How to Forecast Subscription Revenue:
What is Revenue Forecasting?
Revenue forecasting is the process of estimating what your revenue will be over a specific time period—typically monthly, quarterly, or annually.
What is Subscription Revenue?
Customers pay a recurring subscription fee (monthly, quarterly, or yearly) to get access to a product or service.
Step 1: Add Your Products
In the Revenue Section, Finmark provides the tools to add your Products to forecast your revenue.
For this example, our main products will be our subscription tiers:
Basic – $20/month
Pro – $50/month
Premier – $100/month
To add those into Finmark, start on the Revenue Section and Click Add > Product.
Then, you’ll need to fill in the following details into the Product Pop-Up Screen:
Plan name
Price
Subscription Frequency (monthly, quarterly, or annually)
Churn Rate
If you’re unsure of what your churn rate is, check your actuals. If you don’t have the data on hand, you can estimate based on industry trends.
If you offer multiple pricing options for each product you can add multiple price plans.
Repeat this process until you have each individual plan added. You will need to add a new product for each of the following plans:
Basic – $20/month
Pro – $50/month
Premier – $100/month
After you've entered all of your plans, you will be able to view these in the Revenue Summary under Products.
Do you have any one-time non-recurring revenue streams?
For instance, If your company also sells design templates for customers to purchase you can add this in as a new Product with a One-Time Frequency.
Repeat this process for all of your One-Time Purchases.
You can view all of your products listed under the Products section of your Revenue Summary:
Step 2: Add Your Revenue Streams
To forecast your subscription plans revenue. You will start by adding a new revenue stream by clicking +Add then selecting Revenue Stream from the drop-down.
Start by giving your revenue stream a name. For this example, we will name our revenue stream “Subscription Revenue”.
Next, you will select the products you will be forecasting in this revenue stream.
For this example. we will select all three of our subscription plans.
Once your revenue streams are in, it’s time to forecast your growth!
Step 3: Add Your Revenue Driver
A revenue driver is what your revenue growth is based on.
In Finmark, we give a few options for revenue drivers:
To learn more about Finmark's revenue drivers, check out our Revenue Knowledge Base Collection. For this example, we will stick with Base Subscribers with Monthly Growth.
Start by entering the following details:
Acquisition start date: What month do you want to start forecasting from?
Acquisition end date: If there’s a date you expect to stop acquiring leads, you’d enter it here. This is good for time-specific campaigns (i.e. summer sales) or if your revenue growth changes over time due to seasonality.
Initial customers: How many customers will you acquire on the acquisition start date? This is the base number of customers for your forecast. If you already have existing customers, you can enter those numbers here.
Now enter your expected monthly growth rate. How much do we expect our customer count to increase each month?
The growth rate you put here should be based on data. Ask yourself the following questions:
On average, how much have you historically grown your customer count MoM?
If you’re a new company and don’t have historical data, you can work backward based on your revenue and customer goals for the year.
For this example, we will say we will grow at an 8% MoM rate.
Now you can click Add and see your revenue forecast!