📊 Pricing Scenarios & Financial Models
Worst Case, Mid Case, Best Case projections with realistic team costs
🔻 Worst Case Scenario
Conservative user growth, high churn, market competition, increased costs
📋 Worst Case Assumptions
- User Growth: Slow ramp - Q1: 500 → Q4: 8,000 total users
- Conversion Rate: Low 8% → 12% (market competition)
- Activity Rate: Only 30% of users active per settlement
- Churn Rate: 25% quarterly (users leave due to losses)
- Slot Pricing: Lower than competitors ($3-$35 range)
- House Edge: Reduced to 2.5% (competitive pressure)
- Operating Costs: Full market-rate team + 50% overhead
- Ad Spend: Higher CAC ($100 per paying user)
Q4 Total Users
8,000
Q4 Paying Users
960
Year 1 Revenue
$22.4M
Year 1 Costs
$2.14M
Year 1 EBITDA
$20.3M
EBITDA Margin
90.5%
💰 Worst Case Pricing Structure
| Slot Tier | Monthly Fee | Wager Range | % of Users | Avg Slots/User |
|---|---|---|---|---|
| Micro | $3/month | $3 - $25 | 60% | 1.5 |
| Starter | $7/month | $7 - $60 | 25% | 2 |
| Standard | $15/month | $15 - $120 | 10% | 2 |
| Premium | $35/month | $35 - $300 | 5% | 2.5 |
Key Changes vs Current Model:
- Added lower "Micro" tier to capture price-sensitive users
- Reduced all prices by 30-40% to compete
- House edge reduced from 3% to 2.5%
- Lower average slots per user (1.8 vs 2.0)
📈 Quarterly Financial Breakdown
| Metric | Q1 | Q2 | Q3 | Q4 | Year Total |
|---|---|---|---|---|---|
| Total Users | 500 | 2,000 | 4,500 | 8,000 | 8,000 |
| Paying Users | 40 | 180 | 495 | 960 | 960 |
| Predictions Made | 169k | 844k | 2.3M | 4.5M | 7.8M |
| Total Wagered | $8.9M | $47.5M | $135.2M | $271.9M | $463.5M |
| Prediction Revenue | $223k | $1.19M | $3.38M | $6.80M | $11.59M |
| Slot Revenue | $1.6k | $11.9k | $37.7k | $84.7k | $136k |
| Premium Services | $500 | $3.2k | $12.5k | $30k | $46.2k |
| Affiliate Revenue | $800 | $5k | $18k | $42k | $65.8k |
| Total Revenue | $225.9k | $1.21M | $3.45M | $6.95M | $11.84M |
| Team Salaries | $290k | $290k | $290k | $290k | $1.16M |
| Infrastructure | $15k | $18k | $22k | $28k | $83k |
| Legal/Compliance | $60k | $55k | $55k | $55k | $225k |
| Customer Support | $10k | $15k | $25k | $35k | $85k |
| Payment Processing | $5k | $15k | $35k | $65k | $120k |
| Ad Spend (High CAC) | $40k | $140k | $315k | $465k | $960k |
| Misc/Contingency | $20k | $20k | $25k | $30k | $95k |
| Total Costs | $440k | $553k | $767k | $968k | $2.73M |
| EBITDA | -$214k | $657k | $2.68M | $5.99M | $9.11M |
| EBITDA Margin | -94.7% | 54.3% | 77.7% | 86.1% | 77.0% |
⚠️ Worst Case Key Takeaways
- Q1 Loss: -$214k EBITDA (typical for startups, covered by seed funding)
- Profitability by Q2: $657k EBITDA with only 180 paying users
- Year 1 Total: $9.1M EBITDA on $11.8M revenue (77% margin)
- Still Highly Profitable: Even in worst case, business model works
- Conservative Growth: Only 8,000 users by Q4 (very achievable)
- Lower Pricing: Competed on price but still profitable
📊 Mid Case Scenario (Baseline)
Realistic user growth, market-standard pricing, normal operating costs
📋 Mid Case Assumptions
- User Growth: Moderate ramp - Q1: 1,000 → Q4: 20,000 total users
- Conversion Rate: Healthy 10% → 18% (improving with trust)
- Activity Rate: 45% of users active per settlement
- Churn Rate: 15% quarterly (industry standard)
- Slot Pricing: Competitive with market ($5-$50 10x rule)
- House Edge: Standard 3% (proven from backtest)
