How Do I Forecast Revenue to Attract App Investors?

Most app founders pitch their ideas to investors with barely any financial projections at all—or worse, they show up with numbers that look like they've been plucked from thin air. I've sat through more investor meetings than I care to count, and I can tell you right now that nothing kills interest faster than a founder who cant explain where their revenue numbers actually come from. Its honestly one of the biggest mistakes I see, and it's completely avoidable if you know what you're doing.

Here's the thing though—creating a solid revenue forecast isn't about predicting the future with perfect accuracy. That's impossible, and any seasoned investor knows it. What they're really looking for is proof that you understand your market, that you've thought through how money will actually flow through your business, and that you can make logical assumptions based on real data. They want to see that you've done your homework; they want to know you're not just guessing.

The quality of your financial projections tells investors more about your business acumen than almost anything else in your pitch deck

I mean, think about it from their perspective for a second. They're being asked to put money into something that doesn't exist yet (or barely exists) and the only thing they have to go on is your vision and your numbers. If those numbers dont make sense or if you stumble when explaining them? Well, that's a massive red flag. But if you can walk them through your assumptions clearly—showing them exactly how you calculated customer acquisition costs, what your retention rates need to be, and why your monetisation strategy makes sense for your specific market—suddenly you're not just another hopeful founder. You're someone who actually gets how to build a sustainable business, and that's what opens wallets.

Understanding What Investors Actually Look For

Right, so lets talk about what investors are really thinking when they look at your app's revenue forecast. I've sat through enough pitch meetings to tell you that most founders get this completely wrong—they focus on showing massive growth numbers when what investors actually want to see is that you understand your business model inside and out.

Here's the thing; investors aren't stupid. They know you cant predict the future with perfect accuracy. What they're looking for is evidence that you've thought through how money flows in and out of your business, and more importantly, that your assumptions are based on something real rather than wishful thinking. When I'm helping clients prepare their forecasts, the first question I ask is whether they can justify every single number in their spreadsheet. If you cant explain why you're assuming a 3% conversion rate rather than 2% or 4%, you've got a problem.

Investors want to see three main things in your forecast. First, they need to know that there's a genuine market opportunity—basically, are enough people willing to pay for what you're building? Second, they want proof that your unit economics make sense; that means each customer brings in more money than it costs to acquire them. And third, they're looking for a clear path to profitability or at least to the next funding milestone. They don't expect you to be profitable from day one but they do need to see that you've got a realistic plan for getting there. Its not about showing them perfect numbers, its about showing them that you understand the mechanics of building a sustainable app business.

Building Your Core Revenue Model

Right, let's talk about building a revenue model that actually makes sense—because I've seen way too many pitch decks with numbers that look like they were pulled from thin air. Your revenue model is basically the foundation of your entire forecast, and if you get this wrong, everything else falls apart. It's not complicated really, but it does need to be grounded in reality.

The first thing you need to do is pick your primary revenue stream. And here's where people mess up—they try to include every possible way to make money. Subscriptions, in-app purchases, advertising, sponsorships...it becomes a mess. Sure, your app might eventually have multiple revenue streams, but investors want to see that you understand your main source of income first. Are you charging users monthly? Are you selling digital goods? Are you running ads? Pick one and build your model around that.

Here's what your basic revenue model needs to include:

• Your pricing structure (what you're charging and how often)
• Expected conversion rates from free to paid users
• Average transaction value or subscription price
• Projected number of paying users per month
• Any seasonal variations in revenue

Base your conversion rates on industry benchmarks for your app category—freemium apps typically convert 2-5% of users to paid, whilst premium apps with free trials see 10-25% conversion. Don't just pick the highest number because it looks good; investors will spot optimistic projections immediately.

The key is working backwards from real data. If you're pre-launch, look at similar apps in your category. What are they charging? How many downloads do they have? You can estimate revenue from there. If you've already launched, use your actual numbers—even if they're small. I'd rather see a model built on 100 real users than 10,000 imaginary ones because at least then we can extrapolate growth patterns that make sense. And honestly? Investors appreciate honesty over ambition when it comes to your starting point. If you're still building your pre-launch momentum, consider strategies like building an email list before your app launches to gather real user interest data that can inform your projections.

