Growth Rate
The percentage change in a specific metric over a defined time period, measuring business performance.
Definition
Growth rate measures how quickly a business metric (revenue, users, market share) increases or decreases over time. It's expressed as a percentage and helps businesses track progress, set targets, and compare performance against competitors or industry benchmarks.
How to Calculate
Basic Formula:
Growth Rate = ((New Value - Old Value) ÷ Old Value) × 100
Compound Annual Growth Rate (CAGR):
CAGR = ((Final Value ÷ Initial Value)^(1/years)) - 1
Common Types
Revenue Growth Rate
Measures increase in total revenue period over period
User Growth Rate
Tracks growth in total number of users or customers
Monthly/Quarterly Growth
Short-term growth rates for regular monitoring
Real-World Example
SaaS Company Revenue:
- • Q1 Revenue: $100,000
- • Q2 Revenue: $120,000
- • Growth Rate = ((120,000 - 100,000) ÷ 100,000) × 100 = 20%
Quarterly Growth Rate: 20%