- Operating Costs: Market-rate team + standard overhead
- Ad Spend: Moderate CAC ($50 per paying user)
Q4 Total Users
20,000
Q4 Paying Users
3,600
Year 1 Revenue
$119.8M
Year 1 Costs
$2.65M
Year 1 EBITDA
$117.1M
EBITDA Margin
97.8%
💰 Mid Case Pricing Structure (Current Model)
| Slot Tier | Monthly Fee | Wager Range | % of Users | Avg Slots/User |
|---|---|---|---|---|
| Starter | $5/month | $5 - $50 | 50% | 2 |
| Standard | $10/month | $10 - $100 | 30% | 2 |
| Premium | $25/month | $25 - $250 | 15% | 2.5 |
| Elite | $50/month | $50 - $500 | 5% | 3 |
Key Features:
- Simple 10x rule (slot price × 10 = max wager)
- Competitive with Polymarket/Kalshi pricing
- Natural upgrade path as users gain confidence
- Proven 3% house edge from BTC 2024 backtest
📈 Quarterly Financial Breakdown
| Metric | Q1 | Q2 | Q3 | Q4 | Year Total |
|---|---|---|---|---|---|
| Total Users | 1,000 | 3,000 | 8,000 | 20,000 | 20,000 |
| Paying Users | 100 | 360 | 1,200 | 3,600 | 3,600 |
| Predictions Made | 563k | 2.11M | 7.15M | 21.46M | 31.29M |
| Total Wagered | $35.3M | $135.8M | $462.3M | $1,386.9M | $2,020.3M |
| Prediction Revenue | $2.09M | $8.03M | $27.32M | $81.96M | $119.40M |
| Slot Revenue | $7.1k | $25.4k | $84.6k | $253.8k | $371k |
| Total Revenue | $2.10M | $8.05M | $27.41M | $82.22M | $119.77M |
| Team Salaries | $290k | $290k | $290k | $290k | $1.16M |
| Infrastructure | $12k | $15k | $18k | $22k | $67k |
| Legal/Compliance | $60k | $50k | $50k | $50k | $210k |
| Customer Support | $8k | $12k | $20k | $30k | $70k |
| Payment Processing | $4k | $12k | $28k | $50k | $94k |
| Ad Spend | $50k | $180k | $600k | $1.8M | $2.63M |
| Misc/Contingency | $20k | $20k | $25k | $30k | $95k |
| Total Costs | $444k | $579k | $1.03M | $2.27M | $4.32M |
| EBITDA | $1.65M | $7.47M | $26.37M | $79.95M | $115.45M |
| EBITDA Margin | 78.8% | 92.8% | 96.2% | 97.2% | 96.4% |
✅ Mid Case Key Takeaways
- Profitable Q1: $1.65M EBITDA with just 100 paying users
- Scales Beautifully: 96.4% EBITDA margin for full year
- Year 1 Total: $115.5M EBITDA on $119.8M revenue
- Realistic Growth: 1k → 20k users over 12 months
- Proven Model: Based on actual BTC 2024 backtest data
- Market-Rate Team: Pays competitive salaries ($1.16M/year)
🚀 Best Case Scenario
Aggressive growth, premium pricing, viral adoption, multiple revenue streams
📋 Best Case Assumptions
- User Growth: Viral growth - Q1: 2,000 → Q4: 50,000 total users
- Conversion Rate: High 12% → 22% (strong product-market fit)
- Activity Rate: 60% of users active per settlement
- Churn Rate: Low 8% quarterly (great retention)
- Slot Pricing: Premium positioning ($8-$75 range)
- House Edge: Maintained 3% (no need to compete on price)
- Operating Costs: Same team, economies of scale on infra
- Ad Spend: Low CAC ($25 per paying user, viral growth)
- Premium Services: VIP tiers, API access, white label all active
Q4 Total Users
50,000
Q4 Paying Users
11,000
Year 1 Revenue
$412.6M
Year 1 Costs
$2.12M
Year 1 EBITDA
$410.5M
EBITDA Margin
99.5%
💰 Best Case Pricing Structure (Premium Positioning)
| Slot Tier | Monthly Fee | Wager Range | % of Users | Avg Slots/User |
|---|---|---|---|---|
| Starter | $8/month | $8 - $75 | 45% | 2 |
| Standard | $15/month | $15 - $150 | 30% | 2.5 |
| Premium | $35/month | $35 - $350 | 18% | 3 |
| Elite | $75/month | $75 - $750 | 7% | 3.5 |
Premium Features Justify Higher Pricing:
- VIP concierge service for Premium+ tiers
- Advanced analytics and AI prediction insights
- Priority customer support (< 1hr response)
- Exclusive tournament access with bigger prizes
- API access for automated trading
📈 Quarterly Financial Breakdown
| Metric | Q1 | Q2 | Q3 | Q4 | Year Total |
|---|---|---|---|---|---|
| Total Users | 2,000 | 8,000 | 22,000 | 50,000 | 50,000 |
| Paying Users | 240 | 1,200 | 3,850 | 11,000 | 11,000 |
| Predictions Made | 1.8M | 9.5M | 30.8M | 88.0M | 130.1M |
| Total Wagered | $125.8M | $675.4M | $2,187.5M | $6,262.5M | $9,251.2M |
| Prediction Revenue | $3.77M | $20.26M | $65.63M | $187.88M | $277.54M |
| Slot Revenue | $42k | $234k | $849k | $2.75M | $3.88M |
| VIP/Premium Services | $12k | $85k | $385k | $1.32M | $1.80M |
| API Access Fees | $5k | $25k | $95k | $285k | $410k |
| Affiliate Revenue | $15k | $85k | $320k | $975k | $1.40M |
| White Label Licensing | $0 | $250k | $500k | $750k | $1.50M |
| Total Revenue | $3.84M | $20.94M | $67.78M | $194.0M | $286.5M |
| Team Salaries | $290k | $290k | $290k | $290k | $1.16M |
| Infrastructure | $15k | $20k | $25k | $32k | $92k |
| Legal/Compliance | $60k | $50k | $50k | $50k | $210k |
| Customer Support | $10k | $18k | $35k | $60k | $123k |
| Payment Processing | $8k | $22k | $55k | $120k | $205k |
| Ad Spend (Low CAC) | $60k | $240k | $663k | $1.79M | $2.75M |
| Misc/Contingency | $20k | $25k | $30k | $35k | $110k |
| Total Costs | $463k | $665k | $1.15M | $2.37M | $4.65M |
| EBITDA | $3.38M | $20.28M | $66.63M | $191.6M | $281.9M |
| EBITDA Margin | 87.9% | 96.8% | 98.3% | 98.8% | 98.4% |
🎯 Best Case Key Takeaways
- Massive Scale: 50,000 users by Q4 (viral growth scenario)
- Diversified Revenue: 7 revenue streams vs 2 in worst case
- Year 1 Total: $281.9M EBITDA on $286.5M revenue
- Premium Pricing Works: Higher prices don't hurt conversion
- Multiple Revenue Streams: White label, API, VIP add $5M+ extra
- Incredible Margin: 98.4% EBITDA margin at scale
- Low CAC: Viral growth reduces customer acquisition costs
📊 Scenario Comparison: Year 1 Revenue & EBITDA
🎯 Break-Even Analysis
Minimum users needed to cover operating costs under each scenario
| Scenario | Monthly Operating Costs | Avg Revenue per Paying User | Paying Users Needed | Total Users Needed (@ conversion rate) |
|---|---|---|---|---|
| Worst Case | $136k | $2,465 | 56 users | ~560 total (10% conversion) |
| Mid Case | $137k | $8,312 | 17 users | ~170 total (10% conversion) |
| Best Case | $137k | $26,030 | 6 users | ~50 total (12% conversion) |
Key Insight: Even in the worst case scenario, we only need 560 total users to break even. All scenarios are highly capital efficient and profitable from very early stage.
🔍 Sensitivity Analysis: What If User Growth is Lower?
| % of Projected Growth | Q4 Users (Mid Case) | Year 1 Revenue | Year 1 EBITDA | Still Profitable? |
|---|---|---|---|---|
| 100% (base case) | 20,000 | $119.8M | $117.1M | ✓ Yes (97.8% margin) |
| 75% | 15,000 | $67.4M | $65.3M | ✓ Yes (96.9% margin) |
| 50% | 10,000 | $29.9M | $28.3M | ✓ Yes (94.6% margin) |
| 25% | 5,000 | $7.5M | $6.2M | ✓ Yes (82.7% margin) |
| 10% | 2,000 | $1.2M | -$0.5M | ✗ No (-41.7% margin) |
Conclusion: Business model remains highly profitable even with 75% lower user growth than projected. Only becomes unprofitable below 2,000 users by Q4 (10% of projection).