Financial Model Template Financial Model Template Financial Model Template

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<p>Lifetime value metrics for subscription / a la businessesSummary</p> <p>Author:</p> <p>Author blog:</p> <p>Last updated: License Note:</p> <p>This spreadsheet lets you play around with your viral growth, how your revenue sourc how your financial model interacts with your paid user acquisition strategy (namely: b when it costs less than their Lifetime Value [LTV]). Try it out by changing the variable VARIABLES page!</p> <p>fetime value metrics for subscription / a la carte businessesv1: Based on the retention rate, ARPU, and registration funnel, what is your LTV? And can you reinvest that LTV cash profitably to acquire more users via paid acquisition? v2: With evidence from the growth of social networks, the viral growth model was changed to a more accurate population growth equation. The "OVERVIEW + VARIABLES" sheet was added to quickly alter variables and show the results to interested parties (or potential investors). Aidan Nulman (aidan@youphonics.com) Andrew Chen (voodoo@gmail.com) Daniel James (Three Rings) http://youphonics.posterous.com http://andrewchenblog.com http://thefloggingwillcontinue.com 4/27/2010 Distributed for free under GNU Free Documentation License - http://www.gnu.org/copyleft/fdl.html If you have questions, anything to add, or want to generally chat, don't hesitate to reach me at my e-mail address, voodoo [at] gmail --Andrew Chen Likewise! aidan [at] youphonics. Also, if you're looking for a template for your pitch deck, benefit from my research and download this spreadsheet's companion at http://aidannulman.com/2010pitch-template --Aidan Nulman</p> <p>readsheet lets you play around with your viral growth, how your revenue sources work, and ur financial model interacts with your paid user acquisition strategy (namely: buy users costs less than their Lifetime Value [LTV]). Try it out by changing the variables on the LES page!</p> <p>PAID USER ACQUISITIONMonthly ad spend increase Google CPC # of impressions CTR Signup % Ad.com CPM # of impressions CTR Signup % 5%</p> <p>USER METRICSPopulation Pop. at Day 0 Carrying constant Growth rate Retention rate Miscellaneous Free-to-pay conversion Cost of service (per user) 1000 100,000,000 30% 80%</p> <p>$1.00 25,000 1.0% 10%</p> <p>1% $0.68</p> <p>$1.00 250,000 0.5% 20%</p> <p>Ad spend versus Revenue$1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16</p> <p>REVENUE MODELPro Average monthly revenue Adoption rate (% of total paid) Partner Average monthly revenue Adoption rate (% of total paid) More options can be added Average monthly revenue More adoption (% of total paid) $10.00 90.0%</p> <p>$15.00 8.0%</p> <p>$2,000.00 2.0%</p> <p>Revenue Total cost</p> <p>16</p> <p>17</p> <p>18</p> <p>19</p> <p>20</p> <p>21</p> <p>22</p> <p>23</p> <p>24</p> <p>Paid user acquisition modelSource Google Ad.com CPM $1.00 Total CPC $1.00 CPA Impressions 25,000 250,000 275,000 CTR 1.00% 0.50% 