Revenue Impact Simulations
Model the revenue impact of pricing changes before implementing them.
What Are Revenue Impact Simulations?
Revenue impact simulations use your current MRR, conversion, and churn data to estimate what would happen to revenue if you changed prices, added a tier, or changed discount rules. They don’t replace tests but reduce risk by quantifying tradeoffs before you ship.
What You Need
Inputs: current MRR by plan/segment, conversion rates (e.g. trial-to-paid by plan), churn by plan/segment, and elasticity assumptions (how much volume changes for a given price change). Use historical data where possible; for new tiers, use benchmarks or conservative assumptions.
Running a Simple Simulation
Define the change (e.g. “+10% on Plan A,” “new $X tier”). Apply assumed conversion/churn impact (e.g. “10% price increase → 5% churn increase and 3% conversion drop”). Calculate new MRR and compare to baseline. Run best/base/worst cases so you see a range.
Best Practices
Document assumptions clearly. Validate with past price changes if you have data. Use simulations to narrow options, then validate with an A/B test or phased rollout. Re-run when you get new conversion or churn data.