Calculating Revenue Growth Rate: A Simple Guide for the Non-Numbers People

Let’s be honest: “Revenue Growth Rate” sounds like one of those terms that belongs in a pitch deck or a stuffy finance meeting. But stick with me. If you're a law firm owner, especially one who's trying to grow a meaningful (and profitable) practice, then understanding how fast your revenue is growing can be a game-changer.

First things first: What is Revenue Growth Rate?

Your Revenue Growth Rate tells you how much your revenue has increased over a certain period of time—usually month-over-month, quarter-over-quarter, or year-over-year.

Think of it like this: if revenue is the number on the scale, the growth rate is how fast you’re gaining (or losing) weight. It’s not just the number that matters, it’s the trend.

And that trend can help you:

• Forecast future revenue

• Set smarter goals

• Identify red flags (like a slow-down in sales)

• Look more appealing to investors or lenders

The Formula

Here’s the basic formula:

Revenue Growth Rate = ((Current Period Revenue – Previous Period Revenue) / Previous Period Revenue) x 100

Let’s put that into a real-life example. Imagine:

• Your revenue in January was $10,000.

• Your revenue in February was $12,000.

Plug those into the formula:

((12,000 - 10,000) / 10,000) x 100 = (2,000 / 10,000) x 100 = 0.20 x 100 = 20% growth

You grew your revenue by 20% from January to February. Not bad!

How Often Should You Calculate Revenue Growth Rate?

That depends on your goals and how stable your business is. 

Here are some general tips:

• Monthly: Great for fast-growing businesses or those in seasonal industries.

• Quarterly: More stable and less noisy than month-to-month.

• Annually: Ideal for high-level planning and strategy.

Just be consistent. It’s easier to track trends when you’re looking at the same interval over time.

What Counts as “Revenue”?

For our purposes, we’re talking about top-line revenue—aka your total sales before expenses. 

That means:

• Client payments

• Service packages

But NOT:

• Refunds

• Loans

• Investment income

• Sales tax collected

• Retainer funds for matters in progress

Only include actual sales made to your customers or clients.

Tools You Can Use to Calculate Revenue Growth Rate

Here’s the good news: you don’t have to calculate this by hand every time. 

Try one of these:

• Excel or Google Sheets: A simple spreadsheet can do all the math for you. Bonus: you can chart it to see trends over time.

• Your accounting software: Most tools like QuickBooks, Xero, or Wave can generate revenue reports by month or quarter. Export them and plug them into your spreadsheet.

• Dashboard tools: If you’re feeling fancy, platforms like LivePlan or Fathom can track growth for you automatically.

What’s a “Good” Revenue Growth Rate?

Honestly, that depends on your industry, business stage, and goals. But here’s a loose guide for annual tracking:

• 0–10%: Slow growth. Maybe stable, but keep an eye on it.

• 10–20%: Healthy, especially for service-based businesses.

• 20–50%+: You’re onto something! Make sure your systems can keep up.

• Over 100%: Explosive growth. Fun, but possibly unsustainable.

Don’t stress if you’re not growing 50% month-over-month. Consistent, steady growth is often healthier (and more manageable) than wild spikes.

What If My Growth Rate Is Negative?

A negative growth rate just means revenue dropped from one period to the next. The key is to figure out why.

Ask yourself:

• Was it a seasonal dip?

• Did a big client leave?

• Have I raised prices (and seen fewer sales)?

• Did I stop promoting as much?

• Are billers meeting their monthly billable hour requirements?

Sometimes a negative growth rate is a sign of a deeper issue. Other times, it’s just a normal part of business. The important part is to notice it and decide what to do next.

Pro Tip: Track Revenue AND Profit Growth

Let’s say your revenue is growing like crazy. You’ve got new clients, more sales, and money flowing in. Amazing, right?

Well… maybe. Because here’s the catch: if your expenses are growing just as fast (or faster), you might not actually be keeping more of that money.

Revenue growth feels good. But profit growth is what actually funds your lifestyle, your goals, and your peace of mind.

Let’s break down the two rates:

• Revenue is how much you bring in.

• Profit is how much you get to keep after paying for everything it took to earn that revenue.

Imagine this:

In January, you made $10,000 and had $4,000 in expenses → $6,000 profit.In February, you made $15,000 but had $10,000 in expenses → $5,000 profit.

So even though your revenue grew by 50%, your profit went down by $1,000. That’s not necessarily bad—it could be a short-term investment in growth—but it’s important to notice it.

You don’t just want to run a big law firm. You want to run a profitable one.

Know Your Numbers

Revenue growth rate isn’t just a “finance thing”, it’s a business clarity thing. When you know how fast you’re growing, you can make smarter decisions, avoid surprises, and stay in control.

Need help? Not sure where to start? 

At Accounting Girl, we love turning numbers into clear, empowering insights. Whether you're ready to ditch the spreadsheet or want help figuring out what your numbers are telling you, we’ve got your back.

Contact us here to learn more about how we can help!