0.55% Clicks 250 1250 1500</p> <p>odelSignup % Registered users 10% 25 20% 250 18% 275 $ Cost $250 $250 500.00 $ CPA $10.00 $1.00 1.82</p> <p>User funnel aFree-to-pay conversion CPA (unadjusted for virality) $ New registered uu / week Ad spend increase % Carrying constant Growth rate 1% 1.82 275 5% 100,000,000 30.00% time period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 viral acq users 1,000 382 584 850 1,200 1,661 2,264 3,054 4,086 5,433 7,190 9,481 12,464 16,347 21,401 27,973 36,519 47,623 62,046 80,769 105,056 136,535 177,292 229,990 bought users 275 289 303 318 334 351 369 387 406 427 448 470 494 519 544 572 600 630 662 695 730 766 804 845</p> <p>900,000 800,000 700,000</p> <p>600,000 Total users 500,000 400,000 300,000 200,000 100,000 1 2 3 4 5 6</p> <p>User funnel and simple virality</p> <p>$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $</p> <p>ad spend 500.00 525.00 551.25 578.81 607.75 638.14 670.05 703.55 738.73 775.66 814.45 855.17 897.93 942.82 989.97 1,039.46 1,091.44 1,146.01 1,203.31 1,263.48 1,326.65 1,392.98 1,462.63 1,535.76</p> <p>total new users 1,275 671 887 1,168 1,535 2,012 2,633 3,441 4,492 5,860 7,638 9,951 12,958 16,866 21,945 28,545 37,119 48,253 62,708 81,464 105,785 137,301 178,096 230,835</p> <p>paying users cumulative users 13 1,275 7 1,946 9 2,833 12 4,002 15 5,536 20 7,548 26 10,181 34 13,622 45 18,114 59 23,974 76 31,612 100 41,563 130 54,521 169 71,387 219 93,332 285 121,877 371 158,996 483 207,250 627 269,957 815 351,421 1,058 457,206 1,373 594,507 1,781 772,604 2,308 1,003,439</p> <p>Cumulative users over time</p> <p>7</p> <p>8</p> <p>9</p> <p>10</p> <p>11</p> <p>12</p> <p>13</p> <p>14</p> <p>15</p> <p>16</p> <p>17</p> <p>18</p> <p>19</p> <p>20</p> <p>Time period</p> <p>cum. paying users 13 19 28 40 55 75 102 136 181 240 316 416 545 714 933 1,219 1,590 2,072 2,700 3,514 4,572 5,945 7,726 10,034</p> <p>adj CPA $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 0.39 0.78 0.62 0.50 0.40 0.32 0.25 0.20 0.16 0.13 0.11 0.09 0.07 0.06 0.05 0.04 0.03 0.02 0.02 0.02 0.01 0.01 0.01 0.01</p> <p>20</p> <p>21</p> <p>22</p> <p>23</p> <p>retention rate %</p> <p>80%</p> <p>Paying user retention matrix1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 paying users 1 13 2 10 19 3 8 16 28 4 7 12 23 40 5 5 10 18 32 55 6 4 8 15 26 44 75</p> <p>Time-period cohorts</p> <p>13</p> <p>30</p> <p>52</p> <p>82</p> <p>121</p> <p>172</p> <p>Total users (paying and free) retention m1 2 3 4 5 6 7 8 9 10 Time-period cohorts 1 1,275 2 1,020 671 3 816 537 887 4 653 430 710 1,168 5 522 344 568 935 1,535 6 418 275 454 748 1,228 2,012</p> <p>Time-period cohorts</p> <p>11 12 13 14 15 16 17 18 19 20 21 22 23 24 paying users 1,275 1,691 2,240 2,960 3,903 5,134</p> <p>User retention</p> <p>7 3 6 12 20 35 60 102</p> <p>8 3 5 9 16 28 48 81 136</p> <p>9 2 4 7 13 23 39 65 109 181</p> <p>Time period 10 11 2 1 3 3 6 5 10 8 18 15 31 25 52 42 87 70 145 116 240 192 316</p> <p>12 1 2 4 7 12 20 33 56 93 153 253 416</p> <p>13 1 2 3 5 9 16 27 45 74 123 202 333 