Month on Month Growth Calculator

Our monthly growth rate calculator, calculates the percentage increase or decrease in a particular metric on a monthly, quarterly and annual basis. Businesses commonly use the calculator to track their performance metrics, such as revenue, users, or website traffic over time.

There are two different ways this monthly growth rate calculator can be used. 

1. Calculate your annual, quarterly and monthly growth rate

Let’s say you want to calculate the monthly growth rate required to grow users of your app from the current number of 100 users, to your target number of 1,000,000 users in the next five years.  

By inputting a starting point (i.e 100 users), end target (i.e 1,000,000 users) and time frame (5 years) the monthly growth rate calculator will automatically determine the average annual, monthly and quarterly growth rate you would be required to meet in order to hit that target.

This method can be used for any length of time, and any numerical target, such as users, leads, customers, website traffic or revenue.

2. Convert monthly, quarterly or annual growth rates

Let’s say you have a target to grow your revenue by 200% in the next 12 months, but you want to know what monthly growth you would need to hit to achieve this annual target. 

Our monthly growth rate calculator will convert this figure into the monthly and quarterly growth rate you would need to achieve to reach that goal.

By inputting your desired annual growth rate into our calculator you will automatically be displayed your monthly and quarterly growth targets. Adjusting the annual figure up and down will adjust the monthly growth rate calculated. 

The growth rate calculator will also allow you to input a target quarterly growth rate and convert it to annual and monthly growth rates, as well as allow you to input a monthly growth rate and convert it into annual and quarterly figures.

As with the growth rate calculator above, you can use our growth rate conversion tool with any numerical target, such as users, leads, customers, website traffic or revenue.

To use the monthly growth rate calculator you need to input three variables. First you must input the starting value of the metric, second the ending value, and finally the desired time period in years*. The calculator will then calculate the percentage increase or decrease between the two values.

*Note that you can input part years, i.e 1.5 will calculate the annual, quarterly and monthly growth rate required to achieve your target in 18 months. 

Monthly growth rate is calculated first by calculating the annual growth rate (see Calculating Compound Annual Growth Rate below). Once you have calculated the annual growth rate you can use the following formula to determine the monthly growth rate:

Monthly Growth Rate = (1 + Annual Growth Rate) [to the power of] (1/12) – 1

To calculate quarterly growth rates, the same principle applies, with a light change to the formula:

Quarterly Growth Rate = (1 + Annual Growth Rate) [to the power of] (1/4) – 1

As well as planning your future targets, you can also use our monthly growth rate calculator to assess the past. For example, suppose a business had a starting revenue of £100,000 last year and an achieved revenue of £250,000 this year. In that case, the monthly growth rate calculator would determine that the business experienced an average 7.9% monthly growth rate between last year, and this year.

Tracking monthly growth is vital for businesses, primarily because it helps companies to identify trends and patterns in their performance, enabling them to make informed decisions about their operations. 

By tracking their monthly growth, businesses can get a clear idea of how their products or services are performing, allowing them to optimise their marketing strategies, target new customers, and develop new products or services that meet the changing needs of their customers.

Monitoring monthly growth also helps businesses measure their success and progress over time. It allows them to evaluate their performance against their goals and objectives, enabling them to identify areas that require improvement and make necessary adjustments. This is especially important for startups and small businesses, which often operate on tight budgets and have limited resources.

Tracking monthly growth provides businesses with valuable insights into the performance of their competitors, enabling them to stay ahead of the competition. For example, identifying emerging trends in their industry, allowing them to capitalise on opportunities and avoid potential threats.

It can also help businesses secure investor funding, as investors are always looking for growing companies with a solid track record of success. By having a clear understanding of your past, current and anticipated monthly growth following investment, you can create a powerful business case for investment.

Growth rates are a measure of the percentage change in a company’s performance over a specific period. They are used to track or predict the growth of a company’s revenue, profit, customer base, and other key metrics. Growth rates are expressed as a percentage, and they help businesses to understand how well they are performing compared to their previous performance.

For startups, defining annual and monthly growth rates allows them to work out what is a reasonable and realistic target when preparing their financial forecasts. It allows them to show sensible, yet ambitious growth to investors while also reducing the risk of presenting unrealistic growth with the funding available.

There are several types of growth rate, including:

Absolute growth rate

Measures the increase in a specific metric over a period of time.

Relative growth rate

Measures the percentage change in a specific metric over a period of time.

Year-over-year growth rate

Measures the change in a specific metric over the same period in the previous year.

