Why is my Run Rate higher than my Revenue?

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0:00 - What is Run Rate?
1:42 - What is ARR?
0:45 - Spreadsheet Example
2:55 - Outro

Run Rate is an imaginary number, which is our current monthly revenue multiplied by 12 (to annualize it).

Run Rate imagines that we neither add nor subtract any customers for the next year (which is why it's imaginary).

ARR (annual recurring revenue) is also an imaginary number.

ARR answers the question, "What if we all of this month's subscription (recurring) revenue and multiplied it by 12?"

ARR imagines that we neither add nor subtract any subscriptions for the next year (which is why it's imaginary).

So Run Rate includes all revenue vs. ARR only includes subscriptions (recurring)

One more thing: To calculate ARR (annual recurring revenue) correctly, we need to understand MRR (monthly recurring revenue).

Here's a quick video on MRR:

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[ronaldgarrett]

Hi Mike and team, thanks much for all. Alert the Globe would love some one on ones!! Thank you