Easy Formula to Calculate Month-Over-Month Growth in Excel

Are you looking to track the month-over-month (MoM) growth of your business metrics in Microsoft Excel? Calculating the month-on-month growth rate is a valuable way to measure the performance and progress of key indicators like revenue, sales, website traffic, and more over time.

In this article, we’ll show you exactly how to use a simple formula to calculate month-over-month growth in Excel, along with examples to illustrate. We’ll also cover how to use Excel’s built-in GROWTH function to predict future values based on historical MoM growth rates.

What is Month-Over-Month Growth?

First, let’s define what we mean by “month-over-month growth“. Month-over-month growth measures the percentage change in a metric’s value from one month to the next. For example, if your revenue was $10,000 in January and grew to $11,000 in February, the month-over-month revenue growth from January to February would be 10%, since it increased by $1,000 which is 10% of January’s $10,000.

Analyzing month-over-month trends helps smooth out daily and weekly volatility to give you a clearer picture of your business trajectory. It allows you to spot upward or downward trends and compare performance to the previous month. Monitoring month-over-month growth rates of important metrics enables you to make data-driven decisions to optimize your strategies and processes.

The Month-Over-Month Growth Rate Formula

The formula to calculate month-over-month growth percentage in Excel is:

(Current Month Value – Previous Month Value) / Previous Month Value

For example, if the value was 200 in March and 180 in February, the month-over-month growth formula would be:

(200 – 180) / 180 = 0.111 = 11.1%

This represents an 11.1% increase from February to March.

If the value decreased from one month to the next, the percentage will be negative, indicating a month-over-month decline. For instance, if April’s value fell to 150, the MoM growth from March to April would be:

(150 – 200) / 200 = -0.25 = -25%

So a negative 25% month-over-month growth rate means the value dropped by 25% in April compared to March.

How to Calculate Month-Over-Month Growth in Excel

Now let’s walk through how to set up the month-over-month growth formula in an Excel spreadsheet:

1. Enter your metric’s values by month in a single column, with the oldest month at the top and newest at the bottom. For this example, we’ll track website traffic:

2. In the cell to the right of Feb’s value, enter the formula: =(B3-B2)/B2
   • B3 is Feb’s value cell (13,625)
   • B2 is Jan’s value cell (12,500)
3. Press Enter to calculate Feb’s month-over-month growth rate from Jan: 0.09 = 9%
4. Click on the cell with the formula to select it
5. Double-click the small square at the bottom-right of the highlighted cell to auto-fill the formula down the rest of the column
6. Select the MoM growth cells, right-click, and choose Format Cells
7. On the Number tab, select Percentage and enter 2 for Decimal places
8. Click OK to format the growth rates as percentages

Your spreadsheet should now look like:

The MoM growth column clearly shows Feb traffic increased 9% from Jan, Mar rose another 9.36% from Feb, but Apr declined 10.91% compared to Mar.

Visualizing Month-Over-Month Growth Trends

To better visualize month-over-month trends over time, you can create a chart in Excel:

1. Select the Month column and MoM Growth column
2. Go to Insert > Charts > Line
3. Choose a Line chart sub-type
4. Customize the chart title, axis labels, legend, colors, etc. as desired

The resulting line graph will help you easily see MoM growth trends and spot any large increases or decreases that warrant further investigation.

Using the GROWTH Function for Predictions

Excel offers a built-in GROWTH function that can help predict future values based on historical month-over-month growth rates. It uses linear regression to calculate the least squares fit through your data points and return the y-values along that exponential trend line.

The syntax is:
=GROWTH(known_y’s, [known_x’s], [new_x’s], [const])

• known_y’s: The historical values you already have (required)
• known_x’s: A range the same size as known_y’s with optional numeric labels for those data points (like 1, 2, 3)
• new_x’s: A range of numeric labels for the new data points you want to predict for
• const: Enter TRUE or omit to force the constant b in the equation y = b*m^x to equal 1

For example, say we want to predict website traffic for the next 2 months based on Jan-Apr:

1. In a new column, enter labels for the month numbers: 1 for Jan, 2 for Feb, etc.
2. Enter 5 and 6 for May and Jun since they follow month 4 (Apr)
3. In May’s traffic cell, enter the GROWTH formula:
   • =GROWTH(B2:B5, A2:A5, A6)
   • B2:B5 are Jan-Apr’s traffic values
   • A2:A6 are the month number labels 1-5
4. Copy the formula to Jun’s cell too
5. Select May and Jun’s cells, click the Comma Style button to format the predicted values as numbers

The result:

The GROWTH function predicts traffic will rebound to 16,194 in May and continue climbing to 17,785 in June based on the overall MoM growth trend, despite April’s dip.

Keep in mind this assumes growth will continue exponentially at the current average rate. Use the GROWTH function as a projection aid, not an infallible forecast.

Tips for Analyzing Month-Over-Month Growth

When examining month-over-month growth rates, keep the following best practices in mind:

• Be aware of seasonality. Some metrics fluctuate predictably by season, like retail sales peaking during the holidays, so focus on the year-over-year comparison for that month to account for seasonality.
• Watch out for small sample sizes. MoM changes can be misleading if you’re dealing with very small values, where a minor shift can translate to a huge percentage change.
• Don’t neglect longer-term trends. Calculating month-over-month growth is most insightful when combined with a longer-term view like year-over-year comparisons. Look at the bigger picture to understand overall trajectories.
• Investigate root causes. Knowing your month-over-month growth rate is just the first step. Always dig deeper into significant changes to uncover the underlying reasons behind them.

Final Thoughts

Here are the key points to remember about calculating month-over-month growth in Excel:

• Month-over-month (MoM) growth measures the percentage change in a metric’s value from the previous month
• The formula is: (Current Month – Previous Month) / Previous Month
• Calculate MoM growth in Excel in 3 steps:
  1. Enter values by month in a column
  2. Put the formula in the next column: =(B3-B2)/B2
  3. Copy formula down & format as percentage
• Visualize trends with a line chart of MoM growth rates
• Use the GROWTH function to predict future values based on historical MoM growth
• Account for seasonality, small sample sizes, and longer-term trends
• Always investigate root causes behind MoM changes

By setting up a month-over-month growth formula and using the GROWTH function for predictions in your Excel reports, you can easily track, analyze, and forecast the performance of your key business metrics. Monitoring this will help you make data-driven decisions to accelerate growth.

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Vaishvi Desai

Vaishvi Desai is the founder of Excelsamurai and a passionate Excel enthusiast with years of experience in data analysis and spreadsheet management. With a mission to help others harness the power of Excel, Vaishvi shares her expertise through concise, easy-to-follow tutorials on shortcuts, formulas, Pivot Tables, and VBA.