How to calculate your revenue growth rate
Revenue growth rate (매출 성장률), or sales growth rate, shows how fast your sales are rising or falling between two periods. Here is the formula, two worked examples in won and the mistakes to avoid.
The revenue growth rate formula
Revenue growth rate (%) = (revenue this period − revenue last period) ÷ revenue last period × 100
A positive result means revenue grew. A negative result means it fell.
Worked examples in won
Two examples
| Comparison | Previous period | Current period | Growth rate |
|---|---|---|---|
| Month on month | ₩50,000,000 | ₩55,000,000 | 10% |
| Year on year | ₩650,000,000 | ₩585,000,000 | −10% |
In the first example, a café in Seoul, revenue rose by ₩5,000,000 on a base of ₩50,000,000. This is a growth rate of 10%. In the second, a Busan export manufacturer, revenue fell by ₩65,000,000 on a base of ₩650,000,000. This is a growth rate of −10%.
Common mistakes
- Comparing unequal periods. A 31-day month compared with a 28-day month can distort monthly growth.
- Ignoring seasonality. Seollal, Chuseok and the year-end period can shift sales sharply. For seasonal businesses, compare a period with the same period a year earlier.
- Mixing one-off revenue with recurring revenue. A single large order, such as one export contract, can make growth look stronger than it is.
Frequently asked questions
What is the difference between month-on-month and year-on-year growth?
Month-on-month compares one month with the month before it. Year-on-year (YoY) compares a period with the same period a year earlier, which removes most seasonal effects.
Can the revenue growth rate be negative?
Yes. A negative growth rate means revenue fell between the two periods.