Estimates (commony called "assumptions") are used to build a forecast. Reasonable estimates are critical to building a financial forecast that is credible, attainable and useful. Ideally, selecting assumptions would be based on lots of historical data for every component of each forecast item (revenue drivers, expense items, etc.). The more uncertain you are about each assumption, the broader range of values you should try to get a sense of the possible outcomes. Sometimes historical data may be limited / non-existent or the company or market is growing and changing rapidly. In this case, industry benchmarks (or norms) are a great way to select reasonable assumptions based on limited data. We’ve compiled benchmarks from a broad group of SaaS companies. Learn more about how we
help with assumptions.