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Run Rate

Finance

What is Run Rate?

Run Rate is a projection of ARR based on current revenue data, usually MRR. Unlike Annual Recurring Revenue, it's not limited to recurring revenue and can include one-time sales.

How is Run Rate used?

This metric is useful for fast-growing companies to forecast ARR, as using historical data and patterns to forecast ARR can be inaccurate. It provides clarity for budgeting and financial planning purposes and is prevalent in fundraising discussions.

How to calculate Run Rate

Revenue in Period x Total Periods in Year

To calculate Run Rate, you multiply your revenue for a specific period by the total number of those periods in a year. Iif you're using monthly revenue (MRR), multiply it by 12 to project your Annual Run Rate (ARR).

Best Practices

Use with caution and rely on it mainly for short-term projections; combine it with other revenue metrics like LTV and Churn for a holistic view.

Common Misconceptions

Run Rate isn't applicable to all companies: it's more suitable for SaaS businesses with consistent income streams and may not be accurate for businesses with fluctuating revenues.

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FAQs

What are the main drivers of Run Rate?
  • Number of customers
  • Product pricing
  • Churn
  • Contraction
  • Expansion

Supported Integrations

Get this metric directly out of one of our supported integrations.

Related Metrics

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