What is a revenue forecast?
A revenue forecast is an estimate of how much money a business will bring in over the coming months. For subscription and repeat-purchase businesses the two forces that matter most are growth, the new revenue added each month, and churn, the existing revenue that is lost when customers leave or downgrade.
Formulas
Net growth = monthly growth − monthly churnRevenue in month n = revenue today × (1 + net growth ÷ 100)ⁿ
Worked example
Starting from 20,000.00 a month with 8% growth and 2% churn, revenue grows by a net 6% each month. After 12 months it reaches 40,243.93, and the months add up to 357,642.75.
How to use the revenue forecast calculator
- Enter your figures: revenue this month, monthly growth and months to forecast. Monthly churn is optional and counts as zero when left empty.
- Read the result. It updates as you type, so there is no button to press.
- Try other numbers to compare scenarios. Reset brings back the example values.
Getting it right
- Growth compounds, so small changes in the monthly rate make a large difference a year out. Try a cautious and an optimistic rate.
- Churn of 2% a month sounds small but removes more than a fifth of your starting revenue over a year.
- A forecast built on one steady rate is a guide, not a promise; seasonal businesses should forecast each season separately.
Frequently asked questions
How do I forecast monthly revenue?
Take this month’s revenue, subtract your churn rate from your growth rate to get net growth, and multiply forward one month at a time. The table does this for every month you ask for.
What is the difference between growth and churn?
Growth is revenue gained from new customers and upgrades, as a percentage of current revenue. Churn is revenue lost from cancellations and downgrades. Net growth is one minus the other.
How far ahead should I forecast?
Twelve months is the usual planning horizon. Beyond two years the compounding of a single assumed rate makes the numbers unreliable, so treat long forecasts as scenarios.