Simple Reality - Transaction Price to Transaction Quantity
It is common for many innovators to become so caught-up in their idea, that they forget to do (or avoid doing) some simple due diligence around the revenue realities they will face.
Question
What are the Simple Revenue Realities your business faces as you work to monetize the value you create?
aka: How realistic are your revenue goals?
Answer
Here is a simple tool to help you efficiently think through some of the very basic considerations that will ultimately determine your revenue outcomes.
Let's Get Started
Grab a coffee, side-step any distractions (make it a priority) and ...
- Simply download the Excel worksheet or click this link for the Google sheet.
- Enter your Revenue Goal
- As appropriate, adjust the range of ... # of Transactions -and/or- $ per Transaction
- Observe the simple realities of how many transactions at what price will achieve your goal.
Bonus
We have also made it easy to think through Acquisition Scenarios (revenue production) on the Quick Funnel Projections tab.
Example
A smart founding team developed a break-through in applying Artificial Intelligence to help auto dealers generate more revenue from first-time car buyers, post the initial sale.
- After a limited private beta, their first year (12 mos. following public launch) revenue goal is $5,000,000.
- Through a series of strategy sessions with a trusted pricing and monetization consultant, they initially hypothesized that they could effectively frame a compelling value case for a $25k annual subscription.
- The simple reality of the above is they would need to close 200 opportunities, at $25k each, to achieve their 12 month revenue goal.
Why Stop There ...
With the above in mind, they next want to get a sense of the realities around their customer acquisition efforts ... so they used the Quick Funnel Projections tab.
They carefully noted that achieving 10% Prospect-to-Lead conversion rate, compared to a 20% conversion rate (a 50% reduction) ... would require they increase their Opportunity-Win-Rate by 100% (from 25% to 50%) in order to still hit their revenue production goal.
This highlighted the critical-importance of truly understanding their target customers and effectively communicating their (real) value advantages.
In either scenario, successfully increasing performance at each stage of the funnel ... contributes significant improvements to top-line revenue production.
How Does the (your) Story End ?
Well the story isn't over. In part, because of the clarity that resulted from using this simple tool, they exceeded their 12-month revenue goal.
The added clarity increased their confidence and as a result ... they were intentional with their priorities and consistently fine-tuned their approach along the way.
- Prospect to Lead RateHypothesis = 20%Actual = 25%
- Lead to Opportunity RateHypothesis = 20%Actual = 30%
- Opportunity to Win RateHypothesis = 25%Actual = 40%
How will your story end?
Perhaps better and more optimistically stated ...
How will you write the next Chapter in your story?
Using this simple tool will help you ... or perhaps someone you know.
Simply download the Excel worksheet or click this link for the Google sheet.