The compounded monthly growth rate (CMGR) is the constant monthly rate that carries a beginning value to an ending value: CMGR = (Ending Value / Beginning Value)^(1 / n) – 1. This guide works 3 examples step by step, including $100,000 to $130,000 over 12 months at 2.21% a month, shows the Excel and Google Sheets versions, and covers the period counting trap plus the limits of a single smoothed rate.
In This Article
Share On:
The compounded monthly growth rate answers one question: what single monthly rate, repeated month after month, would have carried your starting number to your ending number? CMGR is the smoothed rate hiding inside a messy series, and it’s what SaaS operators, D2C founders and investors reach for when revenue, users or orders bounce around too much to read month by month.
Most explanations stop at the symbols. This guide gives you the compounded monthly growth rate formula in its nth root form, 3 worked examples recomputed from scratch, the Excel and Google Sheets functions that do it in a single cell, and the period counting mistake that quietly turns a 2.21% answer into 2.04%.
What Is the Compounded Monthly Growth Rate (CMGR)?
CMGR is the constant month-on-month rate that would take a beginning value to an ending value across a set number of months. In symbols, CMGR = (Ending Value ÷ Beginning Value)^(1 ÷ n) – 1, where n is the count of months between the 2 values. It turns a volatile series into one number you can compare and forecast with.
The metric earns its place wherever the monthly cadence is the unit of work: subscription revenue, order volume, active users, qualified pipeline. Any single month tells you little, because seasonality, campaign timing and one large deal all move it. If you track monthly recurring revenue, it is the natural rate to sit beside it.
Why CMGR is not the average of your monthly growth rates
Averaging a column of month-on-month percentages looks like the same calculation. It isn’t. Growth multiplies rather than adds, so a 40% month followed by a 20% fall leaves you at 1.40 × 0.80 = 1.12, not at the 10% average those 2 months suggest. The arithmetic mean always sits at or above the compounded rate, and the gap widens as volatility rises.
CMGR vs a simple growth rate
A simple growth rate compares 2 points and stops: revenue rose 30% over the year. It says nothing about the path or the monthly pace. Dividing that 30% by 12 to get 2.5% a month is the usual shortcut, and it is wrong, because it ignores compounding. The real figure is 2.21%. For how monthly, quarterly and annual framings differ, see our guide to MoM vs QoQ vs YoY growth.
The Compound Monthly Growth Rate Formula
The compounded monthly growth rate formula is CMGR = (Ending Value ÷ Beginning Value)^(1 ÷ n) – 1. Divide the ending value by the beginning value, raise that ratio to the power of 1 divided by the number of months, then subtract 1. Multiply by 100 to read it as a percentage.
The nth root form
Raising a number to the power of 1 ÷ n is the same as taking its nth root, which is usually the clearer way to read the formula: CMGR = nth root of (Ending Value ÷ Beginning Value), minus 1. Over 12 months that means the 12th root of the growth ratio. In the first example below the ratio is 1.3, the 12th root of 1.3 is 1.0221045, and subtracting 1 leaves 2.21%.
What counts as n, and the period counting trap
n is the number of months of growth, not the number of rows in your spreadsheet. January to January is 13 monthly readings but 12 months of growth, so n = 12. Get it wrong and the answer moves: the same $100,000 to $130,000 jump returns 2.21% at n = 12, 2.04% at n = 13 and 2.41% at n = 11. Those are not rounding differences.
How to Calculate Compounded Monthly Growth Rate: 3 Worked Examples
Every CMGR calculation is the same 4 steps: pick the 2 endpoints, count the months between them, take the nth root of the ratio, subtract 1. The examples below run those steps on a full year of revenue, an 8 month user curve, and a volatile 4 month stretch where the monthly average lies.
Example 1: revenue from $100,000 to $130,000 in 12 months
A business starts the year at $100,000 in monthly revenue and finishes at $130,000, with 12 months of growth between the 2 readings.
Check it forwards: $100,000 × 1.0221^12 returns $130,000. Compound 2.21% across 12 months and you land back on 30% for the year, which is exactly what should happen. Run the same rate 6 months further and monthly revenue reaches about $148,219.
Example 2: users from 4,200 to 9,800 in 8 months
A product goes from 4,200 monthly active users in month 0 to 9,800 in month 8. The growth ratio is 9,800 ÷ 4,200 = 2.3333 and n = 8, so CMGR = 2.3333^(1 ÷ 8) – 1 = 0.1117, or 11.17% a month.
