Revenue Growth Calculator (price vs volume split & CAGR)

Understanding the revenue growth calculator — concept and principle

This calculator measures revenue growth between two periods and splits the change into the part that came from selling more units (volume) and the part that came from higher prices. It also shows unit growth, the average price change and the annualized growth rate (CAGR) when the periods are more than a year apart. Business owners, analysts and investors use it to understand what is really driving sales.

Growth = volume and price — with the default inputs: 15.5%.

How it is calculated

Revenue = average price × units, for each period
Revenue growth = (R1 − R0) ÷ R0 × 100
Volume effect = (U1 − U0) × P0
Price effect = (P1 − P0) × U1
Volume effect + price effect = R1 − R0 exactly
CAGR = (R1 ÷ R0)^(1 ÷ years) − 1
Revenue growth = (1 + unit growth) × (1 + price change) − 1

The principle

Revenue can grow because customers buy more or because each unit sells for more. Separating the two matters: volume growth usually signals rising demand or market share, while price growth may reflect inflation, a better product mix or pricing power. The split used here values extra units at the old price and the price change at the new volume, so the two parts add up exactly to the total change. This is the same structure as sales-volume and sales-price variances in management accounting.

Worked example

Defaults: earlier period 10,000 units at 40; current period 11,000 units at 42; 1 year apart.

Earlier revenue = $400,000; current revenue = $462,000; change = $62,000.
Revenue growth = 62,000 ÷ 400,000 = 15.5%.
Volume effect = 1,000 × 40 = $40,000; price effect = 2 × 11,000 = $22,000.
Unit growth = 10%; average price change = 5%; 1.10 × 1.05 − 1 = 15.5%.
CAGR over 1 year = 15.5%.

Each point is the calculator re-run with only “Earlier period: average selling price” changed; the gold point is the default example. Change the inputs above and this chart follows your numbers.

Earlier period: average selling price	Revenue growth
10	362%
20	131%
30	54%
40	15.5%
50	-7.6%
60	-23%
80	-42.2%

How to read the result

About two thirds of the growth here came from volume and one third from price. Compare the price change with inflation: if prices rose less than general inflation, real prices fell. Growth driven mainly by price can be fragile if competitors do not follow. For multi-year comparisons, use CAGR rather than total growth.

Common mistakes

Comparing periods of different length without annualizing.
Mixing gross and net revenue in the two periods.
Ignoring product-mix changes, which show up as "price" in an average-price split.
Reading nominal growth as real growth during high inflation.

Keep in mind: Other ways of splitting price and volume exist and give slightly different shares. State the method you use when reporting.

Frequently asked questions

How do I calculate revenue growth?

Subtract last period's revenue from this period's, divide by last period's and multiply by 100.

What is CAGR?

The compound annual growth rate: the constant yearly rate that turns the earlier revenue into the current one over the years given.

Why does the split not use the old price for both?

Using the new volume for the price effect makes the two parts add up exactly to the total change.

Sources: Lumen Learning, Managerial Accounting, Module 7: Budgeting for Operations (sales-volume and sales-price variances)

Checked 9 Nov 2026. Algebraic price–volume decomposition of a revenue change (ΔR = ΔU·P₀ + ΔP·U₁), as used for sales-volume and sales-price variances in managerial accounting (e.g. Lumen Learning, “Managerial Accounting”, Module 7: Budgeting for Operations); CAGR = (end ÷ start)^1/years − 1.

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