A bottoms-up forecast is the projection methodology that builds revenue, costs, and other projections from specific underlying drivers rather than top-down market-share assumptions. Drivers include customer counts by month, ARPC by segment, conversion rates, deal sizes, and sales rep productivity, rather than vague claims like "1% of a $50B market." It produces projections that are testable, defensible, and credible to sophisticated investors because the math is built from observable inputs. It is the methodology that distinguishes rigorous financial modeling from optimistic projection.
The bottoms-up approach:
Identify driver components: