Why Run Rate Matters More Than You Think
Every SaaS founder I talk to obsesses over monthly bookings. But here's the truth: run rate tells you if your business is actually growing or just having a good month.
A revenue run rate takes your actual monthly or quarterly revenue and annualizes it. Simple concept, but most founders calculate it wrong—using last month alone instead of averaging multiple periods.
The Right Way to Calculate Run Rate
1. Get Your Monthly Data
Pull 12–24 months of actual revenue. Don't guess—use your real numbers.
2. Calculate Multiple Bases
- Current month × 12 (snapshot, volatile)
- 3-month average × 12 (smooths seasonality)
- 12-month average × 12 (most accurate for annual plans)
3. Add Growth Projections
Use your actual month-over-month growth rate to project forward 12 months.
4. Track NRR
Net Revenue Retention is your silent growth engine. Track expansions minus churn as a percentage of starting revenue.
The Tool I Built
I got tired of doing this manually every month, so I built a Revenue Run Rate Calculator in Google Sheets that does all of this automatically.
It includes:
- Monthly revenue input with auto-averages (3mo, 6mo, 12mo)
- MRR/ARR calculator with 4 different bases
- NRR tracker with cohort analysis
- Forward projection with best/median/worst cases
- Dashboard with 4 pre-built charts
- SaaS metrics reference sheet
Grab the template here: Revenue Run Rate Calculator — Google Sheets
Quick Formula Cheat Sheet
If you want to DIY:
-
=AVERAGE(last_3_months)*12→ 3-mo average ARR -
=(current - previous) / previous→ MoM growth -
=(start_mrr + expansions - churn) / start_mrr→ NRR
The Bottom Line
Run rate isn't just a vanity metric. It tells you:
- Are you accelerating, decelerating, or flat?
- Is your growth real or just a lucky month?
- What's your realistic annual revenue range?
Stop guessing. Start tracking.
P.S. The Google Sheets template comes with 3 sample datasets (SaaS, subscription, consultancy) so you can test before using your real data.
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