Business Modeling

SaaS Buiness ModelingOur business modeling service offers two approaches: standardized and customized. Our standardized approach, using unit economics analysis running in the cloud, shows SaaS and software license businesses the short and long term success of their go-to-market approach. By comparison, customized financial models built in Excel also support dynamically changing lifecycle economics. In both cases, you can create an appealing investor storybook for a financing round or further business analysis.

Insight on Business Modeling:

The SaaS business model is exponentially profitable in the long run, but is highly challenging in the short term. Initially, companies have to manage small revenues and overcome a cash flow gap. They typically need at least two years to reach break-even.

SaaS vendors require a reliable financial model to give them predictability. They need transparency and insight throughout their entire company life. It is essential for them to be able to anticipate where their business will be, whether in a few months or a few years from now.

For traditional software vendors moving to SaaS, the biggest challenge is the transition to a new, different business model. Their substantial revenue base of expensive perpetually licensed software will be gradually replaced by renewable cloud subscriptions. The focus must move from big, one-time sales to continual customer retention. At the same time, they must keep an eye on essential indicators such as customer lifetime value, churn, recurring revenues, and profitability.

Service and Benefits:

Our standardized business modeling approach leverages unit economics analysis running in the cloud to model a transparent business case. Using the relevant metrics and benchmarks, it shows you the short and long term success of your go-to-market approach. Within one hour, you can understand the two key aspects of your business strategy

  1. The time needed to recover the customer acquisition cost (short term indicator)
  2. The number of times the lifetime value (LTV) exceeds the cost of customer acquisition – the so-called LTV-to CAC-ratio (long-term indicator)

Our customized financial models built in Excel support the dynamically changing lifecycle economics of SaaS and software license businesses. You can use a proven, successful, ready-to-use SaaS business model, instead of worrying about building one yourself. For each segment, you can:

  1. Analyze and visualize recurring revenues, unit cost and customer numbers
  2. Understand the impact of gross margin, churn, and up-sales
  3. Calculate the net profit.

Our models allow you to understand, plan, and manage revenue recognition and expense projections effectively, along with cash flow scenarios. You can present and share your case with your peers, investors or board in a winning way, instead of wandering around in an Excel numbers graveyard. We create instant reasonable baseline scenarios and projections, letting you experiment with multiple variations of a business case all driven by an easy-to-use tool that incorporates the SaaS industry’s best practices.