Enter the total revenue per period and the total period per year into the calculator to determine the run rate of the company or SaaS.
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Run Rate Formula
The following formula is used to calculate a run rate.
RR = RP * PPY
- Where RR is the run rate ($/year)
- RP is the revenue per period ($)
- PPY is the periods per year ($)
To calculate a run rate, multiply the revenue per period by the number of periods.
Run Rate Definition
What is a run rate? A run rate is defined as the total annual revenue earned by a business. Typically, run rate is used when analyzing SaaS (software as a service) businesses.
Run Rate Example Problem
How to calculate a run rate?
- First, determine the total revenue per period.
For this example, we are analyzing a SaaS that has a total revenue of $500,000.00 per quarter.
- Next, determine the total period per year.
Since we have revenue per quarter, we know that there are 4 total financial quarters in a year.
- Finally, calculate the run rate.
Using the formula, we determine the run rate to be: 500,000 * 4 = $2,000,00.00 per year.
Run Rate Information
What is run rate used for? A run rate is used in financial modeling to predict the future revenue of a company of a time period of longer than the current period. So, if we know the revenue for any period, we can extrapolate the projected revenue for a say a year or more.
Is run rate revenue? Run rate is a measure of revenue per year.