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.
The Revenue Run Rate Calculator applies compound growth automatically.