===== Why are my revenues 6.5 times higher than what I think they should be during the first year? =====

If you are driving sales using BU-3 (Customer Acquisition and Retention), your revenues in year 1 could be 6.5 times higher than expected as the result of a combination of factors:

  - First, you are driving sales by either an expense item or a salary item that is being spent in 12 equal increments over the year.\\ \\
  - Second, you are assuming that sales occur in the same month that the expense occurs (sales cycle=0).\\ \\
  - Let's assume that you are spending $12,000 (on expense or salary) over the year. Thus you are spending $1,000 per month.\\ \\
  - Let's assume that you specified the customer acquisition cost (CAC) to be $10.\\ \\
  - Then, in month 1, you would acquire 100 customers.\\ \\
  - In month 2, you would acquire 100 additional customers, bringing your total customers to 200.\\ \\
  - In each subsequent month 3 through 12, you would acquire 100 additional customers, eventually bringing your total customers to 1200 at the end of the first year.\\ \\
  - If your average order size (AOS) were, say, $100, you //might //  think you should receive $12,000 in revenue for the year.\\ \\
  - But, the AOS is per //month//, not per year. So how many customer-months did you have during your first year? The answer is 1+2+3+4+5+6+7+8+9+10+11+12, or 78. So, your revenue for the first year will be $78,000.\\ \\
  - $78,000 is 6.5 times larger than what many first-time users expect, i.e., $12,000.

{{keywords>predicting revenue, bottom-up, customer acquisition cost, average order size, revenue}}