Definition · also called CAGR, compound annual growth rate, MoM growth, month-over-month growth, YoY growth
A growth rate is the percentage change in a number over a period. For SaaS the number is usually MRR: month-over-month (MoM) growth for young products, year-over-year (YoY) growth for established ones.
CAGR (compound annual growth rate) smooths several years of uneven growth into one steady yearly rate. It is the rate that, compounded every year, would take you from the starting value to the ending value.
Growth rate formula
Growth rate = (value now − value before) ÷ value before; CAGR = (end ÷ start)^(1 ÷ years) − 1
- Average monthly growth over n months = (end ÷ start)^(1 ÷ n) − 1. Don't average monthly percentages arithmetically.
- Monthly to yearly: (1 + monthly rate)^12 − 1. 10% MoM is about 214% a year, not 120%.
- Small bases make huge percentages: going from $10 to $100 MRR is 900% growth.
Worked example
MRR was $4,000 in January and $6,000 in July (6 months later). Three years later it is $30,000.
- 6-month growth = ($6,000 − $4,000) ÷ $4,000 = 50%
- Average MoM = (6,000 ÷ 4,000)^(1/6) − 1 ≈ 7.0%
- CAGR from $6,000 to $30,000 over 3 years = 5^(1/3) − 1 ≈ 71% a year
Monthly growth compounds
| Steady MoM growth | Growth over 12 months | $1K MRR becomes |
|---|---|---|
| 3% | 43% | $1.4K |
| 5% | 80% | $1.8K |
| 10% | 214% | $3.1K |
| 15% | 435% | $5.4K |
| 20% | 792% | $8.9K |
Calculated as (1 + monthly rate)^12. Early-stage startups in accelerators often aim for 5–10% weekly or monthly growth; most indie products grow much more unevenly, in steps around launches and pricing changes.
Growth rate in practice: how indie makers use it
Growth rates we calculated from makers' own reported figures (the math is ours, the inputs are sourced):
Senja went from $1K MRR (December 2022) to $10K MRR (August 2023): 10× in 8 months, an average of about 33% month-over-month. (source: indiehackers.com)
HeyReach grew from about $2M ARR (October 2024) to more than $19M ARR (October 2026): a CAGR of roughly 208% over two years. (source: arr.club)
ScreenshotOne went from about $2.2K MRR (February 2023) to about $36K MRR (September 2026): a CAGR of roughly 118% over three and a half years, slow at first, compounding later. (sources: indiehackers.com, x.com)
Buffer went from $17.9M ARR (January 2024) to $22.4M (May 2025): about 25% growth in 16 months for a mature company recovering from a decline. (source: buffer.com)
From our data: how long indie makers took
| Milestone | Makers who reached it | Median time (dated makers) | Middle half |
|---|---|---|---|
| $1K MRR | 112 | < 1 yr (n=22) | < 1 yr – 1 yr |
| $10K MRR | 97 | 1 yr (n=15) | < 1 yr – 2 yrs |
| $1M ARR | 49 | 3 yrs (n=13) | 1 yr – 4 yrs |
| $100K MRR | 40 | 3 yrs (n=9) | 2 yrs – 4 yrs |
Years from the year a maker started to the first year a self-reported figure reached each level. Medians use only makers whose crossing year is pinned down. Full method and every data point: maker journeys.
Free calculators
Frequently asked questions
How do you calculate growth rate?
Subtract the earlier value from the later value and divide by the earlier value. $6,000 MRR this month versus $5,000 last month is 20% month-over-month growth.
What is CAGR?
Compound annual growth rate: the steady yearly growth rate that would take a value from its start to its end over a number of years. CAGR = (end ÷ start)^(1 ÷ years) − 1.
What is a good MRR growth rate?
Early on, 10–20% month-over-month is strong; growth naturally slows as MRR gets larger. A mature SaaS growing 20–30% a year is healthy, especially if profitable.
How do I convert monthly growth to annual growth?
Use (1 + monthly rate)^12 − 1. 5% monthly growth compounds to about 80% a year.
Related terms
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Maker examples are paraphrased from the cited sources and from each maker's IndieMakerList profile; revenue is self-reported unless marked verified. Spotted an error? Tell us.