The run rate isn't just useful for building your pitch deck: Many companies track and report on the run rate regardless of what stage of growth they are in. The run rate is a simple way to extrapolate incomplete data for an observation period.
How to Calculate the Run Rate
If a time period is not yet completed, e.g. the current week or month, RX will extrapolate based on the actual values how the period will end up.
Before you dive into data analysis, let's ensure that we are on the same page by taking a look at an example:
- Today is the 4th of January; thus, you already have the data for the first 3 days of the month
- You already have revenue of €3k, which leads to an average revenue per day of €1k
- As January has 31 days, 28 are still missing, but the total revenue for the month can be extrapolated by calculating:
Run rate: 28 x €1k + €3k = €31k
The run rate is always marked accordingly in your RX account.
Please note that the Run Rate is only useful for metrics for which an average per period is not already calculated. In addition, we must be looking at a time series report.