Scenario planning for SaaS companies

SaaS startups deal with a lot of volatility and uncertainty. In the SaaS industry, you either sink or swim, especially when faced with economic downswings, a global pandemic, or other disruptions.

When running a SaaS company, it makes sense to maximize upside and minimize risk. With Profit Frog’s scenario planning software, every SaaS company can chart a course through unpredictable terrain and optimize profitability.

Intro to scenario planning

Scenario planning is an integral part of financial planning and analysis, and should play a key role in every SaaS business strategy. It is based on evaluating a range of hypothetical future developments. Because of that, it is used by some of the world’s most successful companies.

During scenario planning sessions, leaders will ask a series of “what if” questions and analyze the outcomes. When done with the right framework (hint, hint: Profit Frog), scenario planning can result in strong modeling capabilities using a company’s actual data gathered into hypothetical futures.

Scenario planning is finally available to small business owners, giving everybody a fair chance at an affordable price. We help SaaS companies tackle profitability modeling under hypothetical futures and pave the way to maximize profits.

Which is why you’re in the software industry.

Advantages of scenario planning for SaaS companies

Scenario planning is extremely valuable to any SaaS company’s profitability. Here are the main advantages of scenario planning:

Have a competitive advantage over competitors. Investors, customers, employees, and other stakeholders will be inspired by decisiveness and skillfulness.
Minimize risk by not being caught off guard. When you’re prepared for specific scenarios, you are less at risk because you can act quickly to keep the impact to a minimum.
Maximize upside. Your SaaS business can gain strength by being prepared to take advantage of opportunities introduced by change; meanwhile, unprepared competitors cannot mobilize quickly enough to capitalize on the opportunity.
Be decisive and move quickly. SaaS can react quickly to external events because they’ve already modeled their response and have a plan.

Smart SaaS companies will become smarter with Profit Frog

At one point, scenario planning was only available to big corporations with massive budgets. Over the last couple of years, a new selection of tools for scenario planning has emerged. Most of these tools cater to larger enterprises and are overly complex.

We offer scenario modeling tools solely targeted to help small businesses and startups. With a simple interface, we provide you with everything you need…and nothing you don’t.

With Profit Frog, you don’t need an army of Microsoft Excel wizards by your side. Simply follow our prompts and you’ll be modeling scenarios like a pro.

Our scenario planning software allows you to model a wide spectrum of possible outcomes and impacts. Then you can navigate your SaaS company toward best-case scenarios while being ready for worst-case ones.

Identify potential risks and turn them into gain
Learn where to allocate resources
Be strategically and financially prepared for a worst-case scenario
Recognize and seize amazing opportunities
Be ready for disruptive change and take advantage of it
Have a proactive rather than reactive orientation to the future
Gain confidence in your decision-making skills by preparing for things you can’t control

Strategic Planning vs Scenario Planning

Many SaaS companies mistake strategic planning for scenario planning, when the two approaches are actually different in result and orientation.

Strategic planning assumes a known future outcome and strategizes how to get there
Scenario planning assumes a dynamic, chaotic future and helps you plot the course to maximum profitability through all the unknowns

Strategic planning is a more static process disrupted by variability, while scenario planning is created to navigate variability.

Our scenario analysis is designed to be dynamically updated as conditions change. This type of dynamic planning is much more effective and actionable than many static planning models.

SaaS businesses that decide to adopt scenario planning are better positioned for variability than those that undertake strategic planning by themselves.

Scenario planning FAQ

How does Profit Frog’s scenario planning software differ from other options on the market?

Most scenario-planning software on the market is complex and pricey. Ours is affordable and easy to use.

How do you create a scenario planning project with Profit Frog?

Profit Frog is a practical scenario planning tool that allows you to model as many scenarios as you desire, simply and easily.

Identify scenarios you want to model
Create an action plan and update it dynamically as conditions change
Input actuals (data about your business) into Profit Frog
Adjust variables dynamically to see how they influence scenarios

With our scenario plan, you can look at global or local scenarios with the lens of how they will impact your software as a service company. You can then examine various hypothetical futures posed by those scenarios and create a plan to navigate them.

How does Profit Frog’s scenario planning software help my SaaS company make smarter, more informed decisions?

When you construct scenarios in Profit Frog, you’ll be using your actual data and then strategically altering individual variables. This allows you to gain valuable insight into how specific factors will affect net profit—without having to actually experience the situations. You’ll use the insights gleaned from these exercises to craft a dynamic plan that is strong and tailored to specific possibilities.

Does Profit Frog offer free trials?

Yes, we offer a 14-day free trial of our software.

Do SaaS companies have cost of goods sold?

Cost of goods sold is traditionally defined as the cost of producing a product and delivering it to the customer. Service businesses, including SaaS, still have COGS, even though they are not producing a “good.” For SaaS and other service companies, COGS includes the direct expenses of delivering the service.

Calculating cost of goods sold is a bit different for service businesses than for manufacturers. Profit Frog simplifies the process. See our guide to COGS for SaaS companies for more detail.

How much does Profit Frog’s scenario planning software cost?

Our software is priced on a sliding scale based on your total revenue. For custom pricing, make sure to contact us.

How to use scenario planning in situations caused by the Covid-19 pandemic?

In a world transformed by the pandemic, every company needs to invest in financial, strategic, and operational scenario planning. Profit Frog helps you model corporate viability across all types of scenarios, including disruptions caused by pandemics, supply chain issues, recessions, or other events.