Why are my revenues 5.5 (or 4.6) 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 5.5 or 4.6 times higher than expected as the result of a combination of factors:

1. First, you are driving sales by either an expense item or a salary item that it being spent in 12 equal increments over the year.
   
   
2. Second, you are assuming that sales occur two months after the expense occurs (sales cycle=2).
   
   
3. Let's assume that you are spending $12,000 (on expense or salary) over the year. Thus you are spending $1,000 per month.
   
   
4. Let's assume that you specified the customer acquisition cost (CAC) to be $10.
   
   
5. Then, in months 1 and 2, you would spend $1,000 each, but acquire no customers.
   
   
6. In month 3, you would acquire 100 customers (from your efforts of the first month).
   
   
7. In month 4, you would acquire additional 100 customers (from your efforts of the second month), bringing your total customers to 200.
   
   
8. In each subsequent month 5 through 12, you would acquire 100 additional customers, eventually bringing your total customers to 1000 at the end of the first year
   
   
9. If your average order size (AOS) were, say, $100, you might think you should receive $10,000 (or $12,000) in revenue for the year.
   
   
10. But, the AOS is per month, not per year. So how many customer-months did you have during your first year? The answer is 0+0+1+2+3+4+5+6+7+8+9+10, or 55. So, your revenue for the first year will be $55,000.
    
    
11. $55,000 is 5.5 (or 4.6) times larger than what many first-time users expect, i.e., $10,000 (or $12,000).