Pilot Revenue Calculator
Project 12-month revenue, costs, and profitability based on merchant acquisition, churn, and ARPU (average revenue per merchant).
Purpose
This calculator helps you:
- Forecast Year 1 revenue and profitability
- Test different acquisition and churn scenarios
- Find the break-even month
- Validate unit economics assumptions
- Understand sensitivity to ARPU and churn rate
Interactive Calculator
Scenario Presets
Input Assumptions
Merchant Acquisition Algorithm
12-Month Projections
| Month | New | Churned | Active | Revenue | Costs | Profit | Cumulative |
|---|---|---|---|---|---|---|---|
| 0 | 2 | 0 | 2 | $330 | $85 | $245 | $245 |
| 1 | 2 | 0 | 4 | $660 | $85 | $575 | $820 |
| 2 | 2 | 0 | 6 | $990 | $85 | $905 | $1,725 |
| 3 | 2 | 0 | 8 | $1,320 | $85 | $1,235 | $2,960 |
| 4 | 2 | 0 | 10 | $1,650 | $125 | $1,525 | $4,485 |
| 5 | 3 | 0 | 13 | $2,145 | $125 | $2,020 | $6,505 |
| 6 | 3 | 0 | 16 | $2,640 | $125 | $2,515 | $9,020 |
| 7 | 3 | 0 | 19 | $3,135 | $125 | $3,010 | $12,030 |
| 8 | 3 | 0 | 22 | $3,630 | $125 | $3,505 | $15,535 |
| 9 | 3 | 1 | 24 | $3,960 | $125 | $3,835 | $19,370 |
| 10 | 3 | 1 | 26 | $4,290 | $125 | $4,165 | $23,535 |
| 11 | 3 | 1 | 28 | $4,620 | $125 | $4,495 | $28,030 |
| 12 | 4 | 1 | 31 | $5,115 | $125 | $4,990 | $33,020 |
Year 1 Summary
Key Insights
- ✅ Profitable pilot: Net profit of $33,020 in Year 1 validates business model.
- ✅ Excellent margins: 95.8% profit margin indicates strong unit economics.
- ✅ Strong retention: 5% churn rate shows good product-market fit.
- ✅ Fast break-even: Reached profitability at Month 0.
How to Use
1. Load a Preset Scenario
Click Conservative, Baseline, Optimistic, or Aggressive to see pre-configured merchant acquisition plans.
- Conservative: Slow acquisition (2-4/month), higher churn (8%), lower ARPU (150)
- Baseline: Moderate acquisition (2-8/month), healthy churn (5%), realistic ARPU (165)
- Optimistic: Faster acquisition (3-10/month), good churn (3%), higher ARPU (180)
- Aggressive: Very fast acquisition (4-12/month), excellent churn (2%), premium ARPU (200)
2. Adjust Custom Inputs
Basic Metrics
- ARPU: Average revenue per merchant per month (100-300 range)
- Monthly Infrastructure Cost: Hosting, Firebase, domain (50-200 range)
- Monthly Contractor Cost: Support/ops contractor (0-100 range)
- Merchant Churn Rate: % of merchants lost monthly (0-20% range)
Merchant Acquisition Schedule
Adjust new merchants per month for each of the 13 months (Months 0-12). This gives you fine-grained control over acquisition timing.
3. Read Results
Month-by-Month Table
- New: Merchants acquired that month
- Churned: Merchants lost to churn
- Active: Total merchants (cumulative)
- Revenue/Costs/Profit: Monthly metrics
- Cumulative: Running total of profit (breaks even when cumulative profit > 0)
The table highlights the break-even month in green.
Year 1 Summary Cards
- Total Revenue: Sum of all monthly revenue
- Total Costs: Sum of all monthly infrastructure + contractor costs
- Net Profit: 12-month cumulative profit (or loss)
- Profit Margin: % of revenue that's profit
- Avg Merchants: Average active merchants across the year
- Break-Even: Which month (if any) cumulative profit turns positive
Insights Panel
Smart indicators:
- ✅ Success if profitable or break-even by Month 6
- ⚠️ Warning if losing money or projected to lose money
- ℹ️ Info on margin health (> 50% is excellent)
- ℹ️ Churn feedback (< 5% is strong, > 10% is concerning)
Key Concepts
ARPU (Average Revenue Per Merchant)
Revenue generated by each merchant per month.
Examples:
- 150/month: Flat fee with minimal add-ons (conservative)
- 165/month: Flat 150 + 15 PPC (realistic pilot mix)
- 180+/month: Higher engagement, premium merchants (growth phase)
Changes to ARPU have the biggest impact on profitability. A 10% increase in ARPU can change year 1 profit from loss to strong growth.
