Different ways to measure a business’s growth rate
Measuring growth rate depends on which variable you are looking to assess. I’ll break down the process for measuring revenue growth, market share growth, and user growth rate.
Revenue is the most common metric used to measure the growth rate of a business. Basically, it’s the king of all SaaS metrics in terms of growth. Revenue growth is the increase or decrease of a company’s sales between two periods, whether it's over a number of years or just a few quarters. It’s shown as a percentage and demonstrates the degree to which your company’s revenue has grown or shrunk over time.
This equation can be calculated annually (annual growth rate), quarterly, and/or monthly. Measuring revenue growth in this way calculates both positive and negative changes in revenue growth—giving you a more realistic outlook on your company’s financial health.
Market share growth
Another way to track your company’s growth is by measuring market share growth. In order to calculate market share growth rate, you must first have a grasp on how to calculate market share. Market share is the portion of a market controlled by a particular company or product.
Now, to measure market growth rate, you need to know the total market size in terms of revenue—which includes total sales of the entire market with you and all competitors combined. Once you determine your starting value, you can start calculating market growth rate.
Market growth can indicate your business’ long-term sustainability. If your company is experiencing low sales compared to other companies in your market, it will prove that you need to investigate why your product or your company’s brand isn’t having positive growth.
User growth rate
User growth rate is the percentage of new paying customers you gain every month.
Tracking user growth rate is important because if the trend is positive, then your company is acquiring more customers in an upward trend. It means people like your product; your marketing and sales efforts are going well. However, if your calculations indicate a decline in users at any point, it’s time to strategize to meet your goals.