Revenue Growth Rate
The percentage change in revenue from one period to the next.
Formula
Variables
Example
$120k this year vs $100k last: g = 20%
How it works
Revenue growth rate compares how much revenue changed from one period to the next relative to the earlier period. Subtracting the prior revenue from the current revenue gives the absolute change, and dividing by the prior revenue turns that change into a proportion of the original amount. Multiplying by 100% converts the proportion into a percentage, which makes it easy to compare growth across different time periods or businesses.
When to use it
Use this when you want to measure how sales or revenue has increased or decreased between two periods, such as month to month, quarter to quarter, or year to year. It is common in business reporting, financial analysis, and performance tracking.
Worked example, step by step
Last quarter's revenue: R_0 = $85,000 This quarter's revenue: R_1 = $93,500 Step 1: Find the change in revenue: R_1 - R_0 = 93,500 - 85,000 = 8,500 Step 2: Divide by the prior revenue: 8,500 / 85,000 = 0.1 Step 3: Convert to a percentage: 0.1 × 100% = 10% Answer: g = 10%
Common mistakes to avoid
- Using the current revenue as the denominator instead of the prior revenue
- Forgetting to multiply by 100% at the end
- Swapping the order of subtraction and getting the sign wrong
Did You Know?
Sustained double-digit revenue growth is the single metric most prized by high-growth startups.
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