Financial Modeling Basics
Build simple financial models to understand your business economics—revenue projections, unit economics, and break-even analysis.
🎯 What You'll Learn
- ✓Create basic revenue projections based on reasonable assumptions
- ✓Understand unit economics and why they matter
- ✓Calculate break-even points and runway
📖 Tutorial
Financial modeling isn't just for MBAs. Understanding your numbers helps you make better decisions about pricing, growth, and sustainability. AI can help you build models and understand the math.
Step 1: Start with Unit Economics
What does it cost to acquire a customer? What do they pay you? How long do they stay? These unit economics determine if your business can work.
Step 2: Build Revenue Projections
Revenue projections should be bottom-up (based on specific assumptions) not top-down (based on market percentages). AI can help you think through the drivers.
Step 3: Map Your Costs
Fixed costs stay the same regardless of sales. Variable costs grow with revenue. Understanding both helps you plan profitability.
Step 4: Calculate Break-Even
When do you start making money? Break-even analysis shows how many sales you need to cover your costs.
Step 5: Run Scenarios
Best case, worst case, realistic case. AI can help you model different scenarios and understand what drives the differences.
Step 6: Track Key Metrics
Identify the numbers that matter most for your business and how often to review them.
📋 Copy-Paste Prompts
Use these prompts with ChatGPT, Claude, or any AI assistant.
Help me understand the unit economics of my business. My business model: [DESCRIBE HOW YOU MAKE MONEY] What I charge: [PRICING] How customers pay: [ONE-TIME/SUBSCRIPTION/USAGE-BASED] Based on this, walk me through: 1. CUSTOMER ACQUISITION COST (CAC): How to calculate it, what to include 2. CUSTOMER LIFETIME VALUE (LTV): Formula and calculation 3. LTV:CAC RATIO: What it means and healthy benchmarks 4. PAYBACK PERIOD: How long to recoup acquisition cost 5. GROSS MARGIN: What to include in cost of goods sold If I provide numbers, calculate these metrics for me. If not, tell me what data I need to gather. My numbers (if available): [ANY DATA YOU HAVE]
Example output:
Calculate unit economics. SaaS business, $29/month subscription, average customer stays 8 months...
Help me create a 12-month revenue projection. My business: [DESCRIBE] Pricing: [YOUR PRICES] Current situation: [STARTING POINT - CUSTOMERS/REVENUE] Growth levers: [HOW YOU ACQUIRE CUSTOMERS] Build a projection that: 1. States all assumptions clearly 2. Shows month-by-month projections 3. Accounts for churn/refunds if applicable 4. Breaks down by customer type if relevant 5. Shows total revenue and growth rate Then create three scenarios: - Conservative (things go slower than hoped) - Realistic (reasonable expectations) - Optimistic (things go really well) Note which assumptions have the biggest impact on results.
Example output:
Create 12-month revenue projection. Online course business, $199 course, currently 0 customers, planning to launch with email list of 500...
Help me calculate my break-even point. My fixed costs (monthly): - [LIST COSTS: rent, salaries, software, etc.] My variable costs per sale: - [LIST COSTS: materials, shipping, payment fees, etc.] My price per sale: [AMOUNT] Calculate: 1. Contribution margin (revenue minus variable costs per sale) 2. Break-even point in units (how many sales to cover fixed costs) 3. Break-even point in revenue 4. How many days/months until break-even at current pace 5. What would change break-even most (price vs. costs) Show the math so I understand the calculation.
Example output:
Calculate break-even. Fixed costs: $3,000/month (software, tools, contractor). Variable: $5 per sale. Price: $49 per sale...
Help me calculate my business runway. Current cash: $[AMOUNT] Monthly revenue: $[AMOUNT] Monthly expenses: $[AMOUNT] Monthly growth rate (revenue): [PERCENT] Expenses growth rate: [PERCENT IF APPLICABLE] Calculate: 1. Current monthly burn rate 2. Runway at current burn (months of cash left) 3. Runway if revenue grows as expected 4. When I'll hit profitability (if trajectory continues) 5. What revenue level makes me cash-flow positive 6. Warning zone: when should I start worrying? Provide a simple month-by-month table showing cash balance.
Example output:
Calculate runway. Cash: $20,000. Revenue: $2,000/month. Expenses: $5,000/month. Revenue growing 15%/month...
Help me analyze different pricing options for [MY PRODUCT/SERVICE]. Current or proposed price: $[AMOUNT] My costs per sale: $[AMOUNT] Current conversion rate: [PERCENT IF KNOWN] Monthly visitors/leads: [NUMBER IF KNOWN] Analyze: 1. Current unit economics at this price 2. Impact of raising price 20% (on revenue, assuming conversion drops) 3. Impact of lowering price 20% (on volume and revenue) 4. Where's the optimal price point likely to be? 5. What data would help me find the right price? 6. Non-price factors that affect willingness to pay Show the math for each scenario.
Example output:
Analyze pricing for my online course. Current: $97. Costs: $10/sale. 2% conversion from 1,000 monthly visitors...
💪 Practice Exercise
Build Your First Financial Model
Use 'Unit Economics Calculator' to understand your per-customer economics (use estimates if you don't have real data). Then use 'Break-Even Analysis' to figure out how many sales you need to be profitable. Finally, use 'Revenue Projection Model' to map out your first 6 months.
💡 Pro Tips
- 💡Models are only as good as their assumptions—document and revisit them
- 💡When in doubt, be conservative—optimistic projections lead to bad decisions
- 💡Update your model monthly with real data to improve accuracy