$45.00 USD
Update: Formal financial statements have been added (Income Statement, Balance Sheet, and Cash Flow Statement) monthly and annual as well as a capitalization table / capex w/depreciation and improved global control assumptions.
Looking at the financial model itself, this build has a clean and comprehensive flow from start to finish. You have revenue assumptions that give inputs for monthly traffic, conversion of that traffic to some free pool and then conversion of users in the free pool to the paid subscription pool.
There is logic for traffic growth, changes in conversion %'s over time, churn, movement from paid back to free, and the price charged for the paid service.
The user can dynamically change the start month for traffic, free pool, and paid pool. The idea is to enable all kinds of strategic planning features.
Next up are the expense assumptions. I have included the primary cost categories (G&A, S&M, and R&D). There is also two types of COGS (cost of goods sold). One relates to a direct % of revenue while the other is defined by a $ amount per user. You can easily zero out any of the revenue or expense assumptions if they are not applicable to you.
Startup costs, CapEx, and financing options are also included.
All of these financial configurations get aggregated to a monthly and annual pro forma detail and that is rolled into an executive summary so just the main high-level information is available and if you want to dig down into it, you can.
I have included a place to enter monthly depreciation and income taxes if applicable and that all enables the user to get down to a true expected free cash flow. From that, you can then calculate an equity requirement and the free cash flow return on that equity requirement.
So, let's first describe what a freemium business model means. It can exist a few different ways, but the general concept is you get people to join some kind of free service and in return for them getting this free service the user has to watch display ads. The company then makes ad revenue from this.
It doesn't have to be that strict of a definition though, this kind of business can also entail having a wide range of service offerings, some of those services being free and then some only available if you pay. The paid services would be things that offer more value to the customer.
The upsell mechanism to motivate users to move from the free service version to a paid service version can be tricky. The paid version may include more advanced services or simply not include ads or some combination. You see this a lot with streaming services that may also offer in-app purchases or more channels / content for a higher monthly price.
This business model has come into existence for all kinds of large organizations and starting with something free has been a highly successful customer acquisition strategy for new businesses that have services that may be hard to expose people to if they weren't first given free access. Everyone loves free, even if it means being exposed to ads. You see nearly all major PaaS businesses using this strategy (Google Cloud Platform, Adobe Creative Cloud, Shopify, Amazon Web Services).
Your business strategy could be that the ads are not directly for monetization, but rather to upsell customers to high-end paid services.
The upsell mechanism to motivate users to move from the free service version to a paid service version can be tricky. The paid version may include more advanced services or simply not include ads or some combination. You see this a lot with streaming services that may also offer in-app purchases or more channels / content for a higher monthly price.
This business model has come into existence for all kinds of large organizations and starting with something free has been a highly successful customer acquisition strategy for new businesses that have services that may be hard to expose people to if they weren't first given free access. Everyone loves free, even if it means being exposed to ads. You see nearly all major PaaS businesses using this strategy (Google Cloud Platform, Adobe Creative Cloud, Shopify, Amazon Web Services).
Your business strategy could be that the ads are not directly for monetization, but rather to upsell customers to high-end paid services.
Looking at the financial model itself, this build has a clean and comprehensive flow from start to finish. You have revenue assumptions that give inputs for monthly traffic, conversion of that traffic to some free pool and then conversion of users in the free pool to the paid subscription pool.
There is logic for traffic growth, changes in conversion %'s over time, churn, movement from paid back to free, and the price charged for the paid service.
The user can dynamically change the start month for traffic, free pool, and paid pool. The idea is to enable all kinds of strategic planning features.
Next up are the expense assumptions. I have included the primary cost categories (G&A, S&M, and R&D). There is also two types of COGS (cost of goods sold). One relates to a direct % of revenue while the other is defined by a $ amount per user. You can easily zero out any of the revenue or expense assumptions if they are not applicable to you.
Startup costs, CapEx, and financing options are also included.
All of these financial configurations get aggregated to a monthly and annual pro forma detail and that is rolled into an executive summary so just the main high-level information is available and if you want to dig down into it, you can.
I have included a place to enter monthly depreciation and income taxes if applicable and that all enables the user to get down to a true expected free cash flow. From that, you can then calculate an equity requirement and the free cash flow return on that equity requirement.
For pricing help, see this SaaS pricing simulator.
More Subscription / Membership Recurring Revenue Financial Models:
More Subscription / Membership Recurring Revenue Financial Models:
- B2C SaaS Model for AI-Powered Platforms
- SaaS CFO Dashboard
- Data-as-a-Service (DaaS)
- Function-as-a-Service (FaaS)
- Subscription Box
- B2B/B2C SaaS with 3 Pricing Tiers
- Marketplace
- 5 Tier SaaS Driven by Traffic Conversion
- Customer Cohort Modeling (historical data analysis)
- Marketplace + Subscription
- Product + Service Subscription
- SaaS Pricing and Margin Simulator
- Product-as-a-Service (PaaS)
- Basic 4 Tier SaaS with One-time Onboard Fee Option
- Security Monitoring Service: 3 Tiers
- Ratio-Driven SaaS
- General Mobile App
- LaaS - Lending as a Service
- Property Management Business
- Professional Services Firm / Talent Agency
- Mobile App / SaaS Ad Spend Guide
- SaaS MRR Calculator
- SaaS Rolling Revenue Forecast
- Ad Network
- Car Wash - With Membership Option
- Private Golf Course - Membership Fees
- Customer Spend Patterns
