Product-as-a-Service (PaaS) - Strategic Business Modeling Planner Excel Model

Transition to a subscription model instead of a direct sales model with this financial planning template for a PaaS business.

by Jason Varner
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Description
Product as a Service just means the company sells a subscription service that grants access to the products being offered or the benefit of the products rather than directly selling the product. It is a fairly common business model, but has more recently been used for things that it was not normally used for.


Don't confuse PaaS with Product+Service. If you are doing an 'addon' service to your products, that is completely different than this model.


This model shifts from having inventory on the balance sheet to having fixed assets. The dynamic nature of the deployment schedule is really clean and linked to the final capacity results so that the assumptions can be measured against the forecasted customer growth (subscriptions to the product offering you have deployed).


There is a direct sales component in this Excel template that was made to see what the difference in cash flows and IRR would be if you manufacture / buy and then re-sell the products directly. This can be zeroed out or the PaaS logic can be zeroed out in order to compare the two over the course of 10 years.


At a high level, the user is simply defining how many products they will have available over time, how much it cost to make or buy the products, how much capacity the products provide per month (measured in minutes) and then how much demand there is for the available capacity.


Customer logic uses retention rates and two customer acquisition channels to show the demand and pricing of the subscription to the products over time. There are metrics such as CaC, LTV, and LTV to CaC ratio as well as months to pay back the CaC since this part of the model is a subscription model where customers pay a monthly fee.


I put in three pricing tiers for the subscription and the user can define how many new customers fall into each tier and how much each tier costs per month to the customer.


There is also a full schedule to define regular operating expenses such as sales and marketing, general and adminstartive, and research and development as well as variable costs per active customer per tier if applicable. There is also a catch all to define any expenses as a direct percentage of each revenue stream.


An exit month can be defined and the user can choose to include an exit value or not based on a multiple of trailing 12-month revenues.


Options for use of debt and investor funding are included in cash sources.


Final Outputs:
   - Monthly / Annual pro forma detail (EBITDA/Cash Flow)
   - Monthly / Annual financial statements
   - DCF Analysis
   - Executive Summary (annual key financial line items)
   - Lots of visualizations

This Best Practice includes
1 Excel template and 1 tutorial video