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Methodology

Expansion Revenue Planner methodology

Test adoption-driven expansion MRR against contraction and programme cost without treating the scenario as a forecast.
Duc Nguyen X.By Duc Nguyen X.· Founder, Margin101Last reviewed: View update historyMethodology

Educational only: Business decision support, not accounting, tax or legal advice.

Privacy: Calculations run locally; Margin101 does not receive your commercial inputs.

Update policy: Reviewed when formulas or official dependencies change.

Scope: Market-neutral small-business planning using your own assumptions.

1. Formulas and units

Adopting accounts
adoptingAccounts = eligible accounts × adoption rate

Where

eligibleAccounts
Eligible accounts (whole or operational units)Source: Business record
adoptionRate
Adoption rate (decimal rate)Source: User assumption
adoptingAccounts
Adopting accounts (units)Source: Calculated output
Expansion MRR
expansionMrr = adopting accounts × expansion MRR per adopter

Where

expansionMrrPerAdopter
Expansion MRR per adopter (currency units on one consistent basis)Source: User decision
adoptingAccounts
Adopting accounts (units)Source: Calculated output
expansionMrr
Expansion MRR (money)Source: Calculated output
Closing MRR
closingMrr = opening MRR + expansion MRR − contraction MRR

Where

openingMrr
Opening MRR (currency units on one consistent basis)Source: Business record
contractionMrr
Contraction MRR (currency units on one consistent basis)Source: User assumption
expansionMrr
Expansion MRR (money)Source: Calculated output
closingMrr
Closing MRR (money)Source: Calculated output
Annualised contribution before service cost
annualisedContributionBeforeServiceCost = (expansion MRR − contraction MRR) × 12 − programme cost

Where

contractionMrr
Contraction MRR (currency units on one consistent basis)Source: User assumption
programmeCost
Programme cost (currency units on one consistent basis)Source: User decision
expansionMrr
Expansion MRR (money)Source: Calculated output
annualisedContributionBeforeServiceCost
Annualised contribution before service cost (money)Source: Calculated output

Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Rates, margins, utilisation and buffers are entered as percentages and converted to decimal values for calculation.

2. Worked example

Input assumptions

Worked values below come from the same registered engine and visible default assumptions.

Calculation and outputs

Example

Worked values below come from the same registered engine and visible default assumptions.

Adopting accounts
20
Expansion MRR
1,000.00 currency units
Closing MRR
10,800.00 currency units
Annualised contribution before service cost
8,600.00 currency units

The exact engine-derived outputs are shown in the labelled rows below.

Interpretation

Use closing MRR and annualised contribution before service cost to test the entered programme scenario; the result is not profit.

3. Validation and boundary checks

  • Eligible accounts must be a finite non-negative whole number and adoption must remain between 0% and 100%.
  • Contraction MRR cannot exceed opening MRR.
  • Closing MRR reconciles opening plus expansion less contraction.
  • Negative annualised contribution before service cost remains visible instead of being floored.

4. Assumptions and source classification

  • Adoption and contraction are user-entered scenarios rather than forecasts.
  • Programme cost uses the same annualised comparison basis; service cost is deliberately excluded.

This planner has no current policy-data dependency. Its commercial assumptions are user supplied. Registered family-level regression suites exercise the shared business-logic engine and worked-result reconciliation.

5. Limitations

  • Annualised contribution before service cost is not profit and does not include delivery capacity or service cost.
  • It does not replace financial, accounting, tax or legal advice.

This is educational decision support, not tax, accounting, legal or financial advice. Check the treatment of your actual transactions under the rules that apply to your business and seek qualified advice where appropriate.

6. Update and evidence policy

Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this planner. Commercial inputs remain user-supplied because they vary by business and contract.

Change history

  1. : Initial public release of the Expansion Revenue Plan planner and methodology.

Related reading

Guides to interpret the decision and its assumptions.

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