I think it's important to break down revenue into its components.
That way, you can get a more granular sense of the business drivers.
Let's go through a few examples ⬇️
1. Subscription
2. Retail
3. Marketplace
4. Ads
5. Franchise
That way, you can get a more granular sense of the business drivers.
Let's go through a few examples ⬇️
1. Subscription
2. Retail
3. Marketplace
4. Ads
5. Franchise
1/ Subscription
1. # of customers
2. average revenue per customer
Within these, you have different sizes of customers though. In SaaS, oftentimes enterprise customers are growing faster and have lower churn because of the high dollar amounts.
1. # of customers
2. average revenue per customer
Within these, you have different sizes of customers though. In SaaS, oftentimes enterprise customers are growing faster and have lower churn because of the high dollar amounts.
2/ Retail/Restaurant
1. # of stores
2. average unit volume
It's important to understand the number of total stores management thinks is possible. Pair this with the efficiency of the store and you can get an end-game revenue estimate.
1. # of stores
2. average unit volume
It's important to understand the number of total stores management thinks is possible. Pair this with the efficiency of the store and you can get an end-game revenue estimate.
3/ Marketplace
1. # of customers
2. average order value
3. number of transactions
4. take-rate
Marketplaces are a little more complex because you have the entire volume of the system (gross merchandise volume = GMV) and a take-rate that the company keeps as revenue.
1. # of customers
2. average order value
3. number of transactions
4. take-rate
Marketplaces are a little more complex because you have the entire volume of the system (gross merchandise volume = GMV) and a take-rate that the company keeps as revenue.
4/ Advertising
1. MAUs/active engagement metric
2. ARPU (average revenue per user)
Advertising is all about engagement because it deserves higher ARPU and signals that the product is interesting.
Hours/day and DAU/MAU are solid metrics that measure engagement.
1. MAUs/active engagement metric
2. ARPU (average revenue per user)
Advertising is all about engagement because it deserves higher ARPU and signals that the product is interesting.
Hours/day and DAU/MAU are solid metrics that measure engagement.
5/ Franchise
1. # of locations
2. royalty fees
A franchise is actually similar to a marketplace in terms of unit economics. GMV is all the volume that flows through the entire system and the franchisor takes a cut of that in the form of a royalty.
1. # of locations
2. royalty fees
A franchise is actually similar to a marketplace in terms of unit economics. GMV is all the volume that flows through the entire system and the franchisor takes a cut of that in the form of a royalty.
End/
There are many more examples but at the end of the day, everything boils down to the number of customers and the revenue per customer.
You can further analyze each segment into the total number of customers possible and the value prop which relates to revenue per customer.
There are many more examples but at the end of the day, everything boils down to the number of customers and the revenue per customer.
You can further analyze each segment into the total number of customers possible and the value prop which relates to revenue per customer.
We haven't discussed unit economics but that has to do with the efficiency of the revenue per customer.
If you want to learn more about unit economics, check this out: investingcity.org/post/unit-econ…
If you want to learn more about unit economics, check this out: investingcity.org/post/unit-econ…
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