CalculateY
Quick Answer
A business that grew revenue from $500,000 to $750,000 has an estimated growth rate of 50%. Over 3 years from $500,000 to $864,000, the CAGR is approximately 20%.
Period-over-period growth rate
Compound annual growth rate (CAGR)
Common Examples
| Input | Result |
|---|---|
| $500,000 previous, $750,000 current | 50% growth rate, +$250,000 |
| $1,000,000 previous, $850,000 current | -15% growth rate, -$150,000 |
| $200,000 start, $400,000 end, 3 years | CAGR approximately 26.0% |
| $1,000,000 start, $1,610,510 end, 10 years | CAGR approximately 5.0% |
| $50,000 start, $200,000 end, 5 years | CAGR approximately 32.0% |
How It Works
This calculator uses the standard revenue growth rate formula and the CAGR formula:
Growth Rate = ((Current Revenue - Previous Revenue) / Previous Revenue) x 100
CAGR = ((Ending Revenue / Starting Revenue)^(1 / Years) - 1) x 100
Where:
- Previous Revenue = revenue earned in the earlier period (month, quarter, or year)
- Current Revenue = revenue earned in the later period
- Growth Rate = the percentage change between the two periods
- Starting Revenue = revenue at the beginning of a multi-year span
- Ending Revenue = revenue at the end of that span
- CAGR = the constant annual rate that would produce the same total growth over the given number of years
Simple growth rate vs. CAGR
Simple growth rate compares two periods directly. It works well for quarter-over-quarter or year-over-year comparisons. CAGR is more useful for multi-year analysis because it smooths out year-to-year fluctuations into a single annualized figure. A company that grew 50% one year and 0% the next has a 50% two-year total growth, but a CAGR of approximately 22.5%.
Revenue projections
The projection table uses the formula: Projected Revenue = Current Revenue x (1 + CAGR / 100)^Period. This assumes constant growth, which is a simplification. Actual revenue will vary year to year.
Growth rate benchmarks
Growth expectations vary by company stage and industry. Early-stage startups often target 100%+ year-over-year growth. Growth-stage companies typically see 30% to 80% annual growth. Mature businesses with $100M+ in revenue may consider 10% to 20% annual growth strong performance.
Worked example
A SaaS company earned $500,000 in 2023 and $750,000 in 2024. Growth rate = ($750,000 - $500,000) / $500,000 x 100 = 50%. For a longer view, the company earned $200,000 in 2020 and $750,000 in 2024 (4 years). CAGR = ($750,000 / $200,000)^(1/4) - 1 = (3.75)^0.25 - 1 = 0.3915, or approximately 39.15% per year. Projecting forward 5 years at that CAGR: Year 1 = $1,043,625, Year 2 = $1,452,319, and so on.