Tell me more ×
Answers OnStartups is a question and answer site for entrepreneurs looking to start or run a new business. It's 100% free, no registration required.
up vote 0 down vote favorite

Many CRM applications include sales pipeline tracking and sales workflow. Generally, when a new opportunity is created, one has to somehow enter the 'expected revenue' for the deal. This is easy for product and one-off service sales, it is simply the total of all products and services for the deal.

The question I have concerns subscription based services. When selling something that has a monthly recurring revenue, what value should be entered as the 'expected revenue' for the opportunity? Is it the revenue for one month, one year, or something else?

share|improve this question

1 Answer

up vote 1 down vote

Many CRM applications don't address subscription / recurring revenue models. Cohort analysis is a good metric to view - but a bit more than a simple "field" value.

If you need a rollup value, See Estimating lifetime value of subscription models Also - there is an updated post on Estimating LV of an ecommerce company.

Do these work for you?

share|improve this answer
Those are interesting articles, but are useful more for retrospective analysis than for estimating the value of a sale before it has happened. As you say, CRM applications don't adequately address this model. I think what I may do is just make an easy assumption that each customer will subscribe for a year, and take that as the value of the sale. After all, its only a metric for filtering and prioritsation. The actual sales figures will come from the accounting system. – Tim Long Jul 26 '12 at 12:20

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.