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).
Why this matters
This term matters because small changes compound in SaaS metrics. Use consistent definitions by cohort and segment so you can diagnose retention, payback, and growth quality.
Practical checklist
- Write a 1-line definition for "CMGR (Compound Monthly Growth Rate)" that your team will use consistently.
- Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
- Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
- Use a calculator that references this term (e.g., MRR Forecast Calculator) to sanity-check assumptions.
- Read the related guide (e.g., MRR forecasting: a simple bridge model (new, expansion, churn)) for context and common pitfalls.
Where to use this on MetricKit
Calculators
- MRR Forecast Calculator: Forecast MRR over time using new MRR plus expansion, contraction, and churn rates.
- 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 forecasting: a simple bridge model (new, expansion, churn): A practical way to forecast MRR using a monthly bridge: starting MRR + new MRR + expansion - contraction - 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.