Financial Models

One of the interesting strategies SaaS or recurring revenue service startups use to grow and gain new customers is using a freemium model. This excel template lets the user drive various levers that result in a 5-year financial forecast (monthly and annual views) with specific logic tailored to a freemium launch.

Freemium just means that the business lets users experience their app or service for free, but then either transfers over to a fee only model or lets the user improve their experience by paying a monthly fee. Additionally, this type of strategy involves earning revenue by displaying ads to free users. The inputs that are used to drive this include: Start year of Project, Start month of traffic, Percentage of traffic that converts to free users, Month free service starts, Average monthly impressions per free user, Average CPM earned from displaying ads, Average monthly churn of free user pool, Expected Monthly Conversion From Free Pool to Paid by Year, Price of Paid Service per Month by Year, Churn of Paid Pool to Free Pool per Month by Year, Churn of Paid Pool to Closed Account per Month by Year, % of Traffic Directly to Paid Service. There is a fixed operating expense schedule for the user to define each line item start month and monthly cost per year over five years as well as future CapEx and startup costs. Equity requirements based on startup costs / burn will populate and there is a monthly/annual detail that shows EBITDA/Cash flow and cumulative cash as well as a high level executive summary that displays key financial line items. A lot of visuals are displayed as well as key metrics like CaC, LTV, LTV to CaC ratio, and average months to pay back CaC.