Freemium means you are monetizing users who pay nothing to you with ad revenue and then offer the ability for them to pay more to receive no ads and/or get better services.
This has become a popular way to scale new products and services and a lot of large tech companies have used this style in some way to grow. The key behind it is exposing people to your services with no up-front costs. All users have to do is succumb themselves to ads. This is how Pandoa Internet radio works.
So, in the spirit of being able to display such logic in a 5-year financial forecast, there are some nuances in the revenue logic that are unique compared to any other type of model. You have to have assumptions for some amount of traffic that converts to your freemium service and then some amount of ad revenue being derived from that (usually with a CPM ad revenue model).
Then, there has to be a mechanism to show conversions of free pool users to paid subscribers. There is also all the fixed and variable costs associated with such a business model. That is all logic that has been included in this template. You can figure out what price might be reasonable to charge for the SaaS portion of your service so that it is feasible to actually start in the first place. This is important when looking at competition and trying to value the service you have at scale.
Take a look through the pictures to see more about all the different displays and summaries you will see populate based on the user entered assumptions.
Advanced metrics have been included like LTV (lifetime value of a customer), CaC (customer acquisition costs), and the LTV to CaC ratio as well as months to pay back CaC based on average gross profit per user (shown on a monthly and annual basis). This is important to see if you have structured your sales and marketing costs logically based on how much money you are making per customer.
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This is a collection of financial model templates for businesses in the Information technology Industry and its related sectors.