Revenue projections in a 5-year financial model typically include assumptions about the following variables:
1. Number of customers/customer base: This may include assumptions about customer growth, retention, and churn, as applicable.
2. Average revenue per customer (ARPU): This should include assumptions about pricing, product offerings, and any upsell or cross-sell opportunities.
3. Cost of goods sold (COGS): This should include assumptions about the cost of materials, supplies, and labor associated with providing the product or service.
4. Operating expenses: This should include assumptions about operational costs, such as sales and marketing, overhead, and research and development.
5. Tax rate: This should include assumptions about the applicable income tax rate.
6. Capital expenditures: This should include assumptions about investments in equipment, facilities, and other assets.
7. Debt or equity financing: This should include assumptions about the source and cost of financing.
8. Economic environment: This should include assumptions about macroeconomic factors, such as inflation, interest rates, and GDP growth.
9. Industry trends: This should include assumptions about industry-specific trends, such as competition, regulation, and technology.
10. Other: This should include any other assumptions that may affect revenue projections.
The financial model may also include a sensitivity analysis to gauge the impact of changes in the above assumptions on revenue projections. This will help provide insights into the potential risks and rewards associated with different strategies.