Calculating Customer Acquisition Costs and Lifetime Value

Right, lets talk about the two numbers that will make or break your investor pitch—CAC and LTV. Customer Acquisition Cost and Lifetime Value. Sounds complicated but its really not, I promise.

CAC is simply how much you spend to get one paying customer. Add up all your marketing costs (Facebook ads, influencer partnerships, App Store optimisation work, whatever) and divide by the number of customers you actually acquired. If you spent £5,000 on marketing last month and got 500 new users, your CAC is £10. Easy right? But here's where people mess up—they forget to include everything. Designer time for ad creative? That counts. The agency fees you're paying for App Store assets? Yep, that too. And while paid acquisition is important, don't forget to factor in your organic app downloads and free marketing strategies when calculating your blended CAC.

LTV is trickier because you're predicting the future. Its the total revenue you'll make from a single customer over their entire relationship with your app. For a subscription app this might be straightforward; if users pay £9.99 monthly and typically stick around for 8 months before they cancel, your LTV is roughly £80. For apps with in-app purchases or ads its messier—you need to track actual user behaviour over time and make educated guesses.

The golden rule? Your LTV should be at least 3 times your CAC. If it costs you £10 to acquire a customer, you need to make £30 from them over time. This ratio shows investors you've got a sustainable business model, not just a money-burning machine. I've seen brilliant apps fail because they couldn't get this ratio right—they were spending £50 to acquire users who'd only ever spend £20. That's not a business, thats charity work with extra steps.

One more thing (and this is important)—your CAC will almost certainly go up over time as you exhaust your easiest customer segments. Factor that into your projections or you'll look naive.

Choosing the Right Monetisation Strategy

Right, so you've got your revenue model sorted and you understand your numbers—but here's where things get interesting. You need to pick a monetisation strategy that actually makes sense for your app and more importantly, one that investors will believe in. I mean, you can't just slap ads everywhere and hope for the best, can you?

The main options are freemium (free with paid features), subscription, one-time purchase, in-app purchases, and advertising. Each one has its pros and cons, and honestly, choosing the wrong one can kill an otherwise brilliant app. I've seen it happen more times than I'd like to admit! Freemium works well when you've got features that power users genuinely need—think Spotify or LinkedIn. But here's the thing—your conversion rate from free to paid is probably going to be around 2-4%, so you need massive user numbers to make it work. Subscriptions are brilliant for apps that provide ongoing value, like fitness or productivity tools. They give you predictable recurring revenue, which investors absolutely love because it shows you're not just chasing one-time payments. If you're working on specialised apps like wearables, you might want to explore what monetisation strategies work best for wearable apps as they have unique considerations.

The best monetisation strategy isn't the one that makes the most money per user; its the one that aligns with how your users naturally want to engage with your app

One-time purchases are getting harder to justify these days unless you're offering something really special—users have been trained to expect ongoing updates and support. In-app purchases work great for games and content apps where people want to unlock things as they go. And advertising? Sure, it can work, but you'll need serious user numbers to make meaningful revenue, and it often creates a worse user experience which can hurt retention. When you're presenting to investors, you need to explain why your chosen strategy fits your specific market and user behaviour—not just why it exists.

Creating Realistic Growth Projections

Here's where most people go completely wrong—they build projections that look more like a hockey stick than anything based in reality. I mean, I've seen countless pitch decks where someone expects to go from 0 to 500,000 users in six months with barely any marketing budget. It's a bit mad really, because investors see right through this sort of thing; they've been pitched to hundreds of times before and they know what realistic growth actually looks like.

The key thing to understand is that growth happens in phases, not overnight. Your first few months are going to be slow—painfully slow if I'm being honest. You'll be testing, learning, fixing bugs, and probably pivoting your messaging at least once or twice. Then, if you've got your product-market fit right and you're spending money on acquisition wisely, you might start seeing some momentum. But even then, we're talking about steady month-over-month growth, not explosive viral numbers (unless you've genuinely built the next TikTok, which...you probably haven't). If you're building solo, make sure to factor in realistic timelines for app development when creating your growth projections.

Breaking Down Your Growth Timeline

When I work with clients on their projections, we typically break things down into quarters and think about what's actually achievable with the resources they have available. Sure, you might read about apps that went viral and gained millions of users in weeks, but that's not a projection—that's a lottery win. You need to base your numbers on things you can control and measure.