Merchant Churn Rate
% of active merchants lost each month (cancellation, switching platforms, etc.)
Healthy benchmarks:
- 5%/month: Good (95% retention) — strong product-market fit
- 3%/month: Excellent — very sticky product
- 8-10%/month: Concerning — retention issues need attention
Example: If you have 100 active merchants and 5% churn, you lose 5/month.
Churn reduces growth impact. Even with aggressive acquisition, high churn caps total merchants.
Break-Even Month
Month when cumulative profit becomes positive (net profit > 0).
Healthy:
- Month 1-6: Exceptional product-market fit, strong economics
- Month 7-12: Reasonable, shows path to profitability
- After Month 12: Consider reducing costs or increasing ARPU
If break-even is never reached in 12 months, the model shows sustained losses — adjust assumptions.
Scenarios Explained
Conservative
- Slow merchant acquisition (2-4/month average)
- Higher churn rate (8%) = retention challenges
- Lower ARPU (150) = conservative pricing
Result: Year 1 likely shows break-even or modest loss. Validates need to either:
- Acquire faster
- Improve retention
- Increase ARPU
Use case: Worst-case planning, stress test, risk modeling.
Baseline
- Moderate acquisition (2-8/month, ramps late year)
- Healthy churn (5% = 95% monthly retention)
- Realistic ARPU (165 = 150 flat + 15 PPC)
Result: Break-even by Month 10-11, profitable Year 1, ~$3K annual net profit.
Use case: Default assumption for pilot planning. Most likely scenario.
Optimistic
- Faster acquisition (3-10/month)
- Good churn (3% = 97% retention)
- Higher ARPU (180)
Result: Break-even by Month 8-9, strong Year 1 profit (~$8K+), clear path to scale.
Use case: Best-case scenario if marketing/product performs well.
Aggressive
- Very fast acquisition (4-12/month)
- Excellent churn (2% = 98% retention)
- Premium ARPU (200)
Result: Break-even by Month 6-7, very profitable Year 1 (~$15K+), ready to scale aggressively.
Use case: If you achieve viral growth or land major anchor merchant.
How to Customize Acquisition Schedule
The New Merchants per Month section lets you model realistic acquisition timing:
- Months 0-2: Slow start (seed launches, early testing)
- Months 3-6: Ramp up (word-of-mouth, early PR)
- Months 7-9: Acceleration (referral loops, paid marketing)
- Months 10-12: Scale (product maturity, proven model)
Example baseline curve: [2, 3, 3, 2, 4, 4, 4, 3, 3, 3, 8, 8, 8]
- Slow in spring (2-3/month)
- Ramp in summer (4/month)
- Aggressive push in fall/winter (8/month)
Adjust these numbers to match your actual go-to-market plan.
Sensitivity Analysis
Try these tweaks to understand impact:
| Change | Impact | Lesson |
|---|---|---|
| ↑ ARPU by 10% | +$5-10K annual profit | Pricing has outsized impact |
| ↓ Churn by 2% | +$2-5K annual profit | Retention compounds over time |
| ↑ Merchant acquisition 20% | +$8-15K annual profit | Speed matters for Year 1 |
| ↓ Operating costs by 20% | +$2-3K annual profit | Optimization helps but not primary driver |
Insight: ARPU and acquisition speed are levers. Churn is compounding. Operating costs matter less at pilot scale.
Common Questions
Q: When should we hire the contractor?
A: Currently set for Month 4. If acquiring faster, move earlier. If slower, move to Month 6-7.
Q: What ARPU should we target?
A: Start at 165 (150 flat + 15 PPC mix). Test pricing elasticity:
- Too low (120): Limits runway
- Realistic (165): Most likely
- Optimized (200+): If you can command premium
Q: How many merchants do we need for profitability?
A: Depends on ARPU and costs, but typically:
- 150/month ARPU + 85 costs = Need 67 merchants to break even monthly
- 165/month ARPU + 125 costs = Need 54 merchants to break even monthly
Use the calculator to find your magic number.
Q: Why does churn matter so much?
A: Because it's compounding. Small monthly churn (5%) = 34% annual churn from a cohort. Over 12 months, this severely caps total merchants.
Q: Should we plan to be profitable in Year 1?
A: Depends on strategy:
- Investors: May not require Year 1 profit (growth > profitability)
- Bootstrapped: Should hit break-even by Month 9-12
- Cooperative: Should at least show credible path to profitability
This calculator helps you model either approach.
Integration with Other Docs
- ECONOMICS.md — Cost structure and assumptions
- PILOT_STRATEGY.md — Full 12-month pilot plan with context
- FUND_ALLOCATION.md — How Year 1 revenue is allocated to employees, costs, etc.
Last Updated: 2026-01-11