Freemium Model with CaC Payback - 5 Year Forecast
Originally published: 27/07/2018 09:10
Last version published: 12/10/2018 10:04
Publication number: ELQ-72267-3
View all versions & Certificate

Freemium Model with CaC Payback - 5 Year Forecast

Forecast a 5-year financial plan based on logic specific to the freemium strategy.

The freemium strategy has many variations, but in general it means you give customers a service for free but with ads and then there is an ability for the user to pay a monthly subscription to remove the ads and/or pay for a premium service that is better than the free version.

This creates a lot of opportunity for new services that might have a hard time getting in the door with a monthly subscription up front. Instead, users can experience the service in exchange for having to view ads now and then. It has worked for a lot of organizations.

The logic is specific to planning for these variants. You can determine expected impressions per user per month, conversions of traffic to your free service / paid service and movement to and from the paid and free services.

Logic also exists to determine start dates of traffic/free/paid services. There is also churn logic.

The expense logic allows you to easily categorize G&A, S&M, COGS, and R&D and define those costs on a monthly basis over 5 years as well as determine the start month for each line item.

There are also variable costs that exists so you can adjust some marketing / COGS items base on them being a % of total revenue and/or a specific $ cost per user.

A lot of visuals and an executive summary are included to show you the primary financial summaries at a glance.

The model does go as far as to estimate taxes and depreciation if needed. If not, those can be 0's out to get down to a free cash flow.

The equity requirement is an auto-fill that calculates based on the minimum monthly cash position considering all assumptions.

Key Ratios Included:
1. CaC
2. LTV
3. CaC Payback (months)
4. LTV to CaC ratio
5. Debt service coverage (if applicable)

This Best Practice includes
1 Excel template and 1 tutorial video

Acquire business license for $45.00

Add to cart

Add to bookmarks


Further information

Forecast out cash flow and key expected performance figures .

A business that has ad revenue combined with a subscription service.

Non recurring revenue models.


  • Rate this Downloadable Best Practice

    Write a review

  • Brent Wright, MBA(last updated: 19/08/2020 22:44)
    Great Job!
    I love the format of the spreadsheet and the calculation of the important metrics. This will be an extremely useful tool in determining profit, ROI, CAC, LTV and other related metrics. Once again, great job!


More Best Practices from Jason Varner

See all

Any questions on Freemium Model With CaC Payback - 5 Year Forecast?

The user community and author are here to help. Go ahead!

5.0 / 5 (1 votes)

please wait...