# Compounding Forecast Equation

#### goodlife

##### New Member
First, THANK YOU for the help. I need it. hopefully this will be simple for someone else.

Here's the basic issue: i'm creating a revenue forecast for my internet company. one of the determinant variables is "daily active users" or DAU. new dau are added every month. some percentage of them stay for some length of time. the rest of them drop off. i'm calling this "compounding". namely, that new dau are added every month, while some of the existing dau remain and some fall off.

for the purpose of my forecast, i need to be able to easily change a) the number of DAU that are added every month (will come from it's own calculation), b) the retention or fall off rate (i don't care which) c) the lifespan of the DAU (ex. 6 months).

my basic method now is =(new dau this month)+(last months total dau)*(retention %)

that doesn't give me any way to calculate the lifespan except to say that if 25%/month fall off, at the end of 4 months there should be no one left from month 1.

I don't know if any of that is right. hopefully someone can help. THANK YOU again!

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#### Sal Paradise

##### Well-known Member
If your DAU drop-off rate is 25% (of the initial total) every month, then you don't need lifespan (it calculates itself), no? And if your lifespan is decided with the amount dropping being consistent, then you don't need the drop-off rate.

Either that or I'm not understanding what you're trying to do, and suggest you add some examples of what you'd like to be able to do and how you want it calculated.

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