Recurring Invoice Planner — Subscription LTV & Schedule

Four numbers, and they answer different questions

• Invoice count — how many bills you will raise. A workload figure as much as a revenue one.
• Gross — the amount per invoice times that count: what the term is worth if it runs to the end.
• Net — gross after the loyalty discount.
• Annualised value — the run rate, which is the only number that lets you compare billing structures against each other.

This is contracted value, not lifetime value

Worth being blunt about, because the two get used interchangeably and the consequence is expensive. Nothing here models a customer leaving. A twelve-month figure of 6,000 describes a contract; a customer who cancels in month four produced 2,000 of it and no arithmetic on this page will tell you which happened.

The practical failure follows from that. Acquisition budgets are often set as a share of first-year revenue, and using the contracted figure means budgeting against money nobody has promised you. Retention is what turns a contract into a relationship, so model that separately — the LTV calculator is where the churn side belongs.

Where annualised value is exactly the right number

The counterpart point, because this page is not only a warning. Run rate is genuinely the correct basis for three decisions.

Comparing structures. A 50-a-week retainer is 2,600 a year. A 200-a-month plan is 2,400. They read as roughly the same size and differ by 200 a year — which is precisely why you annualise before comparing rather than after signing.

Sizing cash flow. The run rate is what recurs, and it is the figure that belongs in a forecast rather than the contract total.

Pricing a prepayment discount. Knowing the annual figure is what tells you whether a percentage off for paying up front is affordable or merely attractive.

The months trap

Duration is always entered in months, whatever the billing frequency, and this catches people out.

A twelve-month contract billed weekly is about 52 invoices, not 12. The conversion uses 4.33 weeks to the month — the year divided by twelve rather than a flat four — which is what lands it on 52 a year instead of 48. A 36-month term comes out as 12 invoices billed quarterly and 3 billed yearly. The count never falls to zero for a real duration, so a short term billed annually still counts as one invoice.

Invoice count is an operations number

Fifty-two invoices a year is fifty-two documents to raise, fifty-two reconciliations, and fifty-two opportunities to be paid late. Moving that customer from weekly to monthly billing at the same annual value removes 40 invoices a year and changes nothing about the revenue.

That is a real argument, and it usually beats the argument for weekly billing unless the customer specifically wants the cash-flow smoothing. Administrative load is a cost even when it does not appear on any line of the accounts.

The loyalty discount as a trade

A percentage off the whole term in exchange for commitment. It is worth most where commitment is least certain — a new customer on a short cycle who could leave at any point — and worth least on a customer who was going to stay regardless. Discounting the second group is simply a price cut with extra steps.