Build and compare top-down (market share) and bottom-up (customer segment) revenue forecasts. Enable one or both approaches to create multi-year projections with CAGR and cumulative totals. Educational use only, not investment or business advice.
Configure top-down and bottom-up forecast parameters
Choose a number of years, then enter assumptions for a top-down view (total market revenue and your share) and/or a bottom-up view (customer segments, churn, and average revenue per customer). The tool will generate parallel revenue paths and basic growth metrics so you can compare how different sets of assumptions translate into annual revenue estimates.
Start from market size and apply your share assumptions
Build from customer segments, churn, and ARPC
See CAGR and cumulative totals for each view
See both paths side-by-side for comparison
This is an educational model and not a financial forecast or advice.
Revenue forecasting is essential for business planning, investor presentations, and strategic decision-making. There are two complementary approaches: top-down and bottom-up. Each provides a different perspective, and comparing them helps validate your assumptions.
Top-down forecasting starts with the total market size and works down to your expected share. This approach is useful when you have reliable market data and want to understand your potential within the broader industry context.
Best for: Investor presentations, TAM/SAM/SOM analysis, understanding market context, strategic planning.
Bottom-up forecasting builds from individual customer segments. This approach is more operationally grounded and reflects your actual sales capacity, customer acquisition rates, and retention metrics.
Best for: Operational planning, sales capacity modeling, SaaS metrics, unit economics validation.
Using both methods provides a sanity check on your projections:
The average annual growth rate over the forecast period, accounting for compounding. Calculated as: (Final/Initial)^(1/years) - 1.
The percentage of customers who stop using your product annually. Applied to start-of-year customer count before adding new customers.
The average annual revenue generated per customer. For SaaS, this is similar to ACV (Annual Contract Value).
Percentage points added or subtracted from your market share each year. If you start at 5% and grow by 0.5pp/year, you'll be at 5.5% in Year 2.
Estimate your Total Addressable Market, Serviceable Available Market, and Serviceable Obtainable Market.
Calculate the number of units you need to sell to cover all fixed and variable costs.
Estimate customer lifetime value and compare it to customer acquisition cost.
Calculate monthly and annual recurring revenue, churn rate, and net MRR growth.
Project your cash runway based on current cash and monthly burn rate.
Evaluate investments using discounted cash flow analysis and net present value.
Using both top-down and bottom-up forecasting methods helps validate your assumptions and identify gaps between market opportunity and operational capacity.
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