Home · Guides · Revenue build by driver
Guide · ~8 min read
The fastest way to lose a room is to type "revenue grows 100% a year" into a cell. An investor's next question is "from what?" — and if the answer is "from a hard-coded growth rate," the model is decoration. A driver-based build answers the question before it's asked.
A driver-based revenue build starts from things you can defend with a hiring plan and a sales pipeline, and lets the growth rate fall out as a result:
Change any one of these and the whole model recomputes. Nobody can accuse you of a hockey stick, because the hockey stick — if there is one — is visibly the output of a sales-capacity assumption you can point to.
Every year: begin with last year's customers, add new logos, subtract churn, end with a new count. Using the fictional sample company (14 starting logos, 46 new in year one, 1.2% monthly logo churn), with new adds treated as arriving mid-year so they only churn for half the year:
| Customer roll-forward | 2026 | 2027 | 2028 |
|---|---|---|---|
| Beginning customers | 14.0 | 54.9 | 113.5 |
| + New logos | 46 | 71 | 110 |
| − Churned | 5.1 | 12.4 | 23.0 |
| Ending customers | 54.9 | 113.5 | 200.5 |
New logos grow 55% a year here (46 → 71 → 110), reflecting a sales team that scales — not an arbitrary revenue percentage. Fractional customers are an artifact of applying a monthly churn rate over the year; they round in the presentation layer.
Recognized revenue for a year is roughly the average customer count (not the ending count — customers who joined mid-year weren't paying all year) times ARPA times 12:
Average customers = (14.0 + 54.9) / 2 = 34.45. Revenue = 34.45 × $2,400/mo × 12 = $992,126. Using the ending count instead would overstate year-one revenue by ~60% — a classic beginner error investors catch instantly.
Annual recurring revenue (ARR) is the run-rate: customers × ARPA × 12 at a point in time. The ARR bridge is the one exhibit a growth investor asks for by name, because it separates the four forces moving your revenue:
| ARR bridge | 2026 | 2027 | 2028 |
|---|---|---|---|
| Beginning ARR | $403,200 | $1,802,508 | $4,303,084 |
| + New ARR (new logos) | $1,324,800 | $2,167,488 | $3,559,565 |
| + Expansion (upsell on base) | $120,318 | $537,880 | $1,284,069 |
| − Churned ARR | $45,810 | $204,792 | $488,895 |
| Ending ARR | $1,802,508 | $4,303,084 | $8,657,823 |
Read year one across: $403,200 beginning + $1,324,800 new + $120,318 expansion − $45,810 churn = $1,802,508 ending. It closes exactly. This is what "the bridge ties" means, and it's the source of your retention metrics — NRR and GRR are just the expansion and churn lines above, divided by beginning ARR (see the metrics guide).
Two companies can both grow ARR from $1.8M to $4.3M and be completely different businesses. One does it with a fat expansion line and small churn — a strong, retentive product. The other does it by pouring on new logos to outrun heavy churn — a leaky bucket that gets more expensive every year. The total hides this; the bridge reveals it. That's exactly why investors ask for the bridge and not just the ARR line.
A driver-based build makes your assumptions legible — it doesn't make them right. If your "new logos grow 55%/yr" isn't backed by a hiring and pipeline plan, the model is still fiction, just well-organized fiction. The value is that it forces you to name the assumption an investor can then pressure-test with you, instead of hiding it inside a growth percentage.
ModelKit's revenue tab is fully driver-based: enter starting logos, adds, churn, ARPA and expansion, and it produces your customer roll-forward and a closing ARR bridge — the same exhibit investors ask for by name.
Request the kit — $149 See the ARR bridgeEducational material only — not investment, legal, financial, accounting, or tax advice, and not a valuation opinion. Figures are illustrative outputs of a deterministic model.