That single rate reproduces the whole curve. Starting at 4,200, it produces roughly 4,669, then 5,191, 5,771, 6,416, 7,132, 7,929, 8,815 and finally 9,800. Any month sitting well off that line is worth a look.
Example 3: a volatile 4 months where the average lies
Now a series that swings. Monthly revenue of $200,000 grows 40%, falls 20%, grows 30%, then falls 10%. Average those 4 monthly rates and you get 10% a month. The business actually ends at $262,080, which is 31.04% total growth, not the 46.41% a steady 10% a month would have delivered.
CMGR = (262,080 ÷ 200,000)^(1 ÷ 4) – 1 = 6.99% a month. A steady 10% would have finished the 4 months at $292,820, overstating the business by $30,740 on a base of $200,000.
A volatile 4 month revenue series and the same total growth expressed as a steady CMGR of 6.99% (upGrowth worked example, September 2026)
Month
Actual revenue
Month-on-month change
Value at a steady 6.99% CMGR
Month 0 (start)
$200,000
n/a
$200,000
Month 1
$280,000
+40%
$213,984
Month 2
$224,000
-20%
$228,945
Month 3
$291,200
+30%
$244,953
Month 4 (end)
$262,080
-10%
$262,080
How to Calculate CMGR in Excel and Google Sheets
In both Excel and Google Sheets the formula is =(B13/B1)^(1/12)-1, formatted as a percentage. Both apps also ship a built-in function that returns the same number in one step: =RRI(12,B1,B13).
The formula version
Put your monthly values in column B with the first month in B1. If the last month sits in B13, that is 13 readings and 12 months of growth, so =(B13/B1)^(1/12)-1 gives the CMGR. Format the cell as a percentage with 2 decimals. Pointing the exponent at the row count instead of the gap between readings is where most spreadsheet errors start.
The RRI shortcut
Microsoft documents RRI as a function that returns “an equivalent interest rate for the growth of an investment”, with the syntax RRI(nper, pv, fv). Google Sheets names the same 3 inputs RRI(number_of_periods, present_value, future_value). So =RRI(12,100000,130000) returns 0.022104, the same 2.21%. Google’s own documented sample, =RRI(3,2,4), returns 0.2599210499, which is the cube root of 2 minus 1.
The spreadsheet mistake to avoid
The trap is a column of month-on-month percentages with =AVERAGE() at the bottom. That returns the arithmetic mean, not the compounded rate, and it flatters every volatile series: in example 3 it reports 10% against a true 6.99%. If you want the average of the monthly rates, use GEOMEAN on the growth multipliers (1.4, 0.8, 1.3, 0.9) and subtract 1, which returns 6.99% because the geometric mean is the nth root of the product.
CMGR vs CAGR: Which Growth Rate Should You Report?
Same formula, different period. CAGR counts in years where CMGR counts in months, so the 2 numbers describe identical growth at different resolutions. Convert with CAGR = (1 + CMGR)^12 – 1, or the other way with CMGR = (1 + CAGR)^(1 ÷ 12) – 1. Report CMGR when decisions are monthly and CAGR when the horizon is multi-year.
Converting between CMGR and CAGR
The 2.21% from example 1 annualises to (1.0221)^12 – 1 = 29.99%, which rounds back to the 30% you started with. It works in reverse too. SaaS Capital’s 2026 private SaaS growth rate benchmarks, drawn from more than 1,000 private B2B SaaS companies, report a median growth rate of 22%, down from 25% in 2024. Put 22% through the conversion and the median company is compounding at 1.67% a month.
What a good CMGR looks like
There is no universal number, and anyone quoting one without naming the sample is guessing. That 1.67% a month is a defensible reference point for an established private B2B SaaS business. A company working off a base of a few thousand dollars can post double digit monthly rates that say more about the base than the business. For sector-specific figures, see our MoM growth benchmarks by industry.
Where CMGR Breaks Down, and What It Hides
CMGR draws a straight line through 2 points, so everything that happened between them disappears. It is blind to volatility, hostage to both endpoints, undefined when the beginning value is 0 or negative, and easy to over-read across short windows.
It hides everything in between
Example 3 is the warning. A business that went 40% up, 20% down, 30% up and 10% down reports the same 6.99% as one that grew steadily every month. Those are different businesses carrying different risk, and only one has a repeatable engine. Always show the monthly chart next to the rate.