Compound annual growth rate (CAGR)

Measures the growth rate over a period of time, assuming that growth is achieved  at a steady rate.

CAGR is a popular growth rate used by investors to measure an investment’s performance over time. It considers the growth rate of an investment over several years, and it helps investors determine the average annual return on their investment.

To calculate CAGR, you need to know the starting value, ending value, and the number of years. The formula for calculating CAGR is as follows:

CAGR = (Ending value / Starting value) [to the power of] (1/number of years) – 1

One of the main advantages of using CAGR is that it provides a more accurate representation of an investment’s performance by averaging out growth over time. It takes into account the fluctuations in an investment’s performance, allowing investors to get a better understanding of their returns.

CAGR is also useful for comparing the performance of different investments over the same period. For example, if an investor wants to compare the performance of two different stocks over the same period, they can use CAGR to determine which stock has performed better.

CAGR can also be used to understand the annual growth required across a range of performance metrics, like user numbers, customers, revenue; and it’s also used to analyse long term changes in the size and value of markets and sectors.

A growth rate calculator is a powerful tool that can provide several benefits to businesses. Here are some of the key benefits of using a growth rate calculator:

• Saves time
  • Growth rate calculators automate the process of calculating growth rates, saving businesses valuable time and resources. 
• Accurate projections
  • By understanding historical growth rates businesses can more accurately project future growth, providing businesses with accurate projections of their future performance. This allows businesses to make informed decisions about their operations, such as investing in new products or services or expanding into new markets.
• Provides insights
  • They provide valuable insights into a company’s performance, allowing businesses to identify areas for improvement and optimise their operations. For example, a company that experiences a high growth rate in a particular area can use this information to develop new products or services that meet the needs of its customers.
• Better decision-making
  • By providing accurate projections of future growth rates, growth rate calculators enable businesses to make better decisions about their operations. For example, a business can use the information to plan for the future and make informed decisions about investments and expenditures.
• Helps with financial planning
  • Growth rate calculators are useful for financial planning, allowing businesses to set realistic goals and objectives for their operations. 
• Facilitates comparison
  • They enable businesses to compare their growth rates with industry benchmarks and competitors, providing valuable insights into their performance.
• Increases transparency
  • They increase transparency in business operations, providing stakeholders with a clear picture of the company’s financial performance. This can be useful for investors, lenders, and other stakeholders who need to make informed decisions about the company.
• Improves accuracy
  • Designed to be accurate, providing businesses with reliable information that they can use to make informed decisions. This eliminates the risk of human error that can occur with manual calculations.
• Easy to use
  • User-friendly and easy to use, requiring minimal input from users. This makes them accessible to businesses of all sizes and levels of expertise.

Case Study 1: Annual Growth Rate Calculation for a Retail Business

A startup retail business experienced growth from £100,000 in their first year, to £250,000 in their second year.

They are now seeking investment to further expand the business, and want to be able to present to investors the annual growth rate they experienced last year, to better demonstrate their progress.

To calculate the annual  growth rate for this period, we would use the following formula:

Annual Growth Rate = (Ending value / Starting value) [to the power of] (1/number of years) – 1

Applying this formula, we get:

Annual Growth Rate = (250,000 / 100,000) [to the power of] (1 / 1 Year) – 1 = 150%

Therefore, the annual  growth rate for the retail business over this period is 150%.

This indicates that the business experienced significant growth in sales over the course of one year, which could be due to a variety of factors such as marketing campaigns, seasonal trends, or changes in consumer behaviour.

Case Study 2: Monthly Growth Rate Calculation for a Technology Company

A technology company is planning on raising investment. They have reached £1m in subscription revenue from 10,000 users. They know that the typical Series A investor expects to see a business achieve 300% annual growth in revenue in the first 12-months following investment.

In order to reflect this in their financial projections, they need to know the monthly user growth required to achieve an annual growth rate target of 300%. 

By inputting this user growth rate into their financial model [link to financial model template] they will have an accurate reflection on the number of users needed by the end of the year to achieve their target. This in turn will help them plan their marketing and sales activity accordingly and allow them to derive a sensible amount of investment that is needed to achieve the investors desired goals. 

To calculate the monthly growth rate for this period, we would use the following formula:

Monthly Growth Rate = (1 + Annual Growth Rate) [to the power of] (1/12) – 1

Applying this formula, we get:

Monthly Growth Rate = (1 + 300%) [to the power of] (1/12) – 1 = 12.2%

This indicates that the startup would need to achieve user growth of 12.2% per month to hit their annual 300% target, allowing the founders to plan their marketing budgets and investment requirements accordingly.