What is the sales growth formula?

Sales growth = (sales this period − sales for the same period last year) ÷ sales for the same period last year × 100. $612,000 this year against $540,000 last year is 72,000 ÷ 540,000 = 13.3% growth.

Should I compare with last month or the same month last year?

The same month last year. Most small businesses are seasonal, so December against November tells you about the season, not the business. Compare a month with the same month a year ago, a quarter with the same quarter, or the last 12 months with the 12 before.

How do I take price rises out of my growth?

Divide this period's sales by 1 plus your average price rise, then compare with last year. If prices went up 8%, $612,000 ÷ 1.08 = $566,667 at last year's prices, which is 4.9% more than $540,000. That 4.9% is the growth in how much you sold; the rest is price.

What is a good sales growth rate for a small business?

There is no single figure, and averages from other businesses say little about yours. Start with two checks: growth faster than your own price rises (otherwise you are selling less), and profit growing at least as fast as sales (otherwise the growth is costing you margin). Then compare with your own last few years.

What is the compound annual growth rate (CAGR)?

The average yearly growth that turns an earlier figure into today's. From $430,000 three years ago to $612,000 today is 42.3% in total, but (612,000 ÷ 430,000) to the power of 1/3, minus 1, gives 12.5% a year. Dividing 42.3% by 3 would overstate it, because each year grows on the year before.

Where do I find the figures in Xero?

Run the Profit and Loss for this period and use Compare with to add the same period last year. Use total income, or total trading income if you have other income such as interest or grants, and the net profit line. The figures are without GST or VAT.

Are my figures stored or sent anywhere?

No. The calculation runs in your browser. Nothing you type is saved or sent to our server or anyone else. The only exception is if you ask us to email you the result: then your email address and a short summary of the result are stored, and nothing is sent until you confirm.

Sales growth calculator: is my business growing?

The sales growth formula

Sales growth = (sales this period − sales for the same period last year) ÷ sales for the same period last year × 100. Use sales without GST or VAT, and compare like with like: a month with the same month last year, a quarter with the same quarter, or a financial year with the one before. Comparing with last month mostly measures the season. The Profit and Loss by month in Xero puts a year of months side by side.

Growth on its own can mislead in two ways. If you put prices up, sales grow even when you sell the same amount, so take the price rise out. And sales are not profit: turnover can rise while profit falls if the new work earns less or costs rise faster than prices. The calculator checks both.

A worked example: a landscaping business

A Brisbane landscaping business had sales of $612,000 in the year to 30 June 2026, against $540,000 the year before. It put its prices up 8% at the start of the year. Net profit was $61,000, against $58,000. Three years earlier, sales were $430,000. The owner wants 10% growth next year. (Made-up figures to show the arithmetic.)

	Amount
Growth: ($612,000 − $540,000) ÷ $540,000	13.3%
At last year's prices: $612,000 ÷ 1.08	$566,667, up 4.9%
Of the $72,000 increase, from the price rise	$45,333
Net profit: $58,000 → $61,000	up 5.2%
Net margin: 10.7% → 10.0%	down 0.7 points
Average a year over 3 years: (612,000 ÷ 430,000)^1/3 − 1	12.5%
Sales needed for 10% next year: $612,000 × 1.10	$673,200

13% growth sounds strong, but most of it is the price rise: the business did about 5% more work. Profit grew only 5%, so net margin slipped from 10.7% to 10.0%. Each job keeps less than it did, likely because wages and materials rose faster than the 8%. The owner's next step is the gross margin by job and the overhead lines that grew, not more sales. The price increase calculator shows what the next rise needs to be to hold margin. Press "Load the worked example" above to see it in the calculator.

When growth is not good news

Growth below your price rise means you sold less. Look at which customers bought less or stopped: the sales reports in Xero show it by customer and by item.
Profit growing slower than sales means margin is slipping. The net profit calculator shows your margin and what moves it.
Growth that empties the bank. More sales usually mean more money owed to you and more stock before the cash comes in. If the bank falls while sales grow, see profit but no cash.
Growth from one customer. If most of the increase is one client, the customer concentration calculator shows how exposed you are.

Getting the figures from Xero

Open Accounting › Reports › Profit and Loss and pick this period (a month, a quarter or the financial year).
Use Compare with to add the same period a year earlier (previous year, not the previous month or quarter) and update the report.
Read Total Trading Income (or Total Income) and Net Profit for both columns. If something unusual landed in one year, such as a grant or the sale of a vehicle, leave it out of both.

For a fuller read of whether the business is doing well, not only growing, how to know if your business is doing well runs five checks on the same reports.

Questions

What is the sales growth formula?: Sales growth = (sales this period − sales for the same period last year) ÷ sales for the same period last year × 100. $612,000 this year against $540,000 last year is 72,000 ÷ 540,000 = 13.3% growth.
Should I compare with last month or the same month last year?: The same month last year. Most small businesses are seasonal, so December against November tells you about the season, not the business. Compare a month with the same month a year ago, a quarter with the same quarter, or the last 12 months with the 12 before.
How do I take price rises out of my growth?: Divide this period's sales by 1 plus your average price rise, then compare with last year. If prices went up 8%, $612,000 ÷ 1.08 = $566,667 at last year's prices, which is 4.9% more than $540,000. That 4.9% is the growth in how much you sold; the rest is price.
What is a good sales growth rate for a small business?: There is no single figure, and averages from other businesses say little about yours. Start with two checks: growth faster than your own price rises (otherwise you are selling less), and profit growing at least as fast as sales (otherwise the growth is costing you margin). Then compare with your own last few years.
What is the compound annual growth rate (CAGR)?: The average yearly growth that turns an earlier figure into today's. From $430,000 three years ago to $612,000 today is 42.3% in total, but (612,000 ÷ 430,000) to the power of 1/3, minus 1, gives 12.5% a year. Dividing 42.3% by 3 would overstate it, because each year grows on the year before.
Where do I find the figures in Xero?: Run the Profit and Loss for this period and use Compare with to add the same period last year. Use total income, or total trading income if you have other income such as interest or grants, and the net profit line. The figures are without GST or VAT.
Are my figures stored or sent anywhere?: No. The calculation runs in your browser. Nothing you type is saved or sent to our server or anyone else. The only exception is if you ask us to email you the result: then your email address and a short summary of the result are stored, and nothing is sent until you confirm.

This calculator gives an estimate from the figures you enter. It is not financial or tax advice. Xero is a trademark of Xero Limited. This tool and ReportPilot are independent and are not made or endorsed by Xero.