How to Calculate Month Over Month Percentage Change: A Simple Guide

In business, tracking growth is essential for staying competitive. One of the most common and useful ways to measure progress is by calculating month over month percentage change. But how do you do that? If you’re new to this concept, don’t worry—this guide will break it down step-by-step and make it simple to understand.

What Is Month Over Month Percentage Change?

Before diving into the calculation, let’s define what month over month (MoM) percentage change means. Simply put, it's the measure of how a value has changed from one month to the next. This is commonly used in business to track performance in areas like sales, revenue, and even customer engagement.

For example, if your business made $10,000 in sales in January and $12,000 in February, you can calculate the month over month percentage change to see how much growth occurred.

Why Is Month Over Month Percentage Change Important?

Why should you care about month-over-month change? Well, this metric gives you a quick snapshot of your business's performance. It’s a great tool for:

• Tracking growth: Is your revenue or customer base growing month to month?
• Identifying trends: Are your marketing efforts paying off, or are there areas that need attention?
• Decision making: The insights from MoM calculations can guide your future strategies.

Imagine you run a small e-commerce business. By tracking MoM percentage change in your sales, you can see if a recent marketing campaign increased your sales or if you’re experiencing a dip. This helps you adapt quickly.

How to Calculate Month Over Month Percentage Change: Step-by-Step Guide

Let’s walk through the process of calculating the month over month percentage change using a simple formula.

1. Understand the Formula for Month Over Month Percentage Change

The formula for calculating MoM percentage change is straightforward:

• New Value: The value in the current month.
• Old Value: The value from the previous month.

This formula helps you calculate the percentage difference between two months, showing whether the change is positive (growth) or negative (decline).

Example:

Let's say your sales revenue for January was $8,000, and for February, it was $10,000. Here’s how you would calculate the month over month percentage change:

So, in this example, your sales grew by 25% from January to February.

2. Gather the Necessary Data

To perform the calculation, you need data from two consecutive months. This can be from your financial reports, sales data, or any other metrics you’re tracking.

For instance, if you’re tracking website traffic, gather the number of visitors for January and February. If you’re tracking revenue, use your sales figures.

3. Perform the Calculation

Now that you’ve got the data, plug the numbers into the formula. It’s as simple as subtracting the old value from the new value, dividing by the old value, and multiplying by 100 to get the percentage.

How to Interpret the Results

Once you’ve calculated the month over month percentage change, interpreting the results is key.

• Positive Change: A positive percentage means you’ve had growth. If your sales, for example, grew by 10%, it shows that your business is heading in the right direction.
• Negative Change: A negative percentage means there was a decline. If sales dropped by 5%, it’s important to understand why that happened and adjust accordingly.

Real-World Example:

Let’s say a clothing retailer had $50,000 in sales in January and $55,000 in February. The month over month percentage change would be:

This shows a 10% increase in sales, which would be a good sign for the business owner. On the other hand, if sales had dropped, the business owner might look at factors such as marketing strategies, seasonal trends, or customer feedback.

Common Mistakes to Avoid When Calculating Month Over Month Percentage Change

Even though the MoM percentage change formula is simple, it’s easy to make a few mistakes. Here are some common ones to avoid:

• Using incorrect data: Make sure the values you’re using are accurate and represent two consecutive months.
• Not subtracting the old value: The formula is based on the difference between the new and old values, so skipping that step will give incorrect results.
• Confusing with year-over-year (YoY): Month over month tracks changes month-to-month, while year-over-year looks at changes from one year to the next. Be sure you’re comparing the right periods.

Real-World Applications of Month Over Month Percentage Change

Understanding how to calculate month over month percentage change isn’t just for accountants or analysts. It’s a useful tool for a variety of scenarios, such as:

• Sales Performance: Tracking MoM percentage change in sales allows you to quickly identify whether sales are increasing or declining. For example, an e-commerce store might calculate MoM growth in sales revenue after launching a new marketing campaign. A positive change could indicate the campaign was successful, while a negative change might suggest it's time to re-evaluate.
• Customer Acquisition: If you're tracking the number of new customers, MoM percentage change can show if your efforts in marketing or customer service are yielding results. For example, if you acquired 200 new customers in January and 250 in February, your MoM percentage change would be 25%, indicating that your marketing efforts are working.
• Website Traffic: Business owners and marketers often track MoM changes in website traffic. If you notice a negative MoM percentage change, it might signal a need for more engaging content or better SEO strategies.

Tools to Help You Calculate Month Over Month Percentage Change

If you don’t want to calculate the MoM percentage change manually, there are plenty of tools to help. Here are some options:

• Excel/Google Sheets: You can set up a simple spreadsheet to track changes month over month.
• Google Analytics: For digital marketers, Google Analytics automatically provides data on MoM percentage change in traffic.
• Financial software: Tools like QuickBooks or Xero can track your financial performance and calculate month over month percentage changes in revenue.

Conclusion

Calculating month over month percentage change is a powerful tool for tracking performance and understanding how your business is evolving. Whether you’re tracking sales, customer engagement, or website traffic, MoM calculations give you valuable insights into your growth or areas for improvement.

By following the steps outlined in this guide, you can easily measure and interpret your business metrics, and use that data to make better, more informed decisions. Remember, MoM growth isn’t just about numbers—it's about identifying patterns that help you drive future success.

So, what are you waiting for? Start tracking your month over month performance today, and take control of your business’s growth trajectory!

FAQs About Month Over Month Percentage Change

Q: What is the difference between month over month and year over year percentage change?

A: Month over month tracks changes between two consecutive months, while year over year compares the same month across two different years.

Q: How can I calculate month over month percentage change for sales data?

A: Use the formula:

Q: Can I calculate month-to-month percentage change in customer engagement?

A: Yes! Track the number of interactions, such as clicks or comments, in consecutive months to calculate MoM percentage change in engagement.