Freemium Business Model NotesOriginal filename: freemium model 1-2.xls General Notes This model provides a base template for modeling out a freemium web services business It uses a "cohort" approach and allows you to model churn and conversion behavior for monthly cohorts. The model works off of a concept of "active users" - i.e. someone who is coming to your site at least once to use system that month This has a simple user acquisition / growth approach; you can swap in a more complicated user growth model at the top that accounts for virality or marketing spend -- I only encourage you to model user growth from the bottom up. If you are modeling out microtransactions / vgoods, I suggest breaking out different user types and cross-checking against industry ARPU and ARPPU rates Feel free to use the model however you want -- I hope it is helpful to your efforts. If you spot a bug, let me know! (giff.constable2@gmail.com)

Notes on Assumptions and Inputs Many of the inputs in the model have been zero-ed out so you can enter your own assumptions w/o distraction User growth is at top of Model tab; cohort behavior at top of Assumptions tab Other assumptions are spread across the Model, Assumptions, and Staff tabs (depending on whether static or change over time) Hard-coded inputs are blue

Original model template created by Giff Constable, 2009 -- http://giffconstable.com

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Financial Summary2010 Registered Users (FYE) Active Users (FYE) Subscribers (FYE) Subscriber Ratio (FYE) Revenue Subscriptions Advertising / Affiliate Total Revenue Cost of Revenues Gross ProfitGross Margin

2011 715,188 334,475 3,197 1%

2012 3,178,669 979,648 40,414 4%

2013 6,974,996 1,845,493 126,009 7%

100 100 0 0%

0 0 0 0 00%

0 0 0 0 00%

0 0 0 0 00%

0 0 0 0 00%

Technology Sales & Marketing General & Administrative Total Operating Costs EBITDAEBITDA Margin

0 0 32,880 32,880 (32,880)0%

0 0% 0 0% 72,880 100% 72,880 (72,880)0%

0 0% 0 0% 132,880 100% 132,880 (132,880)0%

0 0% 0 0% 152,880 100% 152,880 (152,880)0%

FYE Headcount (incl. contractors) Corp Technology Sales & Marketing Customer Support Total

2010 1.0 3.5 0.0 0.0 4.5

2011 1.0 3.5 0.0 0.0 4.5

2012 1.0 3.5 0.0 0.0 4.5

2013 1.0 3.5 0.0 0.0 4.5

Note: an "active user" is someone who logs in that month Note: FYE = fiscal year end; numbers represent the last month of the 12 month period Note: percentages next to operating costs show percent of total costs Note: headcount show end-of-year numbers, including part-time contractors

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ModelMilestones Start Jan-101

Feb-102

Mar-103

Apr-104

May-105

Open Beta Jun-106

Jul-107

Aug-108

Sep-109

Oct-1010

Nov-1011

Dec-1012

Jan-1113

Feb-1114

User Growth Adjustment

100%