In the last few weeks I've finally found some time to create a "v2" of the template ... just in time for a little Easter gift to the SaaS community. ;-) I'd recommend that you read this post first since it includes some important notes, but if you prefer to check out the template right away click here to download the Excel sheet.
The original v1 model was a very simple plan for early-stage SaaS startups with a low-touch sales model. As I wrote in the original post:
It's a simple plan for an early-stage SaaS startup with a low-touch sales model – a company which markets a SaaS solution via its website, offers a 30 day free trial, gets most of its trial users organically and through online marketing and converts them into paying customer with very little human interaction. Therefore the key drivers of my imaginary startup are organic growth rate, marketing budget and customer acquisition costs, conversion rate, ARPU and churn rate. If you have a SaaS startup with a higher-touch sales model where revenue growth is largely driven by sales headcount, the plan needs to be modified accordingly.
The new version comes with a number of improvements:
- Support for multiple pricing tiers
- Support for annual contracts with annual pre-payments
- Much more solid headcount planning
- Better visibility into "MRR movements"
- Better cash-flow planning
- Charts galore :-)
The downside of these improvements is that the spreadsheet has become significantly larger and more complex, but I tried my best to find the right balance. Also, the vast majority of the numbers in the sheet are calculated and the number of input cells is fairly limited.
The spreadsheet should be pretty self-explanatory but I've included a number of comments in the spreadsheet. Make sure to check them out - some of them are important in order to understand the model (in case you're not familiar with that Excel feature, hover over the little red triangles).
Here are a some additional notes:
1) General comments
- The sheet is hot off the press and given the large amount of formulas I can't rule out that there are bugs. If you find one, please email me at and I'll fix it ASAP.
- Blue numbers indicate data-entry cells. Black and grey numbers are computed.
- The model contains a lot of simplifications. Don't expect that it will perfectly fit your specific business - consider it a starting point.
2.) "Summary" tab
- The "Summary" tab contains only two types of input cells: Your starting bank balance and cash injections from financings. Everything else is calculated, mostly using data from subsequent tabs.
- As with all input cells in the model, consider the values that I've put in to be dummy data. Fill those cells with your own data and assumptions.
- The model doesn't take into account interest or taxes (except for payroll taxes).
- The "Revenues" line shows your end-of-month MRR for the respective month. This is not compliant with the US GAAP definition of "revenues", which uses different revenue recognition rules, but since SaaS companies live and breathe MRR I think it's the right approach for a SaaS financial model.
3.) "Revenues" tab
- The model assumes that you have three pricing tiers. I've called them "Basic", "Pro" and "Enterprise". If you have more or fewer pricing plans you can of course adjust the model accordingly (with some effort). It is further assumed that all Basic and Pro customers are on monthly plans and that all Enterprise customers are on annual plans.
- The model assumes that you're getting signups organically and via paid marketing and that you're converting a percentage of them into Basic customers and Pro customers. You can change the key assumptions such as your organic growth rate and your conversion rates in the grey area on the left.
- The Enterprise customer segment follows a different logic, based on the assumption that Enterprise customer acquisition is sales-driven as opposed to the marketing-driven low-touch sales model for Basic and Pro customers. The key drivers in the Enterprise segment of the model are your revenue targets, sales team quotas and your assumptions for churn and upsells.
- The spreadsheet shows the impact of e.g. Basic customers who upgrade to Pro and Pro customers who upgrade to Enterprise, but to keep things simple it doesn't support each and every possible movement between plans. For example, I didn't include the option for Basic customers to upgrade to Enterprise straight away or for Enterprise customers to downgrade. If this is a relevant factor in your business, you can of course accommodate for that by adding a few extra rows.
- For Basic and Pro customers, the model allows you to project ARPA development using a given ARPA at the beginning of the planning period along with assumptions on monthly ARPA increases. For Enterprise customers, the model assumes pricing increases at the time of renewal but not during the term of the subscription. Depending on your specific pricing model you'll have to modify that, e.g. to allow for Enterprise customers to add more seats continuously.
- In order to be able to calculate churn for Enterprise customers in the 1st year of the plan, it is assumed that existing Enterprise customers have been acquired over the course of the previous 12 months. This is of course a somewhat theoretical assumption and you need to adjust the model to include your actual numbers.
- As you can see in one of the charts below the numbers, the model allows you to calculate your "MRR movements". It's worth pointing out that the model currently doesn't show "Expansion MRR" and "Contraction MRR" separately but only the delta of the two, which I've called "Net Expansion MRR". In order to calculate Expansion MRR and Contraction MRR separately I'd have to add a couple of additional rows. To avoid making things too complicated, I decided against doing that for now. Fortunately ChartMogul (a Point Nine portfolio company, sorry for the plug) makes it super easy to drill down into all of your MRR movements.
- Please note that the CAC data and "CAC payback time" calculation are based on pretty crude simplifications. A solid planning of CAC payback times, CAC/LTV ratios etc. would require a lot of additional input data.
- The rows with the "Thereof bonuses..." label contain matrix formulas. Handle with care. :)
4.) "Costs" tab
- In order to adjust headcount planning in the G&A, R&D and marketing departments, change the assumptions for start date, base salary and bonus in the grey "Assumptions" area. You can remove, change or add roles in column H.
- With the exception of the VP of Sales role, sales staff headcount planning is done on the separate "Sales Team Hiring Plan" tab (re-using a model that I've built for this post). It calculates the number of sales people that you need based on the growth targets for your Enterprise customer segment, the quota of your sales people and a few other variables.
- Headcount planning for the Customer Success team is (again with the exception of the VP) done formulaically as well, based on assumptions on how many customers a customer success team member can handle.
- It is assumed that there's only one team, which I've called Customer Success, which does both customer support and customer success. Many SaaS companies have different teams for the two functions; if you're one of them you can adjust the plan accordingly.
- The costs for the Customer Success team are attributed to CoGS. This is debatable – if your Customer Success team plays an important role in converting signups or upselling customers you should consider allocating at least a portion of these costs to S&M and include those costs in your CACs. Please note that changing the "cost type" in column I will not automatically move the costs to a different category on the "Summary" tab so you'll have to do that manually.
- The model assumes that payroll tax is the same for all employees. This may have to be adjusted, e.g. if you have people in different countries.
- Regarding the cash impact of expenses, the model assumes that:
- payroll taxes are paid monthly
- bonuses are paid yearly (except for the sales team)
- sales team bonuses are paid quarterly (since bonuses/commissions play a much stronger role in sales compared to other departments)
- The model (somewhat simplistically) assumes that there are no capital expenditures. If you make investments into things like servers, computers or office furniture you should add these expenses accordingly.
If you've made it this far and haven't downloaded the Excel sheet yet: Here it is.
If you have any questions, comments or suggestions, let me know in the comments or email me. And if you like the model, tweet it out. :)
Finally, big thanks to Chris Amani, Sr. Finance Director at Humanity, as well as to Pawel and Dominik of Point Nine, for reviewing drafts of the model and for providing valuable feedback.