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How to Model SaaS using the Standard Financial Model

How to configure the Standard Financial Model for SaaS: specific cells, segment structures, and AI prompts that point where the edits go.

Prebuilt for SaaS Businesses

The Standard Financial Model works for SaaS out of the box. The prebuilt revenue engine on the Revenues sheet handles acquisition, conversion, cohort retention, MRR, billings, and deferred revenue. You customize it through inputs on Get Started. No formulas to edit.

The video above walks through the end-to-end structure. The rest of this page points at the specific cells you'll touch.

When this guide applies

Use the Standard Financial Model for SaaS when you want one document covering revenues, hiring, expenses, statements, valuation, and unit economics. It fits self-serve SMB and prosumer SaaS with volume-driven acquisition, B2B SaaS with a lead-to-subscriber funnel, mixed monthly and annual billing, hardware-plus-subscription combos, and any SaaS business you want investor-ready financials for.

The free SaaS Forecasting Tool is a better fit if you need a revenue-only forecast (~10x less code) or if you're forecasting enterprise pipeline deal-by-deal. See below.

Configure it in the Standard Financial Model

The whole revenue model can run off Get Started. Cells to set:

Model structure

  • D10: Base Timescale. Leave at "monthly" for SaaS.
  • D11: Periods. Default 72 (6 years).
  • D12: Date of first period.

Revenue model type

  • D22: Revenue model type. Set to recurring. This wires the Revenues sheet for contract cycles, cohort retention, and MRR.
  • D20: Growth metric label (e.g. Leads, Signups, Trials, Free Users).
  • D21: Revenue metric label (e.g. Subscribers, Customers, Accounts).

Growth (new Growth Units)

  • D26: New Growth Units in first month.
  • D27: Growth start date (usually =D12).
  • D28: Initial growth rate.
  • D29: Growth rate deceleration. Default -5%. Negative values curve growth down over time; leave it or tune to your channel maturity.
  • D30: Use seasonality. For consumer SaaS or ecommerce-adjacent products, yes with D131-D142 filled.
  • D31: Viral coefficient (K). Only if word-of-mouth is material. See Virality.
  • D34-D35: CPA per paid Growth Unit and % acquired through paid. Use when paid acquisition is the primary channel. Remember CAC = CPA / conversion rate; the model tracks both separately.
  • D36: Use Outbound Sales. Turn on for sales-led motions; drives the outbound block on Revenues (R20-R100) and Hiring Plan R24.

Conversion (Growth Units to Revenue Units)

  • D40: Conversion rate. The single funnel input. If your real funnel has multiple steps (visitor → trial → paid), multiply them into one rate here, or expand the funnel on Forecast as a second conversion step.
  • D41: Conversion lag months. 0 = same-period; 1 = one-month lag (typical for trials).

Two segments (Segment 1 vs Segment 2)
D44-E44 are segment names. Common SaaS uses:

  • Monthly vs annual plans (different D47-E47 churn periods: 1 vs 12)
  • Starter vs Pro vs Enterprise (collapse into two segments or extend)
  • Self-serve vs sales-assisted
  • Free vs paid (with D45 = % of converted that become paid)

Configure each segment:

  • D45-E45: % split of converted units to each segment. Default 50/50.
  • D46-E46: Churn rate per period.
  • D47-E47: Churn period (1 = monthly, 12 = annual).
  • D54-E54: Avg Revenue per Revenue Unit, per period.
  • D55-E55: Billing period (1 = monthly billing, 12 = annual upfront).
  • D56-E56: % billed upfront. 100% is typical for annual-upfront contracts.

Why segments matter for SaaS: monthly and annual cohorts have different churn math, different deferred revenue profiles, and different cash. The two-segment structure captures both without a second model.

Seasonality

  • D131-D142: monthly % adjustments, Jan through Dec. D143 sums (check it stays at zero).
  • Per-segment or per-channel seasonality isn't prebuilt; apply by editing the segment's growth adjustments on Revenues R114, or gate on Forecast col U per row.

