What revenue run rate is
Revenue run rate takes the revenue from one recent period and scales it up to a full year. If you made $85,000 last month, your run rate is $85,000 × 12 = $1,020,000. It answers one question: what would a year look like if every month matched this one?
Run rate counts all revenue: subscriptions, services, product sales, usage fees and one-off projects. That makes it useful for any business, not only subscription companies. It is a snapshot of current pace, not a forecast and not what you actually earned over the past year.
It works well for young companies with less than a year of history, for showing current pace after a big change such as a price rise or a new product, and for quick conversations with investors, lenders or buyers who want a single annual number. Always say which period you used and whether one-off revenue is included.
How to calculate run rate
Multiply the revenue for the period by the number of those periods in a year:
- Month: revenue × 12. $85,000 × 12 = $1,020,000.
- Quarter: revenue × 4. $240,000 × 4 = $960,000.
- Week: revenue × 52. $20,000 × 52 = $1,040,000.
- Any number of days: revenue × 365 ÷ days. $120,000 over 45 days gives $973,333.
The calculator also splits the run rate back into a day, week, month and quarter, so you can see what pace the annual figure implies.
Run rate vs ARR
The two are easy to mix up because both turn current revenue into an annual number. The difference is what goes in.
- ARR (annual recurring revenue) only counts subscription and contract revenue that renews. Setup fees, services and one-off sales stay out.
- Revenue run rate annualises everything you billed in the period, recurring or not.
For a pure subscription business with no one-off fees, the two numbers are close. For a business with services, implementation fees or project work, run rate will be higher than ARR. If you need the recurring figure, use the ARR Calculator.
One-off revenue and seasonality
Run rate assumes the period repeats. Two things break that assumption.
One-off revenue. A $5,000 setup fee in a month becomes $60,000 a year once you multiply by 12, even though it may never happen again. The calculator shows the run rate with and without one-off revenue. With the sample numbers, taking out $5,000 of one-off revenue lowers the run rate from $1,020,000 to $960,000. Plan on the lower figure.
Seasonality. A shop that sells $200,000 in December and $1,200,000 across the whole year would show a December run rate of $2,400,000, double what it actually earns. The same happens in reverse in a quiet month. If your revenue moves with the seasons, annualise a full quarter, or compare with the same period last year.
Checking run rate against the last 12 months
Trailing twelve months (TTM) revenue is what you actually earned over the past year. Comparing it with run rate tells you which way revenue is moving.
- Run rate above TTM: revenue is growing, or the period was unusually strong. In the sample, $1,020,000 is 13.3% above $900,000 of TTM revenue, and 6.7% above without one-offs.
- Run rate below TTM: revenue is slowing, or the period was quiet.
- A large gap in either direction is worth checking. A single large deal or a seasonal peak is the usual cause.
Common mistakes
- Annualising a week. Short periods swing a lot. One big invoice in a week adds 52 of them to the run rate.
- Picking the best month. Use the most recent complete period, not the strongest one.
- Mixing billed and collected revenue. Pick one basis and stick to it, so the number means the same thing every month.
- Treating run rate as a forecast. It ignores growth, churn, price changes and pipeline. Use it to show current pace, then build a forecast separately.
Related tools
See only the recurring part of revenue with the ARR Calculator, track monthly subscription movements with the MRR Calculator, and check your wider numbers with the SaaS Metrics Calculator. If you need more revenue to annualise, see our services.