Example: Forecasting a SaaS Business Starting at $5K MRR
This example models a small SaaS company that has reached $5,000 in monthly recurring revenue and wants a realistic first pass at the next twelve months. The assumptions are not predictions. They are a working scenario for learning how growth and churn interact.
Starting MRR
$5,000
Monthly growth
8.0%
Monthly churn
2.1%
Forecast period
12 months
Month-by-Month Forecast
| Month | Starting MRR | New MRR | Churned MRR | Ending MRR | ARR |
|---|---|---|---|---|---|
| 1 | $5,000 | $400 | $105 | $5,295 | $63,540 |
| 2 | $5,295 | $424 | $111 | $5,608 | $67,296 |
| 3 | $5,608 | $449 | $118 | $5,939 | $71,268 |
| 4 | $5,939 | $475 | $125 | $6,289 | $75,468 |
| 5 | $6,289 | $503 | $132 | $6,660 | $79,920 |
| 6 | $6,660 | $533 | $140 | $7,053 | $84,636 |
| 7 | $7,053 | $564 | $148 | $7,469 | $89,628 |
| 8 | $7,469 | $598 | $157 | $7,910 | $94,920 |
| 9 | $7,910 | $633 | $166 | $8,377 | $100,524 |
| 10 | $8,377 | $670 | $176 | $8,871 | $106,452 |
| 11 | $8,871 | $710 | $186 | $9,395 | $112,740 |
| 12 | $9,395 | $752 | $197 | $9,950 | $119,400 |
What the Founder Should Learn
The company nearly doubles MRR over twelve months in this scenario, ending near $9,950 MRR. That is a strong result for a small SaaS business, but it depends on maintaining 8% monthly growth while keeping churn near 2.1%. If churn rises or acquisition slows, the forecast changes quickly.
The example also shows why ARR run rate is not the same as cash collected. By month twelve, ARR run rate is about $119,400, but that does not mean the company collected $119,400 during the year. It means the month twelve recurring revenue base annualizes to that level if sustained.
Use this example as a model for your own planning. Replace the assumptions with your current MRR, actual churn, and realistic growth rate. Then compare the result with a downside case. Open the calculator prefilled with this scenario, or copy the SaaS revenue forecast template.