How to calculate your revenue growth rate
Revenue growth rate (also called sales growth rate) shows how fast your sales are rising or falling between two periods. Here is the formula, two worked examples in PLN and the mistakes to avoid.
The 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
Two examples
| Comparison | Previous period | Current period | Growth rate |
|---|---|---|---|
| Month-on-month | PLN 160,000 | PLN 176,000 | 10% |
| Year-on-year | PLN 2,000,000 | PLN 1,800,000 | −10% |
In the first example, imagine a small Kraków software house whose monthly revenue rose by PLN 16,000 on a base of PLN 160,000. That is a growth rate of 10%. In the second, suppose a Warsaw e-commerce start-up saw its annual revenue fall by PLN 200,000 on a base of PLN 2,000,000. That is a growth rate of −10%.
Common mistakes
- Comparing unequal periods. A 31-day month against a 28-day month can distort monthly growth.
- Ignoring seasonality. If your sales peak around Christmas, Easter or the May bank holidays (majówka), compare a period with the same period a year earlier. This is also called a year-over-year (YoY) comparison.
- Mixing one-off revenue with recurring revenue. A single large order 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 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.