Overrides on Revenues
Most users never leave Get Started. When you need month-specific overrides, the input rows on Revenues (Segment 1 in R20-R691, Segment 2 in R693-R1172):

  • R22: New Sales Hires per period (outbound mode).
  • R114: Manual growth adjustments (columns AB-CU).
  • R202: Manual conversion adjustments.
  • R378+: Per-month average revenue overrides. Use this to model expansion per cohort or price increases over time.

Common modifications

  • Expanding the funnel. Add a second conversion step on Forecast or fold it into D40. Keep the number of conversion steps low; most funnels collapse cleanly into one net rate.
  • Pricing tiers. Build a SUMPRODUCT table on Get Started for weighted-average revenue per unit, and feed the result into D54. For more detail, split the tiers across the two segments.
  • Non-recurring revenue alongside MRR. Add a driver row on Forecast R72-R95 (revenue category 3) as # per Subscribers * $ to attach one-time revenue to your subscriber base.
  • Hardware + SaaS. New Revenue Units drives the hardware build (one-time revenue per new subscriber via drivers on Forecast), existing Revenue Units drives the subscription build. Use Breakdown to split the P&L.
  • Land-and-expand / upsells. Increase D54-E54 over time or overwrite on Revenues R378+ by month. The model lags the revenue growth against each cohort's start month automatically.
  • Annual + monthly subscribers in parallel. Already prebuilt. Use Segment 1 for annual, Segment 2 for monthly, with independent D46-E46 churn, D47-E47 cycles, D55-E55 billing, and D54-E54 ARPU. Walkthrough.
  • Custom billing schedule. Prebuilt options in D55-E55 / D56-E56 cover most cases. For anything exotic (milestone billing, usage bursts), build it separately and link billings into Forecast R45.
  • Custom revenue logic. Build it outside and link in. See Integrating models.

When to reach for the SaaS Forecasting Tool

The SaaS Forecasting Tool is ~10x less code. Use it when you only need a revenue forecast, not full statements; when you want to model an enterprise pipeline deal-by-deal on the Enterprise SaaS sheet, one row per client with TCV, probability, contract cycle, and billing cycle; or when you want an aggregate subscriber-count forecast on the Forecast sheet in Aggregate mode.

Pick one mode. Using Aggregate and Pipeline together double-counts revenue. You can also use the tool alongside the Standard Model: forecast enterprise pipeline there, forecast self-serve in the Standard Model, then sum both streams.

Edit with AI

Start with the universal context primer and Standard Model template primer. Paste them into Claude for Excel before anything specific.

Then three SaaS-specific prompts:

Add a free-to-paid conversion step

I have a freemium product. Free users convert to paid at ~3% per month. Help me model this inside the existing Standard Model structure without adding a new sheet. Options: (a) set D40 conversion rate to the net free-to-paid rate, (b) add a second conversion step on Revenues, or (c) use Segment 1 for free and Segment 2 for paid. Walk me through which fits best, then make only the input edits. Do not touch formulas.

Model expansion revenue per cohort

My net revenue retention is ~115%. I want ARPU to grow ~1.2% per month per cohort. Show me how to model this by editing D54-E54 on Get Started or overriding per-month values on Revenues R378+. Before editing, confirm which approach preserves the lag from cohort start. Then show me which Key Metrics rows (MRR, ARR) reflect the change.

Split MRR and chart new vs expansion

Using the MRR metrics on Key Metrics and the MRR build on Forecast R651-R674, break my ending MRR for each month into: starting, new, expansion (from ARPU growth), contraction, churn. Create a chart on Key Reports (or propose one) that plots these five components as a stacked bar per month. Do not touch formulas on Statements or Key Metrics.

Cost of Sales and Operating Expenses

The video above covers revenues. Expenses live on Forecast R72-R95 using drivers, with Cost of Sales at R70, salaries on Hiring Plan flowing into R50-R59, and acquisition/retention costs at R68-R69 flowing from Revenues. More at Forecast.

Common questions

See the Standard Financial Model page for FAQ. I run free and paid onboarding sessions and custom model work; contact me any time.

Related: Revenues · Cohorts · Drivers · Seasonality · Ecommerce guide · SaaS Forecasting Tool · Edit with AI · Building an Early-Stage SaaS Financial Model, on the Role Forward podcast with Mosaic.