Dot Loves Data: A Three-Way Model That Sharpened a Pricing Strategy
Wiseworth Financial Modelling and Advisory built a three-way financial model for Dot Loves Data, a Wellington data consultancy. The model forecast profit, cashflow and balance sheet, with a full scenario manager allowing key inputs to be flexed. Building it forced the company to focus on its pricing strategy, and delivered a model flexible enough to grow with the business.
FAST FACTS
Client: Dot Loves Data
Location: Wellington, New Zealand
Services: Forecasting, scenario analysis
Model type: Three-way financial model with full scenario manager
Outcome: A sharpened pricing strategy and a model that grows with the business
Website: dotlovesdata.com
Engagement year: 2023
ABOUT THE CLIENT
Dot Loves Data is a data consultancy that supplies a suite of proprietary analytics tools, providing real-time strategic insights to corporate customers, governments and NGOs.
THE CHALLENGE
Dot Loves Data needed the capability to forecast sales and to test scenarios, in order to improve pricing and client targeting and to predict staff recruitment requirements.
This was a first for the company. As Jessica Parkin, Financial Controller, described it, building a revenue model was a new experience for the team. A growing data science business has revenue that does not behave like product revenue, and headcount that has to be committed ahead of the work it services. Getting either wrong compounds.
WHAT WISEWORTH BUILT
Wiseworth built a three-way financial model forecasting profit, cashflow and balance sheet, with a full scenario manager allowing key inputs to be flexed.
The scenario manager is what made the pricing question answerable. Rather than producing one forecast at one price point, it let the team move the pricing inputs and watch the effect run through revenue, cash and headcount together.
Mark Jeanes led the team through each step, listening to what the business needed before proposing how to model it. The model requirements changed more than once during the build, and the structure absorbed those changes rather than needing to be rebuilt around them.
THE RESULT
Working through the model forced the company to focus on its pricing strategy, to make sure it was suitable for future growth. The result was a model that is flexible and can grow with the business.
[OUTCOME FIGURE: awaiting Mark. Anything on the pricing change or the growth that followed.]
IN THE CLIENT'S WORDS
"We worked with Mark to build a revenue model for our growing data science company.
This was a new experience for us and Mark was able to lead us through every step of the way. He is patient and listens to the needs of the customer before coming up with creative ideas to help your business.
Working through this process with Mark forced us to really focus on our pricing strategy to ensure it is suitable for future growth. We have been delivered a model which is both flexible and can grow with our business.
Throughout the process Mark provided a calm and supportive service offering even when our model needs changed more than once."
Jessica Parkin FCA, Financial Controller, Dot Loves Data
FREQUENTLY ASKED QUESTIONS
What is a three-way financial model?
A three-way model forecasts profit and loss, cash flow and balance sheet as linked statements, so a change in one flows correctly through the other two. It shows not only what a business earns but what that does to its cash position and its balance sheet.
What is a scenario manager?
A scenario manager lets you flex key inputs and compare the results side by side, rather than building a separate model for each case. It is what turns a single forecast into a tool for testing decisions.
Can a financial model help set pricing?
Yes. Modelling pricing inputs through to revenue, cash and headcount shows what a given price point supports and where it stops working. In this engagement the process of building the model was what surfaced the pricing questions.
Can a model forecast staff recruitment requirements?
Yes. Dot Loves Data needed to predict recruitment requirements alongside sales, which matters in a services business where headcount has to be committed ahead of the revenue it delivers.
What happens if requirements change during a model build?
A well-structured model absorbs changes rather than requiring a rebuild. Dot Loves Data's requirements changed more than once during this engagement and the model accommodated them.
Does Wiseworth work with clients outside Australia?
Yes. Wiseworth Financial Modelling and Advisory has delivered engagements in New Zealand, the United Kingdom and Myanmar as well as across Australia.
RELATED SERVICES
Written by Mark Jeanes, Principal, Wiseworth Financial Modelling and Advisory
Published [DATE] | Last reviewed [DATE]
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