Revenue Modeling
Creating a Revenue Model for SaaS Subscription Businesses
This prompt helps finance teams develop a detailed revenue model tailored to SaaS subscription businesses. It focuses on projecting recurring revenue, churn impact, and growth scenarios, providing a robust framework for financial planning and strategy.
Responsible:
Finance
Accountable, Informed or Consulted:
Finance, Leadership, Product
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:
Compile historical data on subscription revenue, churn, and customer acquisition rates.
Define pricing tiers and the breakdown of customer segments (e.g., SMB, enterprise).
Use tools like Excel, Google Sheets, or SaaS-specific platforms like ChartMogul for dynamic modeling.
THE PROMPT
Help design a revenue model for [specific software startup] with a SaaS subscription-based revenue model. Focus on:
Recurring Revenue Projections: Recommending methods to estimate income, such as, ‘Calculate MRR (Monthly Recurring Revenue) and ARR (Annual Recurring Revenue) based on subscription tiers and customer acquisition goals.’
Churn Impact Analysis: Suggesting ways to account for attrition, like, ‘Incorporate historical churn rates to estimate customer cancellations and their impact on revenue projections.’
Growth Scenarios: Proposing methods to model expansion, such as, ‘Develop conservative, neutral, and aggressive growth scenarios based on varying customer acquisition and retention rates.’
Upsell and Cross-Sell Opportunities: Including revenue enhancements, such as, ‘Estimate additional income from upselling to higher tiers or cross-selling related services or add-ons.’
Visualization and Tracking: Recommending tools for reporting, such as, ‘Use spreadsheets or financial modeling platforms to create dynamic dashboards for tracking revenue trends and projections.’
Provide a comprehensive SaaS revenue model that aligns with subscription business strategies. If additional details about pricing tiers, customer base, or churn data are needed, ask clarifying questions to refine the model.
Bonus Add-On Prompts
Propose strategies for incorporating freemium-to-paid conversion rates into SaaS revenue models.
Suggest methods for forecasting revenue from enterprise accounts versus SMBs in a subscription framework.
Highlight techniques for modeling the impact of pricing changes on long-term revenue projections.
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 modeling revenue for specific subscription types, such as annual plans or pay-as-you-go.
Include tips for integrating expansion revenue from geographic or market-specific growth.
Propose ways to simulate the financial impact of promotional discounts or trials.
Highlight tools like Baremetrics or ProfitWell for automated revenue tracking and insights.
Add suggestions for linking revenue models to customer acquisition cost (CAC) analysis.
WHEN TO USE
To develop financial forecasts for SaaS subscription revenue.
During planning for product launches or pricing adjustments.
To align revenue growth goals with operational and marketing strategies.
WHEN NOT TO USE
For non-subscription business models or one-time payment products.
If historical data is insufficient to create accurate projections.