How to Build a SaaS Revenue Waterfall Forecast
If you run a SaaS business, you know that revenue isn't linear. Customers churn, others upgrade, and new sales come in waves. A revenue waterfall model shows exactly how your MRR evolves month by month.
Why You Need This
A basic spreadsheet that just multiplies customers by price doesn't capture the dynamics. A waterfall breaks down:
- Starting MRR
- Churn ($ lost)
- Downgrades ($ lost)
- Upgrades ($ gained)
- New sales ($ gained)
- Ending MRR = Starting + (upgrades + new sales - churn - downgrades)
The Key Formulas
In Google Sheets, assuming:
- B2 = Starting MRR ($50,000)
- B3 = Churn rate (5%)
- B4 = Upgrade rate (2%)
- B5 = Downgrade rate (1%)
- C2:C13 = New sales per month ($10,000 each)
The waterfall for Month 1:
- Starting MRR:
=B2 - Churn:
=-B2*$B$3 - Downgrades:
=-B2*$B$5 - Upgrades:
=B2*$B$4 - New Sales:
=C2 - Net Change:
=SUM(C3:C6) - Ending MRR:
=B2+C7
Then Month 2 starts with Month 1's ending MRR. Drag down for 12 months.
Beyond the Basics
A cohort-based view tracks each monthly cohort separately. This is crucial because a customer who joined in January has different retention than one joining in June.
To grab the full 6-tab template with scenario manager, cash impact, and cohort view, check out the SaaS Revenue Waterfall Calculator at MicroTools Studio on Gumroad.
It's $29 and includes pre-filled formulas and sample data so you can start forecasting in 5 minutes.
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