Growth Rate

Growth rate is the percentage change in a metric — most commonly MRR, ARR, or customer count — between two periods. It is the fundamental measure of business momentum. In SaaS, growth rate is watched obsessively by founders, investors, and operators because it predicts future scale and determines fundraising valuations.

formula.sh

Growth Rate = ((Current Value − Previous Value) ÷ Previous Value) × 100

> Current Value: the metric in the most recent period
> Previous Value: the metric in the comparison period
> Result expressed as a percentage
> Can be calculated monthly (MoM), quarterly (QoQ), or annually (YoY)

example

example.sh

MRR was $40,000 last month and is $46,000 this month.

(($46,000 − $40,000) ÷ $40,000) × 100

→ 15% MRR growth rate month-over-month

why it matters

Growth rate determines how quickly a business compounds. A 10% monthly growth rate means the business roughly triples in a year. A 5% monthly rate means it doubles. The difference sounds small but compounded over 24 months is enormous.

Venture investors use growth rate as the primary screening criterion for investment. The "T2D3" framework (triple, triple, double, double, double ARR) describes the growth trajectory expected of venture-backed SaaS companies. Understanding your growth rate relative to these benchmarks tells you whether you are on a venture path or a lifestyle business path — both are valid, but knowing which one you are building matters.

common mistakes

✗Calculating growth rate from a very small base and presenting it without context — 100% growth from $1K to $2K is impressive math, not impressive business

✗Using growth rate without specifying the time period — monthly and annual growth rates are not comparable

✗Ignoring the quality of growth — rapid growth that comes entirely from heavy discounting or one-time deals is not sustainable

pro tips

✓Track growth rate on a trailing 3-month basis to smooth out month-to-month volatility

✓Calculate growth rate on net new MRR separately from total MRR — it shows whether the engine is accelerating

✓Set a public monthly growth rate target for your team — transparency around the number creates accountability

the mrrsucks take

You track your growth rate like it is going to magically become positive if you refresh Stripe enough. It is a metric, not a mood. The number does not care about your feelings.

faq

What monthly growth rate is considered good for early-stage SaaS?+

Y Combinator uses 5–7% weekly growth as a benchmark for fast-growing startups. For monthly MRR growth, 10–20% is strong pre-PMF. Post-PMF and at scale, 5–10% monthly is healthy.

What is the rule of 72 for growth rate?+

Divide 72 by your monthly growth rate to estimate how many months it takes to double. At 10% MoM growth: 72 ÷ 10 = 7.2 months to double.

The $0 MRR milestone›

related metrics

./install-the-daemon

$9. 365 roasts. one public endpoint of pure shame.