Growth Rate Calculator

In the fast-paced world of SaaS and subscription businesses, understanding your growth rate isn't just important-it's essential for survival and success. Growth rate serves as the pulse of your business, indicating whether you're scaling effectively, maintaining momentum, or losing ground to competitors.

This comprehensive guide will walk you through everything you need to know about growth rate: what it is, how to calculate it, what constitutes healthy growth at different stages, and actionable strategies to accelerate your growth. Whether you're a startup founder, growth marketer, or executive, mastering growth rate metrics will help you make data-driven decisions and build a thriving business.

Growth rate measures the percentage change in a specific metric over a defined time period. For SaaS and subscription businesses, the most common growth metrics include:

• Revenue Growth Rate:  The increase in monthly recurring revenue (MRR) or annual recurring revenue (ARR)
• Customer Growth Rate:  The expansion of your customer base
• User Growth Rate:  The increase in active users or accounts
• Market Share Growth:  Your expansion relative to the total addressable market

• Indicates business health and trajectory
• Helps forecast future performance
• Attracts investors and stakeholders
• Guides resource allocation decisions
• Benchmarks performance against competitors

The basic growth rate formula is simple yet powerful:

Example:  If your MRR grew from $50,000 to $65,000 in one month, your monthly growth rate would be 30%.

Different growth rate calculations serve different purposes:

• Month-over-Month (MoM):  Best for tracking short-term momentum and identifying trends
• Quarter-over-Quarter (QoQ):  Smooths out monthly volatility for clearer patterns
• Year-over-Year (YoY):  Eliminates seasonality for true growth comparison
• Compound Monthly Growth Rate (CMGR):  Shows average monthly growth over a longer period
• Compound Annual Growth Rate (CAGR):  Indicates long-term growth trajectory

Growth expectations vary dramatically based on company size and stage:

Early Stage (< $1M ARR):

• Target: 20-50% MoM growth
• Focus on finding product-market fit
• High volatility is normal

• Target: 15-20% MoM growth initially, declining to 10-15%
• T2D3 benchmark: Triple revenue for 2 years, then double for 3 years
• Focus on scalable acquisition channels

• Target: 5-10% MoM growth
• 100%+ annual growth is still excellent
• Focus on efficiency and expansion revenue

• Target: 2-5% MoM growth
• 50%+ annual growth is strong
• Focus on market expansion and M&A

As companies mature, the focus shifts from growth at all costs to sustainable, profitable growth. The Rule of 40 states that a healthy SaaS company's growth rate plus profit margin should exceed 40%.

For example:

• 30% growth + 10% profit margin = 40 (healthy)
• 50% growth + (-10%) profit margin = 40 (healthy but watch burn)
• 20% growth + 5% profit margin = 25 (needs improvement)

Calculating growth rate manually can be tedious, especially when tracking multiple metrics across different time periods. Use our Growth Rate Calculator to:

• Instantly calculate MoM, QoQ, and YoY growth rates
• Compare your growth to industry benchmarks
• Project future performance based on current trends
• Identify growth acceleration or deceleration patterns