How to add in additional revenue streams

The revenue model in the Standard Model enables you to model up to two revenue streams from one user base. Here's how you can add in more revenue streams.

A common question I get asked is “how do I build in additional revenue streams”?

The default revenue model forecasts up to two revenue streams from one user base, but you may find yourself needing to add in more revenue streams or more user bases.

There’s a few methods available in using the Standard Model: 1

  • Replicate the Revenue Model to create an additional set of Revenue Model calculations, then link into Modelhooks. This is more detailed, but it’s a common approach if the default revenue model is a good structure for what you want to model, and you just want to add another user base or two. The process is simple: select the Get Started - Revenue Model and Revenue Model sheets as a group (command + click on a Mac, control + click on a PC), select Move or Copy from the option list, and then select to copy the sheets. Now you will have two completely independent instances of the default revenue model, and you can setup the funnel and revenue model for each. Then, you’ll just need to link the new revenue model into Modelhooks, details here ›
  • Add the new revenue stream(s) to the Revenue Model sheet or a new sheet, then link into Modelhooks. This is a fairly simple and common method. If the default revenue model is a good structure for calculating some of your revenue streams, and you want to add a new revenue stream that is either not a great fit for the default structure, or a new revenue stream that is tied to a new user base, then I’ll create a new set of calculations for this new revenue stream. If it’s really simple, I’ll just do it at the bottom of the Revenue Model sheet. If it’s more complex, or I want to make it separate from the default structure, I’ll create a new sheet for it. And then I’ll link the new revenue stream(s) into Modelhooks. The default Modelhooks structure has eight lines for revenues and three for cost of goods sold; all of them are by default tied to the existing revenue model, but for any lines that you are not using (since some of them are optional), you can simply replace them with the calculations from your new revenue streams. If you need more lines, it’s fairly easy, you just need to add in new lines into Modelhooks, Forecast, and Actuals, so that the revenue lines displayed are consistent. 2
  • Create a new revenue model for all of your revenue streams, and link into Modelhooks. When I built custom models, this is what I do. If I’m not using the default revenue model at all, I delete the Get Started - Revenue Model sheet, then I delete all the rows on the Revenue Model sheet below the timing scale (meaning, I delete everything below row 7). Now I have a clean sheet, and I build my custom revenue model however I want, and then link the necessary metrics into Modelhooks. I rename the Revenue lines and the Cost of Goods Sold lines to how I want the terminology to work in the financial reports, then type in the terms for the conversion funnel and link in the appropriate metrics. If necessary, I will link in any acquisition expenses I have modeled in, or any sales hires I may have built to model growth. I will calculate LTV on my custom sheet and link that into Modelhooks. Sometimes I will edit the Summary sheet to change the major metrics being displayed at the top of the Summary statement, or sometimes I will add new lines into Modelhooks for more revenue lines or COGS detail, but for 90% of integrations the only thing “integration” of a custom revenue means is linking the relevant numbers into the Modelhooks sheet.

While each of those approaches are a bit different in how you create the new revenue stream, all of them use the Modelhooks approach to feed the new revenues (and cost of goods sold, and relevant metrics) into the financial core of the model. More on Modelhooks ›

  1. If you are using the Starter Model, adding in new revenue streams is fairly easy since the default structure has no prebuilt logic for growth and revenues, so it’s easy to build in your own however you want. Simply add them to the Forecast sheet or create a new sheet for Revenues to forecast your revenue streams. 

  2. There’s one additional little thing: if you are modeling a marketplace business and you want to report gross transaction value, but not sum that into net revenues, use the yes/no dropdown on Modelhooks, rows 14 to 21, to select whether you want to sum them into revenues. 

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