Definition
Run rate is a normalized revenue pace (such as MRR) used to project annualized performance.
Why it matters
Run rate helps you compare periods and set targets, but it can mislead if revenue is seasonal or volatile.
Pricing implications
Price changes affect run rate quickly, but you should validate against churn and cohort retention to avoid overestimating long-term impact.
Measurement tips
Use a stable month or a rolling average to avoid outliers.
Checklist
- Use consistent definitions (MRR, ARR).
- Avoid using a single peak month as run rate.
- Separate run rate from bookings and cash collected.
- Normalize annual contracts to monthly equivalents.
- Use cohort churn to validate run-rate projections.
- Recompute run rate after pricing changes.
- Document the method in reporting dashboards.
- Align run rate with finance reporting cadence.