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SimulateFin

SaaS vs. in-house software ROI & cash runway simulator

Model five years of recurring revenue, engineering payroll, cloud spend and licence costs in one place. Adjust any assumption and the projection, break-even point and runway recalculate instantly — then share the exact scenario as a link.

Viable but tight

The model survives, but the margin for error is thin.

Year-5 ARR
$3.4M

From $1.5M today — 2.4x over 5 years.

5-year net profit
$560.3K

On $11M of cumulative revenue.

Break-even
2y

Operating profit turns positive in month 24.

Cash runway
60+ mo

Lowest balance $526.3K in month 23.

LTV : CAC
1.5x

LTV $5.5K against $3.6K acquisition cost.

CAC payback
11 mo

Net revenue retention 101.2% per month.

5-year projection · Realistic case

60 monthly periods, compounded. Hover for exact figures.

  • Cash balance
  • Cumulative net profit

Quick glossary

MRR (Monthly recurring revenue)
Contracted, repeating revenue normalised to a monthly figure.
ARR (Annual recurring revenue)
Annualised recurring revenue, conventionally MRR multiplied by twelve.
ARPA (Average revenue per account)
Average recurring revenue per customer account, per month.
Gross margin
Revenue remaining after the direct cost of delivering the service.
Net revenue retention (NRR)
Retention including expansion — above 100% the base grows on its own.
Opex (Operating expenditure)
Payroll, contractors, infrastructure, licences and maintenance.
TCO (Total cost of ownership)
Every cost of a path over the full horizon, not just the sticker price.
Full glossary →

Start from a profile

Software strategy

Licence a third-party platform. Predictable per-seat cost that grows with headcount.

USD
$0$500K
%
0%25%
%
0%15%
USD
$10$5K
USD
$0$25K
%
20%95%
0120
USD
$40K$400K
h
0 h800 h
USD
$20$400
USD
$0$2K
USD
$0$5M
mo
1 mo36 mo
FTE
0 FTE20 FTE

What these numbers mean

A plain-language reading of the projection above. Every figure updates as you move the controls. Current verdict: Viable but tight.

Where the revenue goes

Starting from $120K in monthly recurring revenue, organic growth of 7.2% outruns 6.0% monthly churn by 1.2% a month before any paid acquisition. Re-investing 30% of operating profit at a $3.6K acquisition cost adds a compounding second engine on top. After 60 months the model lands at $3.4M of annual recurring revenue — 2.4x today's $1.5M.

What the cost base is made of

In month one the business spends $112.8K. Engineering payroll is $97K of that — 86% of every operating dollar — across 8 engineers at $145K fully loaded, plus $3.8K of contract engineering at $95 an hour. Infrastructure starts at $9.9K and reaches $19.6K by month 60, because $55 of cloud spend rides on every $1K of MRR. With salary inflation at 4.5% and price inflation at 3.4%, the total monthly cost base ends the period at $147.2K.

Break-even and runway

Gross profit first covers the full cost base in month 24 (2y from now). Everything lost before that point is repaid by month 46. The cash balance bottoms out at $526.3K in month 23, which the opening $750K covers with room to spare, and finishes at $1.3M.

Unit economics

At $420 ARPA and 78% gross margin, each account contributes $328 of gross profit a month. Against 6.0% monthly revenue churn that implies a lifetime value of $5.5K, and an LTV:CAC ratio of 1.5x, which sits below the conventional 3:1 bar — the business earns back acquisition cost, but slowly enough that growth has to be financed. Acquisition cost is repaid after 11 mo of gross profit. The burn multiple works out at 0.1x of net burn per dollar of new ARR.

Build, buy, or both

On the buy saas path, the software itself costs $132.8K over five years — $132.8K in licences and $0 in build and maintenance. That is already the strongest of the three paths at these inputs — no alternative strategy improves five-year net profit by a meaningful margin.

Conservative, realistic, aggressive

The same inputs run three ways. The spread between the outer columns is the honest output of any five-year model — treat the middle column as a midpoint, not a forecast.

Five-year outcomes under conservative, realistic and aggressive assumptions
MetricConservativeGrowth misses plan, churn runs hot, costs drift up.RealisticYour inputs, taken at face value.AggressiveAcquisition compounds, retention improves, costs hold flat.
Year-5 ARRRecurring revenue exiting month 60.$142.7K$3.4M$99.8M
5-year net profitCumulative profit after re-investment.-$6M$560.3K$52.3M
Ending cashBalance at month 60.-$5.2M$1.3M$53.1M
Break-evenFirst month operating profit is positive.NeverMonth 24Month 3
Cash runwayMonths before the cash balance reaches zero.1y 1mo60+ mo60+ mo
Lowest cash balanceDeepest point of the cash trough.-$5.2M$526.3K$739.9K
LTV : CACLifetime value against acquisition cost.1.1x1.5x2.0x

Build vs. buy, head to head

Identical assumptions, three software paths. Select one to load it into the simulator.

How the model works

  1. 1

    Each of the 60 monthly periods is computed in sequence. Recurring revenue carries forward, grows by the organic rate, gains the revenue bought by last month re-investment at your stated CAC and ARPA, and loses the churn rate.

  2. 2

    Gross profit is revenue multiplied by gross margin. The operating cost base is engineering payroll and contractors (both indexed by salary inflation), fixed cloud spend indexed by price inflation, variable cloud spend proportional to MRR, and the licence or build-and-maintain cost of your chosen software path.

  3. 3

    Operating profit is gross profit less that cost base. A share of any positive operating profit is spent on acquisition; the remainder moves the cash balance. Break-even, payback, runway and minimum cash are read off the resulting path rather than estimated from a single month.

  4. 4

    The three scenarios apply fixed multipliers to growth, churn and cost so the columns stay directly comparable: conservative dampens growth to 60% and raises churn 35% and costs 12%; aggressive lifts growth 40%, cuts churn 25% and trims costs 6%.

SaaS financial metrics, explained

The definitions behind every input and output on this page — LTV, CAC, churn, payback, runway and burn multiple — and the judgement calls that go with them.

Lifetime value (LTV) is the gross profit a single customer account is expected to generate before it churns. This simulator uses the standard recurring-revenue form: LTV = (ARPA x gross margin) / monthly revenue churn rate. If your average account pays $420 a month, your gross margin is 78%, and you lose 3.2% of recurring revenue each month, LTV is (420 x 0.78) / 0.032, or roughly $10,238. The gross-margin term matters: revenue you never keep is not value. Two companies with identical ARPA and churn can have LTVs that differ by 40% purely on cost of revenue.

Ready-made scenarios

Five common company profiles, each pre-loaded into the simulator. Open one and adjust it from there.