Financial Forecasting
Creating a Revenue Forecast Model for Subscription-Based Businesses
This prompt helps finance teams develop a revenue forecast model tailored to subscription-based businesses. It focuses on using customer metrics like churn, MRR, and customer acquisition to predict short-term and long-term revenue trends.
Responsible:
Finance
Accountable, Informed or Consulted:
Finance, Leadership, Sales
THE PREP
Creating effective prompts involves tailoring them with detailed, relevant information and uploading documents that provide the best context. Prompts act as a framework to guide the response, but specificity and customization ensure the most accurate and helpful results. Use these prep tips to get the most out of this prompt:
Gather historical revenue data, including MRR and churn rates.
Analyze marketing and sales plans to estimate new customer acquisition.
Define pricing tiers and customer segments for detailed forecasts.
THE PROMPT
Help design a revenue forecast model for [specific software startup] with a subscription-based revenue model. Focus on:
MRR Analysis: Providing strategies to calculate Monthly Recurring Revenue (MRR), such as, ‘Sum up the revenue from all active subscriptions and track changes from new sign-ups, upgrades, downgrades, and cancellations.’
Churn Impact: Suggesting methods to incorporate churn, like, ‘Use historical churn rates to estimate the percentage of subscribers likely to cancel each month and its impact on revenue.’
Customer Growth Projections: Including new customer acquisition, such as, ‘Base acquisition forecasts on marketing and sales plans, including conversion rates and planned campaigns.’
Scenario Planning: Recommending ways to create multiple projections, like, ‘Develop optimistic, conservative, and neutral scenarios to account for market or operational uncertainties.’
Visualization and Tracking: Suggesting tools, such as, ‘Use spreadsheets or financial software to create visual dashboards showing monthly revenue trends, growth rates, and churn projections.’
Provide a revenue forecast model template that aligns with subscription-based revenue goals and ensures accuracy in financial planning. If additional details about pricing tiers, user base, or churn are needed, ask clarifying questions to refine the model.
Bonus Add-On Prompts
Propose strategies for factoring in seasonal fluctuations or promotional impacts on subscription revenue.
Suggest methods for tracking and forecasting the effects of free-to-paid conversion rates.
Highlight techniques for integrating product usage data into revenue growth forecasts.
Use AI responsibly by verifying its outputs, as it may occasionally generate inaccurate or incomplete information. Treat AI as a tool to support your decision-making, ensuring human oversight and professional judgment for critical or sensitive use cases.
SUGGESTIONS TO IMPROVE
Focus on specific subscription types, like freemium, tiered plans, or annual contracts.
Include tips for forecasting upgrades and cross-sell opportunities within the subscription base.
Propose ways to incorporate macroeconomic trends into revenue forecasts.
Highlight tools like Baremetrics or ProfitWell for automating subscription revenue tracking.
Add suggestions for integrating renewal rates into long-term forecasts.
WHEN TO USE
To project revenue trends for subscription-based business models.
During financial planning cycles to align forecasts with growth goals.
When preparing for fundraising or stakeholder reporting.
WHEN NOT TO USE
For non-recurring revenue models or one-time sales businesses.
If customer data is insufficient or unreliable for accurate projections.