Definition
CMGR (Compound Monthly Growth Rate) answers: if growth were smooth and compounded monthly, what constant monthly rate would turn the starting value into the ending value over the chosen number of months-
Formula
CMGR = (ending / starting)^(1 / months) - 1
How to use it
- Use CMGR to compare scenarios over different horizons (it normalizes to a monthly rate).
- Use CMGR for topline metrics like MRR, revenue, users, or traffic, but pair it with retention and margin for business quality.
Common mistakes
- Using CMGR when the starting value is near zero (results explode).
- Assuming CMGR will continue indefinitely (small differences compound).
- Confusing CMGR with simple average monthly change (compounding matters).
Measured as
CMGR = (ending / starting)^(1 / months) - 1
Misused when
- Using CMGR when the starting value is near zero (results explode).
- Assuming CMGR will continue indefinitely (small differences compound).
- Confusing CMGR with simple average monthly change (compounding matters).
Operator takeaway
- Use CMGR to compare scenarios over different horizons (it normalizes to a monthly rate).
- Use CMGR for topline metrics like MRR, revenue, users, or traffic, but pair it with retention and margin for business quality.
- Keep CMGR (Compound Monthly Growth Rate) consistent by cohort, segment, and period before you use it as a decision signal in planning or reporting.
- Interpret the metric alongside retention, margin, or payback so one ratio does not hide the real operating trade-off.
Next decision
- Quantify the impact with MRR Forecast Calculator: Monthly Projection, Formula, and Example if you need to turn the definition into an operating assumption.
- Read MRR Forecast Formula: Example, Template, and Monthly Bridge if the decision depends on interpretation, policy, or trade-offs beyond the raw formula.
Where to use this on MetricKit
Calculators
- MRR Forecast Calculator: Monthly Projection, Formula, and Example: Project future MRR using new MRR, expansion, contraction, churn, and time horizon inputs with a simple monthly forecast model.
- MRR Growth Rate Calculator: Calculate MRR growth over a period and convert it to CMGR and annualized growth (CAGR).
- ARR Growth Rate Calculator: Calculate ARR growth over a period and convert it to CMGR and annualized growth (CAGR).
Guides
- MRR Forecast Formula: Example, Template, and Monthly Bridge: Learn how to forecast MRR with a monthly bridge model using starting MRR, new MRR, expansion, contraction, and churn.
- MRR: what it means (and how to track it cleanly): A guide to MRR: definitions, what to include/exclude, and how to decompose MRR changes over time.
- MRR growth rate: how to measure recurring momentum: A practical MRR growth guide: compute period growth, CMGR, and annualized growth (CAGR) from start and end MRR.
- ARR growth rate: how to measure recurring momentum: A practical ARR growth guide: compute period growth, CMGR, and annualized growth (CAGR) from start and end ARR.