Both endpoints carry all the weight
Move either end of the window and the answer moves with it. A launch month, a refund-heavy month or a partial month at the edge of the range swings the result more than everything in the middle combined. Pick endpoints that represent normal trading, and state which months you used.
Zero and negative values break the maths
Divide by a beginning value of 0 and there is nothing to compute. Feed the formula a negative value at either end and the root of a negative ratio either errors or returns something meaningless. Google’s RRI documentation requires positive inputs, with the period count and present value above 0. For metrics that can legitimately go negative, such as net profit, use absolute change instead.
Short windows exaggerate
Across 2 or 3 months, ordinary noise looks like a trend. A 3 month CMGR built on one strong campaign month rarely survives contact with month 4. Treat anything under 6 months as directional and pair it with a longer read. Our write-up on what investors read into YoY revenue growth covers the checks that come next.
Compounded Monthly Growth Rate FAQs
What is the compounded monthly growth rate (CMGR)?
CMGR is the constant monthly rate that would take a beginning value to an ending value over a fixed number of months. It smooths a volatile series into one comparable figure, which is why SaaS, D2C and investment teams apply it to revenue, users and orders. It tells you what the average month looked like once compounding is respected, rather than what any single month did.
What is the CMGR formula?
CMGR = (Ending Value / Beginning Value)^(1 / n) – 1, where n is the number of months of growth between the 2 values. Read the exponent as a root: over 12 months you take the 12th root of the growth ratio, then subtract 1. Going from $100,000 to $130,000 across 12 months gives 2.21% a month, which compounds back to 30% for the year.
How do you calculate CMGR in Excel or Google Sheets?
Use =(B13/B1)^(1/12)-1 with your first month in B1 and your last in B13, then format the cell as a percentage. Both apps also include RRI, which Microsoft documents as returning an equivalent interest rate for the growth of an investment, so =RRI(12,100000,130000) returns 0.022104, the same 2.21%. Avoid averaging a column of month-on-month percentages, because that overstates growth.
What is a good CMGR?
There is no universal benchmark, so treat any single figure with suspicion. As a sourced anchor, SaaS Capital’s 2026 research brief covering more than 1,000 private B2B SaaS companies reports a median growth rate of 22% a year, which converts to a CMGR of 1.67%. Early-stage companies growing off a small base often post much higher rates that say more about the base than the business.
What is the difference between CMGR and CAGR?
Only the period. CAGR compounds over years and CMGR compounds over months, so both describe the same growth at different resolutions. Convert between them with CAGR = (1 + CMGR)^12 – 1. The 2.21% monthly rate used throughout this guide annualises to 30%. Use CMGR when decisions are made monthly and CAGR when you are reporting a multi-year trend to a board or an investor.
Can CMGR be negative?
Yes. When the ending value is lower than the beginning value the ratio falls below 1, the nth root falls below 1, and subtracting 1 leaves a negative rate, which is the correct reading of a shrinking business. What the formula cannot handle is a beginning value of 0 or a negative value at either end. Google’s RRI documentation requires positive inputs for the same reason.
Your Next Move: Put CMGR Into Your Monthly Reporting
A CMGR is only as useful as the reporting around it. The version that earns its place in a board pack names both endpoints, states n, sits beside the month-by-month chart, and is read next to a retention or margin number so growth and quality arrive together.
If you would rather have that built than described, upGrowth’s growth team sets it up for SaaS, fintech and D2C companies: one agreed metric definition, a dashboard that computes it, and a monthly review where the number drives a decision. Start with our marketing calculators or our guide to the GTM metrics that belong on a founder dashboard.
Manjusha Karkera is an enthusiastic content marketer who has created numerous engaging and compelling writing pieces for various clients and companies over the years. She enjoys writing pithy content and copy on various sectors like fashion, beauty and wellness, sports, fitness, education, etc. Prior to Team upGrowth, she worked as a Marketing Communications Specialist. Her overall experience includes all forms of content writing and copywriting.
Growth Strategy and Planning
Inbound Growth
Growth Hacking
Fractional CMO
Search Engine Optimization
Paid and Performance Marketing
Social Media Marketing
Demand Generation
AI-Driven Growth Strategy
AI-Native Workflow Automation
Generative Engine Optimization
Grove — AI Growth Strategist
AI Automation
Framework
Case Study
Tools
Growth Tools
Decision Tree
Compare
Custom GPT's
AI Answer Gap
Offer
Webstories
Quizzes
Blog
AI-powered Apps
Social Media Tools
Agency Fit Score
