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Should you forecast sales for your subscription service or SaaS business?From music services, such as Spotify, Rdio, and Beats, to movie streaming sites like Netflix, to snacks and meal delivery like NatureBox and HelloFresh, it seems there’s a subscription service for anything and everything.If your business is building a subscription service, creating a reliable sales forecast is a critical step to understanding how your business will grow and what the key drivers of revenue growth will be.Download our free detailed subscription sales forecast template to help estimate your first full year of monthly sales. You'll get a Microsoft Excel spreadsheet with built-in formulas to help you forecast new subscribers, average revenue per user (ARPU), cancellations, churn rate, recurring revenue, and your projected lifetime value (LTV).
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Understanding the sales forecast spreadsheet:This is a fairly simple sales forecast spreadsheet that assumes that your service doesn’t have any one-time setup fees and that your business operates a simple monthly subscription service where customers pre-pay for a month of service. The sales model can get more complex if users can upgrade their services over time or if you have one-time setup fees or different contract lengths.In our sales forecast example, you can adjust the Average Revenue per User (ARPU) each month if you expect that, on average, some customers might upgrade to higher-priced services that you offer. Starting Subscribers is the number of customers that you have at the beginning of a month.In this monthly sales forecast template, we are starting with zero subscribers in our first month as a new business. In future months, we calculate starting subscribers by looking at how many customers we had at beginning of the previous month and then add in new subscribers and subtract customers that decided to cancel.In this sample model, we assume that customers pre-pay for a month of service ahead of time, so we calculate churn rate based on the number of customers that we start each month with rather than the number of customers that we end the month with. From there, we calculate churn, the projected lifetime of an average customer in months and in dollars and finally calculate the total monthly recurring revenue that you should expect to collect in a given month.Want to learn more about forecasting sales? Check out our Complete Guide to Forecasting Sales for Your Monthly Subscription Business.
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