Background and assumptions: Product Revenue Ramp

This starter model assumes a series of increasing price points for a software product family.
Here, they are generically labeled here as single user, "try and buy" special, departmental,
divisional and corporate site license.
The "units" are intended to show some kind of relative scale that drives your product segment:
seats,
Servicetransactions/second, GB, transformation
is computed separately, mappings,
and shown as both as cashetc
flow and amortized amounts.
Customers may pay for a year's revenue in advance but suppliers can only recognize this as
revenue
Inputs areonce it is consumed
marked or expired.
in bold blue with heavy border boxes. All other values are calculated from
these inputs. Once you have experimented with the model, you will want to turn off the
spreadsheet protection and start fiddling with the elements. To unlock cells, use Tools |
Protection | Unprotect Worksheet
The model can be extended to track add-on sales and cross-selling (upselling), but these are
heavily dependent on the situation. Drop me an email if you need an example.

rich@mironov.com
http://www.mironov.com

000000 0000001
Product Revenue Forecasting Model
Inputs in model shown
in blue

Product Pricing Tiers List Price Units $/Unit Support Support

Single User $2,500 1 $2,500 20% $500
"Try and Buy" special $2,000 1 $2,000 20% $400
Departmental $15,000 10 $1,500 20% $3,000
Divisional $40,000 50 $800 20% $8,000
Corporate $100,000 150 $667 20% $20,000

Sales/Installations Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

New customer sales (net) 2 7 15 40 60 80 90 100
Single User 40% 2 6 11 27 51 83 120 160
"Try and Buy" special 35% 0 3 8 22 43 71 102 137
Departmental 10% 0 0 2 6 12 20 29 39
Divisional 10% 0 0 2 6 12 20 29 39
Corporate 5% 0 0 1 3 6 10 14 19
Cumulative units sold 2 9 24 64 124 204 294 394

Product Revenue ($k/qtr) Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16
Single User $5 $15 $28 $68 $128 $208 $300 $400
"Try and Buy" special $0 $6 $16 $44 $86 $142 $204 $274
Departmental $0 $0 $30 $90 $180 $300 $435 $585
Divisional $0 $0 $80 $240 $480 $800 $1,160 $1,560
Corporate $0 $0 $100 $300 $600 $1,000 $1,400 $1,900
TOTAL $5 $21 $254 $742 $1,474 $2,450 $3,499 $4,719

Customers who buy/renew

support 90%

Customers with support

contracts Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

0000002
000000
Product Revenue Forecasting Model
Inputs in model shown
in

Product Pricing Tiers

Single User
"Try and Buy" special
Departmental
Divisional
Corporate

Sales/Installations Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18
New customer sales (net) 130 165 200 240 290 340 390 440 490
Single User 211 278 358 454 571 707 862 1038 1235
"Try and Buy" special 183 241 311 395 496 615 752 906 1077
Departmental 52 68 88 112 141 175 214 258 307
Divisional 52 68 88 112 141 175 214 258 307
Corporate 26 34 44 56 70 87 107 129 153
Cumulative units sold 524 689 889 1129 1419 1759 2149 2589 3079

Product Revenue ($k/qtr) Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18
Single User $528 $695 $895 $1,135 $1,428 $1,768 $2,155 $2,595 $3,088
"Try and Buy" special $366 $482 $622 $790 $992 $1,230 $1,504 $1,812 $2,154
Departmental $780 $1,020 $1,320 $1,680 $2,115 $2,625 $3,210 $3,870 $4,605
Divisional $2,080 $2,720 $3,520 $4,480 $5,640 $7,000 $8,560 $10,320 $12,280
Corporate $2,600 $3,400 $4,400 $5,600 $7,000 $8,700 $10,700 $12,900 $15,300
TOTAL $6,354 $8,317 $10,757 $13,685 $17,175 $21,323 $26,129 $31,497 $37,427

Customers who buy/renew

support

Customers with support

contracts Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18

0000003
000000
Single User 2 7 17 41 87 162 270 414
"Try and Buy" special 0 3 10 30 68 132 224 347
Departmental 0 0 2 7 18 36 62 97
Divisional 0 0 2 7 18 36 62 97
Corporate 0 0 1 4 9 18 31 48
TOTAL 2 10 32 89 200 384 649 1003

Support contract cash flow

($k) Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16
Single User $1.0 $3.5 $8.5 $20.5 $43.5 $81.0 $135.0 $207.0
"Try and Buy" special $0.0 $1.5 $5.0 $15.0 $34.0 $66.0 $112.0 $173.5
Departmental $0.0 $0.0 $1.0 $3.5 $9.0 $18.0 $31.0 $48.5
Divisional $0.0 $0.0 $1.0 $3.5 $9.0 $18.0 $31.0 $48.5
Corporate $0.0 $0.0 $0.5 $2.0 $4.5 $9.0 $15.5 $24.0
TOTAL ($k) $1.0 $5.0 $16.0 $44.5 $100.0 $192.0 $324.5 $501.5

Recognized support revenue Sep-14

TOTAL ($k) $0.3 $1.13 $3.3 $8.4 $19.0 $38.4 $70.0 $116.6

0000004
000000
Single User 604 854 1176 1585 2099 2735 3511 4445 5557
"Try and Buy" special 512 729 1009 1364 1811 2364 3041 3857 4826
Departmental 144 205 284 385 512 670 862 1094 1371
Divisional 144 205 284 385 512 670 862 1094 1371
Corporate 71 102 141 192 255 333 429 545 683
TOTAL 1475 2095 2894 3911 5189 6772 8705 11035 13808

Support contract cash flow

($k) Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18
Single User $302.0 $427.0 $588.0 $792.5 $1,049.5 $1,367.5 $1,755.5 $2,222.5 $2,778.5
"Try and Buy" special $256.0 $364.5 $504.5 $682.0 $905.5 $1,182.0 $1,520.5 $1,928.5 $2,413.0
Departmental $72.0 $102.5 $142.0 $192.5 $256.0 $335.0 $431.0 $547.0 $685.5
Divisional $72.0 $102.5 $142.0 $192.5 $256.0 $335.0 $431.0 $547.0 $685.5
Corporate $35.5 $51.0 $70.5 $96.0 $127.5 $166.5 $214.5 $272.5 $341.5
TOTAL ($k) $737.5 $1,047.5 $1,447.0 $1,955.5 $2,594.5 $3,386.0 $4,352.5 $5,517.5 $6,904.0

Recognized support revenue

TOTAL ($k) $181.3 $267.8 $381.0 $527.4 $714.3 $949.4 $1,241.3 $1,598.8 $2,031.0

0000005
000000