Start with your beta launch period. How many users can you reasonably get through your personal network, early partnerships, or initial marketing efforts? Then think about what percentage of those users will stick around (hint: it won't be 100%, probably not even 50%). From there, you can start modelling out what happens when you actually spend money on user acquisition. Consider leveraging app partnership strategies for cross-promotion to boost your early growth without massive advertising spend.

Using Cohort Analysis for Projections

One approach that works really well is building your projections using cohort analysis. Basically, you group users by when they signed up and track their behaviour over time. This lets you see patterns—like maybe 30% of users who sign up in month one are still active in month three. Once you've got those retention numbers (even if they're estimates at first), you can start projecting forward with much more accuracy.

Your growth projection should also account for the fact that your conversion rates and retention will improve over time as you learn and optimise. But don't go crazy here; if you're projecting that your conversion rate will triple in six months, you better have a damn good explanation for why. Small, consistent improvements? That's believable. Magical transformations? Not so much.

Another thing investors want to see is what happens when you add more fuel to the fire. If you're currently spending £5,000 a month on acquisition and getting 1,000 users, what happens when you scale that to £20,000? The answer isn't always "you get 4,000 users" because channels have limits and costs often increase as you scale. Being honest about these constraints actually makes your projections more credible, not less. Plus, once you've established a user base, you can explore ways to turn your app users into marketing champions which can significantly improve your organic growth rates.

The table above shows what reasonable growth might look like—notice how the numbers increase but not at some insane exponential rate that defies logic? That's what you're aiming for. And honestly, even hitting these numbers would require everything going relatively well, which it won't always. That's why smart investors want to see your projections alongside your assumptions, so they can judge for themselves whether your numbers make sense given the market you're in and the resources you have.

Accounting for Market Size and Competition

Right, so you've built your revenue model and worked out your customer acquisition costs—but here's where a lot of people trip up. If you tell investors you're going to capture 10% of a billion-pound market in year two, they're going to smile politely and then bin your pitch deck the moment you leave. I mean, it sounds impressive on paper, but its just not realistic is it?

Market size matters, but what matters more is your serviceable addressable market—basically, the slice of the pie you can actually reach with your resources and positioning. If you're building a fitness app for pregnant women in London, your total addressable market might be huge globally, but your serviceable market is much smaller. Be honest about this; investors have seen it all before and they'll respect you more for being grounded in reality. Understanding why different apps have different development costs can help you better assess competitive positioning and resource requirements.

Competition analysis is where things get interesting. You need to know who you're up against and—this is the bit people forget—how much they're spending to acquire customers. If your main competitor is burning through venture capital with £20 customer acquisition costs and you think you can compete with a £5 budget, you better have a bloody good reason why that's going to work. Look at their app store rankings, their review counts, their social media presence. These things tell you how established they are and how hard you'll need to work to stand out. Pay attention to what motivates users to leave reviews because review volume and quality can indicate market penetration and user satisfaction levels.

Download your competitors' apps and actually use them for a week. Note their onboarding flow, monetisation strategy, and engagement tactics—then show investors specifically how you'll do things differently (and better).

When you present market data to investors, break it down into layers: total market size, your serviceable market, and your realistic penetration rate based on comparable apps that have actually achieved something similar. Sure, Instagram might have millions of users, but they had timing and network effects on their side that you probably dont have. Ground your projections in what similar apps have done in similar timeframes—that's the kind of thinking that gets investors nodding along rather than checking their phones.

Common Forecasting Mistakes That Kill Investor Interest

Right, lets talk about the things that'll make investors close their laptops and politely say "we'll be in touch"—which usually means never. I've watched brilliant app ideas get turned down not because the product was bad, but because the financial projections were, well, a bit rubbish really.

The biggest mistake? Being ridiculously optimistic with your numbers. Sure, you might genuinely believe you'll capture 10% of the market in year one, but investors have seen this story a thousand times before and it rarely plays out that way. They want to see conservative estimates backed up by actual logic—not wishful thinking dressed up as a spreadsheet. What I mean is, if you're projecting hockey stick growth without explaining exactly how you'll achieve it, you've already lost them. And speaking of launches, many founders underestimate what it takes to create an app launch that gets attention, which directly impacts those early growth numbers.

