Launch-year model
Scenario
You are reviewing a proposed launch of a new digital advisory product for a mid-sized financial services business. Your CFO wants a simple financial model for year 1 so the team can decide whether to launch next quarter or wait until the following year. The product will be sold through the existing client base, and you are given only the launch assumptions below. Assume USD, no taxes, and no working-capital timing effects.
Financials
| Metric | Value |
|---|---|
| Target clients in Year 1 | 18,000 |
| Annual subscription fee per client | $120 |
| Expected adoption rate | 22% |
| Variable servicing cost per active client | $28 |
| One-time launch marketing spend | $1,450,000 |
| Fixed product and support opex | $2,100,000 |
| Initial build cost | $3,600,000 |
| Gross margin on subscription revenue | 76.7% |
Question
How would you build the launch-year financial model, what assumptions would you make explicit, and would you recommend launching based on the economics?
Required inputs
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