A renewal forecast is an estimate of the recurring revenue expected to renew in a future period, based on upcoming contract renewals and the predicted outcomes for each customer, such as renew, churn, or renew with expansion or contraction. It is used to plan retention actions, predict ARR changes, and improve revenue and cash planning.
What a Renewal Forecast Includes
A renewal forecast typically covers:
- Renewal book: contracts up for renewal in a defined window (monthly, quarterly, annual)
- Expected outcome per account: renew, churn, downgrade, upgrade, or unknown
- Expected ARR impact: starting ARR, expected renewal ARR, and expected expansion or contraction
- Timing and risk: renewal dates, stage of renewal process, risk level, and key blockers
- Ownership and next steps: responsible CSM or renewals rep, action plan, and stakeholder status
Many teams forecast both gross renewals (retain what exists) and net renewals (including expansion and contraction).
How Renewal Forecasts Are Built
Renewal forecasts are usually built using a mix of process and data:
- Rules-based forecasting: weighted probabilities by renewal stage or health category (green/yellow/red)
- Pipeline-style renewal stages: renewal opportunities with close dates and commit levels
- Cohort and trend methods: historical churn and renewal rates applied to segments
- Predictive forecasting: models that use product usage, support signals, billing status, and engagement to estimate renewal likelihood
Modern systems often automate inputs from CRM, billing, and product analytics and refresh forecasts weekly or daily.
Why Renewal Forecasts Matter
Renewal forecasts support planning and execution across teams:
- ARR planning: estimates retained ARR and churned ARR for Net New ARR calculations
- Resource allocation: focuses CSM and renewals capacity on the highest-risk or highest-value renewals
- Early risk detection: flags accounts with low adoption or unresolved issues before the renewal date
- Cash and collections planning: helps predict invoicing and payment timing
- Executive visibility: provides a clear view of downside risk and what actions are underway
Frequently Asked Questions
What is the difference between a renewal forecast and a sales forecast?
A sales forecast estimates new bookings from pipeline. A renewal forecast estimates retained recurring revenue from existing customer contracts.
Does a renewal forecast include expansion ARR?
It can. Many teams include expected expansion and contraction in the renewal forecast to show net impact on ARR.
What data improves renewal forecast accuracy?
Product adoption and usage trends, support severity, stakeholder engagement, billing status, and clean contract start and end dates.
How often should renewal forecasts be updated?
Common cadences are weekly for operational review and more frequent updates as large renewals approach or risk changes.
What causes renewal forecasts to be wrong?
Late identification of risk, inconsistent renewal stages, poor data quality, missing usage-to-account mapping, and optimistic probability assumptions.
