CAGR Calculator
Calculate CAGR (compound annual growth rate) — the single, smoothed annual rate that explains a beginning-to-ending value over several years — used instead of a simple average growth rate because a plain average ignores compounding and can badly misstate what actually happened.
Fees last verified: 2026-08-02
Your numbers
Results update instantly as you type.
The value at the start of the period — revenue, users, portfolio value, or any other growing metric.
The value at the end of the period, in the same units as the beginning value.
The length of the period being measured.
CAGR
16.96%
Average annual growth rate, compounded.
How the CAGR Calculator works
Enter the beginning value, the ending value, and the number of years between them. The calculator finds the constant annual growth rate that would take the beginning value to the ending value over that period, accounting for compounding. Three mistakes are common here: running CAGR over too short a period (a single year), where it adds nothing over a plain growth rate and can look artificially dramatic; treating CAGR as if it were the average of each year's individual growth rate, when it's actually the geometric mean derived only from the start and end points; and assuming a smooth CAGR means the underlying growth was actually smooth — it says nothing about what happened in between, only about the net result.
Who this is for
For founders who need one defensible growth number to put in front of investors, since 'we grew X% on average' invites the question of whether that average is arithmetic or compounded — CAGR removes the ambiguity. Marketers and operators use it to compare revenue growth across channels, campaigns, or years on equal footing, regardless of how different their starting sizes were. And it's for anyone trying to tell whether growth is genuinely compounding or whether one unusually strong year is quietly skewing a simple average into looking better than the underlying trend really is.
Worked example
A metric grows from $10,000 to $16,000 over 3 years. CAGR = ((16,000 / 10,000) ^ (1/3) − 1) × 100 ≈ 16.96% — the value grew at an average compounded rate of about 16.96% per year, even though actual year-to-year growth may have varied considerably. That 16.96% doesn't tell you whether the path was smooth. One business could hit this exact CAGR with three steady years of roughly 17% growth each — a predictable, low-risk trajectory. Another could hit the identical 16.96% CAGR with a 60% growth year (a successful launch), a -10% year (a lost major account), and a 30% rebound — a far more volatile path that still compounds to the same three-year result. Both would report the same headline CAGR to an investor or in a board deck, but they represent very different risk profiles — which is exactly why CAGR is a useful summary number and a poor substitute for looking at the year-by-year detail underneath it.
Why CAGR uses a geometric mean, and what it hides
CAGR is a geometric mean, not an arithmetic one, and that distinction is the entire reason it exists as a separate metric from 'average growth rate.' An arithmetic average simply adds each year's growth rate and divides by the count, treating growth like independent numbers rather than a multiplying chain. A geometric mean instead finds the one constant rate that, compounded over the same number of periods, reproduces the actual ending value — which is what growth really does, since each year applies to a base that already includes every prior year's growth. The classic illustration: a value that grows 50% one year and falls 50% the next has an arithmetic average of 0%, suggesting no net change, but the real result is a 25% loss (100 → 150 → 75) — CAGR reflects that outcome, a simple average doesn't. The direct consequence is that CAGR hides volatility by design. Two businesses can post the identical CAGR over the identical period with completely different risk profiles — one growing steadily near that rate every year, the other swinging between sharp gains and real setbacks that happen to compound to the same net result. CAGR alone can't tell them apart, which is why it's best read alongside the year-by-year figures underneath it, not as a replacement for them. Two pitfalls follow from the same root cause. A short period can produce an extreme or misleading CAGR — a single strong or weak year, annualized, can imply a pace that was never actually sustained. And CAGR describes the past, not a forecast — extrapolating it forward assumes the conditions that produced it keep holding, a weaker assumption the further out it's projected, and it says nothing about whether growth is decelerating, accelerating, or nearing a ceiling.
Frequently asked questions
What is CAGR?
CAGR (compound annual growth rate) is the single constant annual growth rate that would take a beginning value to an ending value over a period of years, assuming steady compounding each year. It smooths year-to-year volatility into one comparable figure.
What's the formula for CAGR?
CAGR = ((Ending value ÷ Beginning value) ^ (1 ÷ Number of years) − 1) × 100. A value growing from $10,000 to $16,000 over 3 years gives CAGR = ((16,000 / 10,000) ^ (1/3) − 1) × 100 ≈ 16.96%.
How is CAGR different from a simple average of year-over-year growth rates?
A simple average adds each year's growth rate and divides by the count — arithmetic, not compounding. CAGR finds the geometric mean instead, the one number that actually reproduces the real ending value when compounded. The gap grows with volatility: +50% one year and -50% the next averages to 0% arithmetically, but the value is actually down 25% overall — CAGR reflects that, a simple average doesn't.
Is there a minimum time period for CAGR to be meaningful?
No fixed rule, but a single year adds nothing over a plain growth rate — CAGR only earns its keep once multiple years are actually compounded together. A very long period (a decade-plus) risks the opposite problem: smoothing over major structural changes until the rate no longer reflects current reality. A handful of years is a reasonable middle ground for most business use.
How does CAGR handle a declining or negative value?
It still works and returns a negative CAGR — an ending value below the beginning value correctly produces a negative rate. Where it breaks down is a beginning value of zero, or a value that crosses from positive to negative during the period, since the ratio behind the formula becomes undefined or nonsensical.
Can I use CAGR to compare two different investments or channels?
Yes — this is one of its most common uses, since it normalizes growth into one rate regardless of starting size, so a channel that grew $5,000 to $9,000 and one that grew $500,000 to $900,000 compare on equal footing. Just match the time period — a 2-year CAGR against a 5-year CAGR isn't a fair comparison even if the numbers look similar.
Can I use CAGR to predict future growth?
Only as a rough baseline, not a guarantee — CAGR describes what already happened, not what happens next. Extrapolating it forward assumes the conditions that produced it keep holding, rarely safe over a long horizon, especially for anything still finding its growth ceiling or facing new competition.
Related calculators
Profit Calculator
Calculate your profit — the actual dollar amount left after costs, not a percentage — alongside your profit margin, so you can see both what you kept and how efficiently you kept it.
CPA Calculator
Calculate your CPA (cost per acquisition) — what you actually pay for a sale, sign-up, or lead, not just a click or impression — and, optionally, the max CPA you can afford while still hitting a target margin.
LTV:CAC Calculator
Calculate customer lifetime value (LTV), customer acquisition cost (CAC), and the LTV:CAC ratio — the core unit-economics check for any subscription or repeat-purchase business, showing whether customers are worth more than it costs to acquire them.