Subscriber Growth Rate

Date created: Aug 27, 2020  •   Last updated: Aug 27, 2020

What is Subscriber Growth Rate?

Subscriber Growth Rate measures the percentage growth of an application’s account base in a given time period compared to the previous time period. The time period can be a week, a month, a quarter, or a year.

Alternate names: Customer Growth Rate, Account Growth Rate

Formula

ƒ Sum(Current period # of Subscribers – previous period # of Subscribers) / Previous period # of Subscribers
ƒ Sum(# new Subscribers added - # cancelled Subscribers) / Count(# Subscribers at the end of previous period)

How to calculate

A software company has 100 subscribers at the end of the previous month and 150 subscribers at the end of the current month. It has achieved a 50% Monthly Account Growth Rate.

Subscriber Growth Rate

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More about this metric

Subscriber growth is an important metric for a SaaS platform because it shows period-over-period momentum, or lack thereof, for an application. A positive Subscriber Growth Rate shows that the application is gaining traction in the marketplace. A flat or declining Subscriber Growth Rate can be an early warning sign of potential application stagnation or decline. Variability in the Subscriber Growth Rate, measured monthly, can also be an indication of seasonal trends.

Especially for a new business that is yet to generate revenue, Subscriber Growth Rate is a key metric to track because it can help predict future revenue generation based on current momentum.

In addition to tracking Subscriber Growth Rate, it is also useful to calculate the compound growth rate over a period of time. When done monthly, this is known as the Compound Monthly Growth Rate (CMGR).

Recommended resources related to Subscriber Growth Rate

This article explains how to calculate Compound Monthly Growth Rate and the best practices as well as the interpretation of Monthly Account Growth Rate.