Calculate growth between two periods and the average yearly growth over several years.
Growth rate = (current − previous) ÷ previous × 100.
CAGR = (current ÷ previous)1 ÷ years − 1. It smooths uneven years into one average yearly rate.
A franchise location had $420,000 revenue three years ago and $483,000 this year. Growth is 15% in total. Over 3 years, CAGR is 4.8% a year.
Use it for monthly reports, to compare locations, or to see whether labor and revenue grow at the same pace.
Compare like with like: the same month last year is often better than the previous month for seasonal businesses.
A print shop had $610,000 in revenue two years ago and $548,000 this year after losing a large school district contract. The change is -$62,000, a growth rate of -10.2%. Over 2 years, average yearly growth is -5.2%, so revenue fell about 5% a year on a compound basis.
The growth rate compares only the two figures you enter, and CAGR spreads that change evenly across the years, so neither shows what happened in between. Results mislead when the periods differ in length or content, such as a year that includes an acquired business or a one-time equipment sale. With years set to 1, total growth and CAGR are the same number.
Nominal growth includes price increases. To see growth in real terms, divide one plus your growth rate by one plus inflation over the same period and subtract one. The Bureau of Labor Statistics publishes the Consumer Price Index you can use for inflation. With fictional numbers, revenue up 15% over three years while prices rose 10% is real growth of 1.15 ÷ 1.10 − 1 = 4.5%, or about 1.5% a year.
| Site | Last year | This year | Growth |
|---|---|---|---|
| Main Street | $910,000 | $946,400 | 4.0% |
| Harbor | $780,000 | $756,600 | -3.0% |
| New site, opened this year | $0 | $420,000 | new |
| Total | $1,690,000 | $2,123,000 | 25.6% |
| Same-store (first two only) | $1,690,000 | $1,703,000 | 0.8% |
The total looks strong, but the existing sites barely grew. Report both lines.
The constant yearly rate that would take you from start to end over the period.
For long periods, it helps to compare in real terms.
Yes. The calculator shows negative growth.
Labor cost growth and headcount growth.
It means revenue shrank on average each year over the span. CAGR smooths the path, so a business that fell sharply one year and partly recovered the next can show the same CAGR as one that declined steadily.
Yes, a decimal such as 1.5 for 18 months works in the formula. Make sure both revenue figures cover periods of the same length, such as two full 12-month periods, or the comparison is between unlike things.
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