by Marco Angioni II

Created on: March 10, 2011   Last Updated: March 14, 2011

Sales growth allows you to figure out how much your business has grown over a given period of time.  You can set your timeframe for as short or as long as you want.  Short-term sales growth may help you determine the effectiveness of recent marketing efforts.  On the other hand, long-term sales growth may help you determine the popularity of your brand, as well as the public’s opinion on your products or services.

Calculating sales growth is relatively simple.  The formula is ((current time period sales – previous time period sales) / last time period sales) x 100 = sales growth rate.

-Determine Your Time Period-

As mentioned above, the time period you choose to use to calculate your sales growth should have some relevance.  You should not pick an arbitrary time period.  Pick a time period that will enable you to utilize the information to expand or otherwise improve your business.

-Money Or Units-

The next item you must determine is whether you are going to measure sales growth in terms of money or in terms of units.  This is an important consideration, especially if you have raised or lowered the price of your products or services. 

Calculating sales growth on a unit basis is important for determining the popularity of your product or service.  However, an increase in unit sales does not automatically correspond into an increase in revenue or profit.  For example, your increase in unit sales may be attributed to a recent price reduction or other promotion.  As such, make sure that you carefully analyze your business when choosing how to calculate sales growth.

-The Calculation-

As mentioned above, you need to choose a time period.  Additionally, you need to choose whether you want to calculate money or units.  For purpose of example, we will utilize a one month time period and the calculation of units.  Further, we will pretend that your business sold 100 units this month and 80 units the previous month.

Based on the formula, you first would subtract the previous month’s sales from the current month’s sales.  Therefore, 100 units minus 80 units equals 20 units.

After finding the difference (which is 20 units in our example), you divide the difference by the previous month’s sales.  Therefore, 20 units divided by 80 units equals 0.25.

Finally, take the quotient (which is 0.25, as calculated above) and multiply by 100.  This will result in the

• 1
• 2
• Next Page >>