Another killer is ignoring churn completely. I see this constantly; founders model revenue as if every user who downloads their app will stick around forever and keep paying. That's not how mobile apps work, its just not reality. Most apps lose 70-80% of their users within the first week, so if your forecast doesn't account for people leaving, investors will assume you don't understand your own business model.

Then there's the classic mistake of underestimating costs—particularly customer acquisition costs. You cannot just assume users will find your app organically; acquiring users costs real money and those costs usually increase over time as you exhaust your cheapest channels first. If your revenue forecast shows aggressive growth but your marketing budget stays flat, something doesnt add up and investors will spot that immediately. This is especially true if you're planning influencer campaigns—make sure you understand the biggest mistakes in app influencer marketing before budgeting for them.

But here's the thing—probably the most dangerous mistake is presenting numbers that don't tie back to your other documents. If your pitch deck says you need £500k but your financial model shows you burning through £800k in year one, that's a massive red flag. Everything needs to connect; your market research should support your growth assumptions, your user projections should align with your marketing spend, and your revenue model should match what you've told investors about pricing.

Presenting Your Numbers With Confidence

Here's the thing—you can have the most accurate financial projections in the world, but if you cant present them clearly, investors will lose interest fast. I've seen brilliant founders stumble through their pitch deck because they tried to show every single calculation they'd done. Don't do that. Investors want to see the big picture first, then drill down into the details if they're interested.

Start with your headline numbers. What's your projected revenue in year one, two, and three? What are your key assumptions? Keep it simple—like, really simple. If you need more than three slides to explain your revenue model, you're probably overcomplicating it. I usually recommend a single slide that shows your revenue streams, another for your cost structure, and then one more for your growth trajectory. That's it. Everything else can go in the appendix. If you're still refining your user experience, consider whether your app's design matches user expectations because this will directly impact your conversion assumptions.

Handling the Tough Questions

Investors will poke holes in your numbers. Its their job. They'll ask why you think conversion rates will be 5% when industry average is 2%. They'll question your CAC assumptions. They'll wonder if your churn rate is realistic. The key is to stay calm and actually answer the question—don't get defensive or waffle on about something else. If you based your numbers on competitor data, say so. If you ran user tests that validated your pricing, share that. If something's just an educated guess? Admit it, but explain your reasoning. Having productive meetings with clear outcomes is crucial at this stage—understanding what makes app meetings actually useful will help you structure these investor conversations more effectively.

The best pitches I've seen aren't the ones with perfect numbers—they're the ones where founders clearly understand their business model and can articulate why their assumptions make sense

One more thing—always bring a detailed financial model to the meeting, even if you don't present it. When an investor asks to see your monthly projections or wants to understand your unit economics, you need to pull that up immediately. Having to email it later makes you look unprepared, and honestly, it kills momentum. I keep mine in a Google Sheet that I can access from my phone if I need to...because yes, I've had investors ask questions over coffee when I wasn't expecting it.

Conclusion

Look—forecasting revenue for investors isn't about creating the perfect spreadsheet or predicting the future with absolute certainty. It's about showing you understand your market, your users, and the real challenges you'll face building a sustainable app business. I've seen founders get so caught up in making their numbers look impressive that they forget the whole point is to demonstrate clear thinking and realistic planning.

The investors I work with don't expect you to be right about everything. They know markets shift and user behaviour can surprise everyone. What they want to see is that you've thought through the mechanics of how your app will actually make money—not just in theory, but in practice. They want to know you understand your unit economics, that you've calculated what it costs to acquire each user and how much value they'll bring over time. And honestly? They want to see that you're being honest with yourself about the risks and challenges ahead.

Here's what I tell every founder before they pitch: your revenue forecast is a living document. It will change as you learn more about your users and test different approaches to monetisation and growth. But having that initial forecast forces you to make concrete assumptions about your business model, and that process alone will make you better prepared for the tough questions investors will ask. The founders who succeed aren't always the ones with the flashiest projections—they're the ones who can defend their numbers, adapt when reality proves them wrong, and show they understand the fundamentals of building a profitable app business. Start there, test your assumptions early, and refine as you go.

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