This is a pain point for any finance department or CFO or consultant that is charged with producing regular rolling revenue forecasts for a SaaS company. The future customers are not so bad, but figuring out the best way to account for revenue of existing customers is much more difficult if you want to do it properly. This involves knowing when customers joined, retention rates, and easily being able to update this over time to continue to get good numbers. The template you see here accomplishes just that.
Update: Annual revenue tab added (annual revenue from MRR)
This template allows for up to 4 pricing tiers to be modeled. A 'tier' is essentially separated by the average contract length (months), average value of each contract per month, and the retention rate in the contract period. Yes! This model works fine no matter if you need to create a forecast for month-to-month services or specific contract length services, no matter if it is 3/6/12/24 or what have you.
This is also a good way to test out different scenarios of a single customer tier based on assumptions of retention rate over various average contract lengths. For example, if you do 12-month contract vs. 1 month contracts and an assumed retention rate of each, which one produces more revenue? Those are the kinds of things that can be done here as well.
There are visualizations to make it easy to see the forecast results. Revenue and customers are displayed based on the customer tier, new / existing cohorts, and aggregated into sub-totals / grand totals.
The model is good for looking at operations that are 5 years old and does a forecast for up to 5 years into the future by month. If you have customers older than 5 years, that is fine and there is a workaround for the correct data entry as you see in the video.
In general, each time you create a new forecast (no matter if you are doing it every month or quarter) is that you slide the historical customers acquired over and enter new data into the most recent months. This is the least difficult and most accurate way to produce such a revenue forecast for SaaS. The reason why is that you need to know cohort retention and the timing of when customers joined to best show their expected future revenues.
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
- Freemium
- 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
- Ad Network
- Car Wash - With Membership Option
- Private Golf Course - Membership Fees
- Customer Spend Patterns