FinOps & process
Run-rate
Current spend annualized, or projected to month-end, as if the recent pace continued unchanged. It is a quick but naive look forward.
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Definition
Run-rate takes a recent, representative period of spend and extends it forward at the same pace. A common shorthand is "current monthly spend times 12" for an annualized figure. It is quick to compute and easy to explain. That makes it the usual starting point for forecasting and budget talks.
Its weakness is the same as its strength. It assumes the recent pace is representative. That fails around known step-changes. A new commitment may start. A feature launch may be planned. Usage may swing with the season. A naive run-rate cannot see these coming.
Where it shows up
Run-rate is a simple computed figure. The usual form is current monthly spend times twelve, for an annualized number. You can take it straight from the monthly total in a billing console. No separate forecasting tool is needed to produce it, and none is needed to explain it.
What makes it expensive
Run-rate assumes that next month looks like this one. Around a known step-change, it will not. A commitment may be about to start. A feature launch may already be scheduled. A naive extrapolation cannot see either. The fix is not a better formula. The fix is to ask what is already on the calendar.
Related
The invoice is a lagging signal.
A monthly invoice tells you what already happened. CostMon builds a daily baseline, so a spike stands out while you can still act on it.