545</p> <p>14 1 1 2 4 7 13 21 36 59 98 162 266 436 714</p> <p>239</p> <p>328</p> <p>443</p> <p>594</p> <p>792</p> <p>1,049</p> <p>1,384</p> <p>1,821</p> <p>) retention matrix7 334 220 363 598 982 1,609 2,633 8 267 176 291 479 786 1,288 2,106 3,441 9 214 141 233 383 629 1,030 1,685 2,753 4,492 10 171 113 186 306 503 824 1,348 2,202 3,594 5,860 11 137 90 149 245 402 659 1,078 1,762 2,875 4,688 12 110 72 119 196 322 527 863 1,409 2,300 3,750 13 88 58 95 157 257 422 690 1,128 1,840 3,000 14 70 46 76 125 206 338 552 902 1,472 2,400</p> <p>7,638</p> <p>6,111 9,951</p> <p>4,889 7,961 12,958</p> <p>3,911 6,369 10,366 16,866</p> <p>6,740</p> <p>8,833</p> <p>11,559</p> <p>15,107</p> <p>19,724</p> <p>25,730</p> <p>33,542</p> <p>43,699</p> <p>15 1 1 2 3 6 10 17 29 47 79 129 213 349 571 933</p> <p>16 0 1 2 3 5 8 14 23 38 63 104 170 279 457 747 1,219</p> <p>17 0 1 1 2 4 6 11 18 30 50 83 136 223 366 597 975 1,590</p> <p>18 0 1 1 2 3 5 9 15 24 40 66 109 179 292 478 780 1,272 2,072</p> <p>19 0 0 1 1 2 4 7 12 19 32 53 87 143 234 382 624 1,018 1,658 2,700</p> <p>20 0 0 1 1 2 3 6 9 16 26 42 70 114 187 306 499 814 1,326 2,160 3,514</p> <p>21 0 0 1 1 2 3 4 7 12 21 34 56 91 150 245 399 651 1,061 1,728 2,811 4,572</p> <p>22 0 0 0 1 1 2 4 6 10 16 27 45 73 120 196 319 521 849 1,382 2,249 3,658 5,945</p> <p>2,390</p> <p>3,131</p> <p>4,095</p> <p>5,348</p> <p>6,978</p> <p>9,097</p> <p>####</p> <p>15,425</p> <p>15 56 37 61 100 165 270 442 722 1,178 1,920</p> <p>16 45 30 49 80 132 216 353 577 942 1,536</p> <p>17 36 24 39 64 105 173 283 462 754 1,229</p> <p>18 29 19 31 51 84 138 226 369 603 983</p> <p>19 23 15 25 41 67 111 181 296 482 786</p> <p>20 18 12 20 33 54 88 145 236 386 629</p> <p>21 15 10 16 26 43 71 116 189 309 503</p> <p>22 12 8 13 21 35 57 93 151 247 403</p> <p>3,129 5,095 8,293 13,493 21,945</p> <p>2,503 4,076 6,634 10,794 17,556 28,545</p> <p>2,002 3,261 5,307 8,635 14,045 22,836 37,119</p> <p>1,602 2,609 4,246 6,908 11,236 18,269 29,695 48,253</p> <p>1,282 2,087 3,397 5,527 8,989 14,615 23,756 38,603 62,708</p> <p>1,025 1,670 2,717 4,421 7,191 11,692 19,005 30,882 50,166 81,464</p> <p>820 1,336 2,174 3,537 5,753 9,354 #### #### #### #### ####</p> <p>656 1,068 1,739 2,830 4,602 7,483 12,163 19,765 32,106 52,137 84,628 #####</p> <p>56,905</p> <p>74,069</p> <p>96,374</p> <p>125,353</p> <p>162,990</p> <p>211,855</p> <p>####</p> <p>#####</p> <p>23 0 0 0 1 1 2 3 5 8 13 22 36 59 96 157 256 417 679 1,106 1,799 2,926 4,756 7,726</p> <p>24 0 0 0 0 1 1 2 4 6 11 17 29 47 77 125 204 333 543 885 1,439 2,341 3,805 6,181 10,034 26,087</p> <p>20,066</p> <p>23 9 6 10 17 28 45 74 121 198 322</p> <p>24 8 5 8 13 22 36 59 97 158 258</p> <p>525 855 1,391 2,264 3,682 5,986 9,731 15,812 25,685 41,709 67,703 ##### #####</p> <p>420 684 1,113 1,811 2,945 4,789 7,784 12,649 20,548 33,367 54,162 87,873 ##### ##### #####</p> <p>#####</p> <p>Revenue versus ad spendRevenue mixPro Partner More Rev/paying Cost of service Time period Paying users Total users Revenue Ad spend Cost of service Total cost Profit per user Month's