Most first forecasts fail in the same way: someone picks a plausible-looking annual revenue number and works backwards. It produces a spreadsheet, but it doesn't produce understanding — and it collapses the moment anyone asks where the number came from.

The alternative is to model the drivers: the small number of things that, multiplied together, produce revenue. Then when someone asks what happens if you charge 10% more, you have an answer rather than a new spreadsheet.

The four ways money arrives

Almost every business fits one of four patterns, and many use two or three at once. Feasy Pro models each as a separate revenue stream, and one forecast can mix all four.

1. Unit sales — volume × price

You sell a countable thing for a price. The drivers are how many you sell per period and what each one costs the customer.

Use it for: retail, e-commerce, food and drink, hardware, wholesale, manufacturing — anywhere “we sold 400 of them” is a natural sentence.

Worked example. A coffee shop sells 3,200 drinks a month at an average of $4.60. That's $14,720 a month, or $176,640 a year. Now the interesting questions become answerable: what if the average ticket rises to $5.10 as you add food? What if August is 30% quieter?

2. Billable hours — hours × rate

You sell time. The drivers are billable hours per period and your hourly rate.

Use it for: agencies, consultancies, law and accounting practices, trades, therapists, tutors.

Worked example. A two-person studio bills 260 hours a month at $145 — $37,700 monthly. The honest question this format forces on you is utilisation: two people have roughly 340 working hours a month between them, so 260 billable is a 76% rate. That's optimistic, and now you can see that it's optimistic.

3. Recurring charges — subscribers × charge

Customers pay repeatedly, and the base carries forward from month to month. The drivers are your subscriber count and the charge per period.

Use it for: SaaS, memberships, retainers, maintenance contracts, subscription boxes.

Worked example. You start with 40 subscribers at $89/month and add 12 a month. By month twelve you have 172 subscribers and $15,308 in monthly recurring revenue — and the compounding is visible rather than assumed. Set the subscriber count to vary over time to model a slower start or an acquisition push.

4. Revenue only — the number itself

Sometimes you already know the figure and modelling drivers adds nothing. You type the revenue directly.

Use it for: a grant, a fixed contract you've already signed, a stream too small to justify detail, or a legacy line you're winding down.

Use it sparingly. Every stream you enter this way is a number you can no longer interrogate — and interrogating numbers is the whole point of building a forecast.

Choosing between them

Pick the format that matches how you'd naturally describe the business to a friend. If you hear yourself saying “we do about fifteen jobs a month”, that's unit sales. If it's “we bill around 200 hours”, that's billable hours. If it's “we've got 90 members”, that's recurring charges.

When a business genuinely does two things — a studio with project work and retainers, say — model them as two streams. You'll get a revenue mix chart out of it, and you'll be able to attach different direct costs to each.

Constant or varying over time

Every driver in Feasy Pro can hold constant across the forecast horizon or vary month by month. Constant is the sensible default: it keeps the model readable and it's honest about how much you actually know.

Switch to varying when there's a real reason:

  • Seasonalitya garden centre in April is not a garden centre in November
  • Ramp-upa new location that takes six months to reach steady state
  • Planned price changesa rise you've already decided on
  • Contract endingsa stream you know stops in month nineteen

For varying values you can paste a row straight from Excel or use fill-right, so populating 36 months takes seconds rather than an afternoon.

Four mistakes worth avoiding

  1. Hockey sticks with no mechanism.Growth has to come from somewhere — more customers, higher prices, a new channel. If you can't name the driver, the curve is a wish.
  2. Forgetting capacity.Selling 500 haircuts a month needs enough chairs and enough hours. Model the people alongside the revenue and the constraint shows up.
  3. Confusing revenue with cash.Booking a sale isn't being paid for it. That's what credit terms are for — see reading a cash-flow forecast.
  4. Ignoring the direct costs.Revenue that costs 90% of itself to deliver isn't the win it looks like. Attach direct costs to each stream, as an amount or as a percentage, and read the gross margin.

What to do next

Pick the stream type that matches your business and enter your honest best guess for each driver. Don't polish it — a rough forecast you can question beats a precise one you can't.

Then look at what it produces. In Feasy Pro, revenue flows straight into the three statements and the metrics dashboard, so you'll see gross margin, break-even and cash runway immediately — and you'll know which assumption to go and research first.