What is Revenue Growth Rate (RGR)?

Revenue Growth Rate (RGR) is a key performance metric that measures the percentage increase or decrease in a company’s revenue over a specific period of time. It is a critical indicator of a business’s growth trajectory, showing how quickly a company is expanding and how its revenue is evolving. RGR is often calculated on a month-over-month (MoM) or quarter-over-quarter (QoQ) basis, but it can also be tracked on a year-over-year (YoY) scale, depending on the business model.

For businesses, especially startups and SaaS companies, RGR is an essential metric that provides insights into the effectiveness of their strategies, product-market fit, and market expansion. A high RGR typically indicates that the company is on the right track, successfully scaling its operations, or gaining more customers, while a low or negative RGR may signal stagnation or a decline in business performance.

How to Calculate Revenue Growth Rate

Calculating Revenue Growth Rate (RGR) is straightforward and involves comparing revenue between two periods (such as two consecutive months or quarters). The formula for calculating RGR is:

RGR = ((Current Period Revenue - Previous Period Revenue) / Previous Period Revenue) * 100

This formula gives you the percentage change in revenue from one period to the next, allowing you to track growth or contraction.

Example:

If your company made $100,000 in Revenue Month A and $120,000 in Revenue Month B, the calculation for RGR would be:

RGR = ((120,000 - 100,000) / 100,000) * 100 = 20%

This means that your revenue grew by 20% from Month A to Month B.

For businesses that track performance weekly (especially early-stage startups), you can use the same formula with weekly data:

Weekly RGR = ((Revenue Week B - Revenue Week A) / Revenue Week A) * 100