Calculate annual revenue run rate from any period's revenue — project ARR from Q1 earnings, monthly revenue, or partial-year figures with optional growth rate compounding.
Run rate is an annualized estimate of revenue based on a shorter period's actual results.
It's widely used when you don't have a full year of data — at a company's early stage,
after a major shift, or when reporting partial-year results.
The formula
Annual Run Rate = (Period Revenue / Period Months) × 12
At $250k revenue over 3 months: ($250k / 3) × 12 = $1,000,000 ARR run rate.
Run rate vs ARR
In SaaS, ARR (Annual Recurring Revenue) is calculated from your current MRR:
ARR = MRR × 12. This is precise and based on contracted recurring revenue.
Run rate is a more general term for any revenue annualized. It can apply to
total revenue (including one-time), service revenue, or transactional revenue —
not just subscription revenue.
For pure SaaS businesses: use ARR, not run rate. ARR is more accurate because
it's based on contracted recurring revenue, not a period average that may be skewed
by seasonality or one-time items.
For non-SaaS businesses: run rate is the correct term.
When run rate is misleading
Seasonality: A retailer who earns $500k in December but annualizes to $6M ARR
is not a $6M/year business.
Growth periods: Annualizing January revenue when you're growing 10% MoM will
significantly understate full-year revenue.
One-time items: Large consulting contracts or one-time sales inflate run rate
without representing sustainable recurring revenue.
Use compound growth rate projection for growing businesses — the calculator supports
this with the optional monthly growth rate input.
Frequently asked questions
What does this calculator do?
Calculate annual run rate from any period's revenue, with optional compound growth
projection to estimate forward revenue.
What Is Revenue Run Rate? Formula, Examples, and When to Use It
Revenue run rate annualizes a shorter period's revenue. Learn the formula, examples, limitations, and when run rate is (and isn't) a reliable metric.
Revenue run rate answers: "If the business keeps growing at this pace, what would
annual revenue be?" It's a forward-looking estimate, not a guarantee.
Formula: Annual Run Rate = (Period Revenue / Period Months) × 12
Common use cases
Q1 results: A company with $250k in Q1 has a $1M run rate
Monthly reporting: A company with $100k MRR has a $1.2M run rate
Investor communication: "We're at a $2M run rate and growing 15% MoM"
When run rate is reliable
Run rate is most reliable when:
- Revenue is stable month-over-month (low seasonality)
- The measurement period is representative
- No large one-time items distort the period
When run rate is misleading
Seasonality: December retail revenue × 12 ≠ annual revenue
One-time contracts: A $200k consulting deal inflates the monthly run rate
High growth: Growing 15% MoM means last month's run rate understates full-year revenue
For growing businesses, use compound growth projection instead of simple annualization.
Revenue Run Rate vs ARR: Key Differences for SaaS Founders
Run rate and ARR both annualize revenue, but ARR is specific to contracted recurring subscriptions. Learn when to use each and how they differ.
The confusion between run rate and ARR is common — especially for SaaS companies
in early stages where the distinction matters most.
ARR: Annual Recurring Revenue
ARR = Current MRR × 12
ARR is based on contracted, recurring subscription revenue. It represents the
forward-looking annual value of your current subscription base — only counting
revenue you have under contract.
How to Calculate Revenue Run Rate: Step-by-Step Guide
Step-by-step guide to calculating revenue run rate from monthly, quarterly, or YTD revenue figures, with examples and growth-adjusted projection.
Calculating run rate takes three inputs: period revenue, period length, and
optionally a growth rate. Here's the step-by-step process.
Step 1: Choose your measurement period
Pick a recent period that's representative of your current business:
- Last month: Best for fast-growing businesses; most current data
- Last quarter: Smooths monthly volatility; standard for investor reporting
- Last 6 months: Good for seasonal businesses; removes recent spikes
Avoid periods with known outliers: unusually large contracts, product launches,
or seasonal peaks.
Step 2: Calculate monthly average revenue
Monthly Average = Period Revenue / Number of Months
At $750k over the last 3 months: $750k / 3 = $250k/month average.
Step 3: Annualize
Annual Run Rate = Monthly Average × 12
$250k × 12 = $3,000,000 annual run rate.
Step 4: Apply growth adjustment (optional)
For growing businesses, simple annualization understates forward revenue.
With 8% monthly growth: Month 12 revenue will be $250k × (1.08)^11 ≈ $582k/month.
12-month total ≈ $4.6M — 53% higher than the simple run rate of $3M.