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.

## 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 (\$)

## 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?

1. 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.

2. 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.

3. 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.