SmartHelping / Freemium Startups / Excel
Freemium Startup Financial Model
Plan how a free service can grow into a paid subscription business. Build a five-year forecast connecting traffic, free users, paid conversions, advertising revenue, and operating costs to cash flow and funding needs.
Immediate download after purchase. By purchasing, you agree to the Terms of Service.
Video walkthrough & spreadsheet preview
See how the free and paid user pools drive the forecast.
Review the walkthrough and screenshots to follow the model from traffic and conversion assumptions through the financial reports.
From traffic to free users to paid subscribers
Build the customer growth assumptions step by step.
Set the start month for traffic, the free user pool, and the paid user pool separately so the forecast can reflect your launch sequence.
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Define monthly traffic
Enter the expected traffic and traffic growth assumptions that feed the customer acquisition plan.
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Convert traffic into free users
Set the percentage of traffic that joins the free service. Conversion assumptions can change over time.
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Convert free users into paid subscribers
Define the conversion from the free pool to the paid subscription pool and the price charged for the paid service.
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Account for customer movement
Include churn and movement from paid subscriptions back to the free service as the customer pools develop.
Subscriptions, ads & retention
Connect the free offering to the ways your business earns revenue.
Model paid subscriptions and advertising while adjusting the assumptions that determine how users move through the service.
Paid subscription revenue
Set the price of the paid service and forecast revenue as users convert into the paid pool.
Advertising revenue
Include ad revenue alongside paid subscriptions when advertising is part of your freemium strategy. Set it to zero when it does not apply.
Conversion changes over time
Adjust conversion percentages as the forecast develops to explore different assumptions about acquisition and upgrades.
Churn & paid-to-free movement
Model customer churn and movement from paid back to free to reflect how the user mix changes over time.
Related reading: how to calculate churn rate in SaaS.
Flexible freemium planning
Explore the balance between a free audience and paying customers.
Use the forecast to explore how traffic growth, conversion, churn, pricing, and ad revenue affect the business. Revenue and expense assumptions that do not apply can be set to zero.
Direct costs, overhead & startup investment
Include the cost of serving users and building the business.
Bring operating expenses, startup costs, capital spending, and financing into the five-year plan.
Operating expense categories
Organize general and administrative, sales and marketing, and research and development costs in the expense assumptions.
Two approaches to direct costs
Model cost of goods sold as a percentage of revenue and as a dollar amount per user. Set either assumption to zero when it does not apply.
Startup costs, CapEx & depreciation
Include startup investment and capital expenditures, with depreciation accounted for in the financial model.
Financing & capitalization table
Include financing assumptions and use the capitalization table as part of the startup's funding plan.
Related financing resource: how a leveraged buyout model works.
Financial statements & cash flow summaries
Follow the customer assumptions through to the funding requirement.
The operating forecast rolls into detailed monthly and annual reports and a high-level executive summary.
Monthly & annual statements
Review the income statement, balance sheet, and cash flow statement on both a monthly and annual basis.
Executive summary & visuals
Review the main financial results in the executive summary and visualizations, then use the detailed reports to investigate the underlying forecast.
Free cash flow
Account for depreciation and income taxes where applicable to work through the forecast to expected free cash flow.
Equity requirement & return
Use the projected cash flows to assess the equity requirement and the free cash flow return on that equity.
Related accounting tool: Accounting System in Excel.
Included in a bundle
Explore the SaaS & recurring revenue collection.
This freemium model is included in the SaaS financial model template bundle.
SaaS Financial Model Template Bundle
Browse the broader collection of SaaS and recurring revenue financial models.
Explore the bundleRelated models & planning tools
Explore more ways to model growth, pricing, and retention.
5-Tier SaaS Traffic Conversion Model
Explore a separate SaaS model built around traffic conversion and five pricing tiers.
Explore the modelSaaS Rolling Revenue Forecast
Review the separate rolling revenue forecasting template for SaaS businesses.
Explore the forecastSaaS Pricing & Margin Simulator
Explore a dedicated tool for testing SaaS pricing and margin assumptions.
Explore the toolCustomer Cohort Modeling
Explore the separate template for analyzing historical customer cohorts.
Explore the templateQuestions before you buy
A few useful details.
How long is the forecast?
The model covers five years and includes monthly and annual financial statements, supporting detail, and an executive summary.
Can traffic, free users, and paid subscriptions start at different times?
Yes. Traffic, the free user pool, and the paid user pool have separate start-month assumptions.
Does the model account for paid customers moving back to free?
Yes. It includes movement from paid back to free alongside conversion and churn assumptions.
Do I have to include advertising revenue?
No. Set advertising revenue assumptions to zero if ads are not part of the business. Other revenue or expense assumptions can also be zeroed out when they do not apply.
How are direct costs modeled?
There are two types of cost of goods sold assumptions: a percentage of revenue and a dollar amount per user.
Does the model include financial statements and a cap table?
Yes. It includes monthly and annual income statements, balance sheets, and cash flow statements, along with a capitalization table and capital expenditure planning with depreciation.
How do I get the template?
The Excel template is available to download immediately after the $45 one-time purchase. It is also included in the SaaS financial model template bundle linked above.
Plan your freemium startup
Connect customer growth to cash flow and funding needs.
Get the Freemium Startup Financial Model. Have a question? Contact SmartHelping.
