Revenue, costs and profit
How Foundation projects revenue, costs and profit year by year.
Revenue
Each product earns according to its pricing type:
- Per unit: price × monthly volume × months selling.
- Commission: monthly value × your percentage × months selling.
- Subscription: monthly price × average customers × months, plus the one-time fee for each new customer.
In year 1, a product that starts after a few months only earns for the months it's on sale. Subscriptions ramp from your starting customers to your end-of-year count.
From year 2, revenue grows by your revenue growth rate. Subscription customers also lose your churn rate each year before new ones are added.
Costs
Operating costs are your running-cost categories, staff (with employer costs), energy, depreciation and a contingency. Each one is split into:
- a fixed part that stays the same every year, like rent; and
- a variable part that grows in step with revenue, like ingredients or card fees.
Foundation doesn't add inflation. Fixed costs stay flat across the projection.
Profit and tax
profit before tax = revenue − operating costs
net profit = profit before tax − tax
Tax is your tax rate applied to positive profit only. Losses in one year don't reduce tax in later years.
Net margin is net profit as a share of revenue. ROI is year-1 net profit divided by total investment.
Cash flow
Depreciation is a cost on paper, but no cash leaves the business. So yearly cash flow is net profit plus depreciation. Cumulative cash flow starts at minus your total investment and adds each year's cash flow.