function calculateRunRate() {
var revenueInput = document.getElementById('currentRevenue');
var periodSelect = document.getElementById('periodType');
var resultDiv = document.getElementById('resultDisplay');
var errorDiv = document.getElementById('errorDisplay');
var revenue = parseFloat(revenueInput.value);
var periodFactor = parseFloat(periodSelect.value);
// Validation
if (isNaN(revenue) || revenue < 0) {
errorDiv.style.display = 'block';
resultDiv.style.display = 'none';
return;
}
errorDiv.style.display = 'none';
// Logic for Annualization
// We first normalize everything to a Monthly Run Rate (MRR)
var mrr = 0;
// If period is weeks (0.25 approx for calculation logic relative to months)
// More precise: 1 week = 7 days. Year = 52 weeks. Month = 4.33 weeks.
if (periodFactor === 0.25) {
// Weekly input
var annualRev = revenue * 52;
mrr = annualRev / 12;
} else {
// Monthly based inputs (1, 3, 6, 12)
mrr = revenue / periodFactor;
}
var arr = mrr * 12;
var quarterly = mrr * 3;
// Formatting currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2,
maximumFractionDigits: 2
});
// Update DOM
document.getElementById('arrOutput').innerHTML = formatter.format(arr);
document.getElementById('mrrOutput').innerHTML = formatter.format(mrr);
document.getElementById('qrrOutput').innerHTML = formatter.format(quarterly);
resultDiv.style.display = 'block';
}
How to Calculate Revenue Run Rate (Rev Rate)
Revenue Run Rate (often shortened to "Rev Rate" or simply "Run Rate") is a financial performance indicator used widely by startups, SaaS companies, and businesses with recurring revenue models. It allows business owners and investors to predict future annual revenue based on the financial data of a shorter, recent time period.
Essentially, calculating your rev rate answers the question: "If we continue to perform exactly as we did in this recent period for the rest of the year, how much money will we make?"
The Revenue Run Rate Formula
The calculation is straightforward. You take the revenue generated in a specific period and multiply it by the number of those periods in a year. The most common variation is the Annual Recurring Revenue (ARR) calculation based on one month of data.
Basic Formula: Run Rate = Revenue in Period × (365 / Days in Period)
Monthly Formula: Annual Run Rate = Monthly Revenue × 12
Quarterly Formula: Annual Run Rate = Quarterly Revenue × 4
Example Calculation
Imagine a software company generated $50,000 in revenue last month. To calculate their Annual Run Rate:
Input: $50,000 (Monthly Revenue)
Calculation: $50,000 × 12
Result: $600,000 Annual Run Rate
Why is Revenue Run Rate Important?
Forecasting: It provides a quick snapshot of annual performance without waiting for the year to end.
Valuation: Investors often value young companies based on a multiple of their ARR (Annual Run Rate) rather than trailing yearly revenue.
Budgeting: It helps in planning expenses by projecting future cash flow availability.
Risks and Considerations
While calculating rev rate is a powerful tool, it assumes that the current conditions will persist unchanged. It does not automatically account for:
Seasonality: If you calculate run rate based on December (often a high-sales month), you may overestimate your annual revenue.
Churn: Losing customers can decrease revenue, which a simple run rate calculation might miss if looking only at gross revenue.
One-time Fees: Including non-recurring setup fees in a run rate calculation can inflate the projection inaccurately.
Use the calculator above to quickly determine your ARR, MRR, and quarterly projections based on your most recent financial data.