profit Profit-to-date $ $ Avg rev % $10.00 $15.00 $2,000.00 $50.20 $0.68 1 13 1275 $640 $500 $867 $1,367 (57.02) $ (726.95) $ $ 2 30 1691 $1,489 $525 $1,150 $1,675 (6.27) $ (185.99) $ (912.94) $ 3 52 2240 $2,614 $551 $1,523 $2,074 10.35 $ 539.08 $ (373.86) $ 4 82 2960 $4,100 $579 $2,013 $2,592 18.46 1,507.80 1,133.94 90% 8% 2%</p> <p>$1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 1 2</p> <p>rsus ad spend</p> <p>5 121 3903 $6,059 $608 $2,654 $3,262 $ $ $ 23.18 2,797.17 3,931.11 $ $ $</p> <p>6 172 5134 $8,636 $638 $3,491 $4,129 26.20 4,506.93 8,438.03 $ $ $</p> <p>7 239 6740 $12,020 $670 $4,583 $5,253 28.26 6,766.51 15,204.54 $ $ $</p> <p>8 328 8833 $16,454 $704 $6,006 $6,710 29.73 9,744.01 24,948.55 $ $ $</p> <p>9 443 11559 $22,256 $739 $7,860 $8,599 30.81 13,657.82 38,606.36 $ $ $</p> <p>10 594 15107 $29,840 $776 $10,273 $11,048 31.61 18,791.76 57,398.13</p> <p>Ad spend versus Revenue</p> <p>Revenue Total cost</p> <p>2</p> <p>3</p> <p>4</p> <p>5</p> <p>6</p> <p>7</p> <p>8</p> <p>9</p> <p>10 11 12 13 14 15 16 17 18 19 20 21 22 23 24</p> <p>11 792 19724 $39,741 $814 $13,412 $14,227 $ $ $ 32.23 25,514.75 82,912.87</p> <p>12 1049 25730 $52,658 $855 $17,496 $18,352 $ 32.70 $ 34,306.26 $ 117,219.13</p> <p>13 1384 33542 $69,496 $898 $22,808 $23,706 $ 33.08 $ 45,789.51 $ 163,008.64</p> <p>14 1821 43699 $91,433 $943 $29,716 $30,658 $ 33.37 $ 60,774.51 $ 223,783.15</p> <p>15 2390 56905 $119,999 $990 $38,695 $39,685 $ 33.60 $ 80,313.85 $ 304,096.99</p> <p>16 3131 74069 $157,182 $1,039 $50,367 $51,406 $ 33.78 $ 105,775.26 $ 409,872.25</p> <p>Revenue Total cost</p> <p>17 4095 96374 $205,561 $1,091 $65,534 $66,626 $ 33.93 $ 138,935.58 $ 548,807.83</p> <p>18 5348 125353 $268,488 $1,146 $85,240 $86,386 $ 34.05 $ 182,102.62 $ 730,910.45</p> <p>19 6978 162990 $350,309 $1,203 $110,833 $112,036 $ 34.14 $ 238,272.88 $ 969,183.33</p> <p>20 9097 211855 $456,661 $1,263 $144,062 $145,325 $ 34.22 $ 311,335.59 ######## $</p> <p>21 11850 275270 $594,846 $1,327 $187,183 $188,510 34.29 ####### ####### $</p> <p>22 15425 357517 $774,320 $1,393 $243,111 $244,504 34.35 ####### #######</p> <p>23 20066 464110 $1,007,303 $1,463 $315,595 $317,057 $ 34.40 ####### #######</p> <p>24 26087 602123 $1,309,568 $1,536 $409,443 $410,979 $ 34.45 ####### #######</p> <p>Lifetime valuePaying users LTVTime period Paying users User periods Rev/paying user Aggr LTV LTV for paying users New users conv % Time period New users User periods Aggr LTV LTV for new users 1 13 63 $50 $3,185 $249.81 1% 1 1275 6345 $3,185 $2.50 2 1020 3 816 4 653 5 522 2 10 3 8 4 7 5 5</p> <p>New (unregistered) users LTV</p> <p>e6 4 7 3 8 3 9 2 10 2 11 1 12 1</p> <p>6 418</p> <p>7 334</p> <p>8 267</p> <p>9 214</p> <p>10 171</p> <p>11 137</p> <p>12 110</p> <p>13 1</p> <p>14 1</p> <p>15 1</p> <p>16 0</p> <p>17 0</p> <p>18 0</p> <p>19 0</p> <p>13 88</p> <p>14 70</p> <p>15 56</p> <p>16 45</p> <p>17 36</p> <p>18 29</p> <p>19 23</p> <p>20 0</p> <p>21 0</p> <p>22 0</p> <p>23 0</p> <p>24 0</p> <p>20 18</p> <p>21 15</p> <p>22 12</p> <p>23 9</p> <p>24 8</p>