Grab free pitch deck and financial model templates at https://rocketproforma.com/resources

People always ask why their quick calculation of how much revenue their SaaS startup should make in a year doesn't match their financial projection.

If I charge $100 per month and I get 1,000 subscribers in year 1, why don't I have $1,200,000 in revenue?

The answer is...time.

You will acquire those 1,000 users over 12 months, and only the ones that you acquire in month 1 will pay the full $1,200 ($100 per month for 12 months). In fact, sales usually accelerate—so you'll acquire most of your customers in the second half of the year. This means that most of your customers aren't even paying $600 in that year.

Your ARR (annual recurring revenue) will be $1,200,000 in month 12, which is the number you were expecting to see. That's because ARR is an imaginary number. It's what the revenue you would expect to see over the next 12 months if you neither added nor lost any subscribers. In month 12 you have 1,000 subscribers, so the ARR is $1,200,000. But remember that ARR is imaginary ;)

In this video we walk through the math.

Check out video 2 of this Subscription / SaaS series to learn the math behind annual vs. monthly subscription revenue:
   • Annual vs. monthly revenue for subscr...  

#startups #financials #SaaS #pitchdecks #impressinvestors

0:00 - Intro
0:10 - Why doesn't my math work for my subscription revenue?
1:31 - ARR (Annual Recurring Revenue)

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Find free pitch deck and financial model resources at
https://rocketproforma.com/resources

Want to quickly create your startup financial projections and confidently present to investors?
Check out https://RocketProForma.com