Revenues and costs per unit, to calculate cash flows over time and customer lifetime value (LTV)

Optional: Hide or show the column notes

TBD - this could be average revenue per order, a recurring maintenance fee, etc. Transaction is used to model a one-time or repeat transaction, but does not repeat every month

TBD - this could be average revenue per order, a recurring maintenance fee, etc. Transaction is used to model a one-time or repeat transaction, but does not repeat every month

TBD - this could be average revenue per order, a recurring maintenance fee, etc. Transaction is used to model a one-time or repeat transaction, but does not repeat every month

optional, used in case you offer discounts for first subscription or first purchase

total, over billing period

total, first transaction only

Recurring - Period for billing, # of months

defines the billing cycle, so that cash collection can be separate from revenues. By default this equals the period for churn, but you can overwrite and change it

Recurring - Period for churn, growth, # months

define the length of a cycle for churn. Annual = 12, monthly = 1

% Growth in Gross Margin per unit, linear annual growth

annual rate, linear growth

% that do not renew

Months after acquisition when one-time occurs

month; this will be zero for upfront, one-time fees, perhaps assume 12 for one-time fees that happen after 1 year

Transaction - Period for churn, growth, # months

% Growth in Gross Margin per unit, linear annual growth

annual rate, linear growth

% that do not repeat

Average # Repeat Transactions per year

average lifetime one time purchases, before churn

optional, assume an annual rate. used if you want to discount the future cash flows, using methodology from https://www.forentrepreneurs.com/ltv/

optional, only used if using discount rate

optional, only used if using discount rate

may need to adjust based on one time discounts, which costs to use from CAC forecast, and other business-specific issues

Cost of Retention and Expansion, Recurring

For subscription renewals

Cost of Repeat and Expansion, Transaction

For repeat transactions

formula for LTV from https://www.forentrepreneurs.com/ltv/ to use discount rate (optional), and growth in average revenue (optional)

LTV = revenues less cost of sales for this one time cash flow assumed in the first month of forecast

LTV = 48 months * gross margin per month, since no churn is assumed the model uses the max lifetime as used in the cash flow forecast

LTV / CAC, to help measure profitability performance

# of months to payback the customer acquisition costs, based on gross margin

Details for LTV calculations and Cash Flows per month +

click on the "+" sign in the margin to see the detail behind the calculations

Revenues, Cost of Sales, Gross Margin for LTV calculations

Gross Margin, Recurring, less cost of retention and expansion, recurring

includes costs of retention, expansion, and repeat in the gross margin calculation, reflecting CORE expenses as per https://www.forentrepreneurs.com/ltv/

same as gross margin above

Gross Margin, Transaction, less gross margin, recurring, less cost of retention and expansion, recurring

includes costs of retention, expansion, and repeat in the gross margin calculation, reflecting CORE expenses as per https://www.forentrepreneurs.com/ltv/

calculated to show cash flows per month, unhide to see the calculations that support the chart above

this section estimates gross margin and acquisition costs, net of churn, so it shows how the total LTV accrues over time