Run Rate Calculator

| Added in Business Finance

What is Run Rate?

Run rate is a financial projection that estimates annual revenue based on current periodic performance. It takes your revenue from one period (month, quarter, etc.) and extrapolates it across a full year.

This metric is particularly valuable for SaaS companies, startups, and subscription-based businesses to forecast future revenue and communicate growth potential to investors.

The Formula

[\text{Run Rate} = \text{Revenue Per Period} \times \text{Periods Per Year}]

Where:

  • Revenue Per Period is earnings from one period (month, quarter, etc.)
  • Periods Per Year is how many of those periods fit in a year

Calculation Examples

Quarterly Revenue:

  • Revenue per quarter: $400,000
  • Periods per year: 4

[\text{Run Rate} = 400{,}000 \times 4 = 1{,}600{,}000]

Monthly Revenue:

  • Revenue per month: $150,000
  • Periods per year: 12

[\text{Run Rate} = 150{,}000 \times 12 = 1{,}800{,}000]

Quick Reference

Period Type Periods Per Year
Weekly 52
Monthly 12
Quarterly 4
Annual 1

Use Cases

  • Financial Forecasting: Project future revenue for planning
  • Investor Presentations: Demonstrate growth trajectory
  • Budget Planning: Allocate resources based on expected income
  • Strategic Decisions: Identify when to scale operations

Frequently Asked Questions

Run rate is a projection of annual revenue based on current periodic performance. It extrapolates your monthly or quarterly revenue to estimate full-year earnings.

Run rate is useful for financial forecasting, investor presentations, budget planning, and evaluating business growth, especially for SaaS and subscription businesses.

Run rate assumes consistent performance throughout the year. It does not account for seasonality, one-time events, customer churn, or growth trends that may affect actual results.

Run rate is a projection based on current data while actual revenue is what you have earned. Run rate can overestimate or underestimate depending on business conditions.