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Build an MRR waterfall with gross and net retention

  • For FP&A and financial analysts
  • You practice Setting limits and rules
  • Time about 5 minutes
  • Level Intermediate

About this exercise

You're preparing the October recurring revenue waterfall. Write a prompt for plain text with lines starting "New:", "Ending MRR:", "Gross retention:" and "Net retention:", each with the math. Reactivated customers count as New. Retention percentages use the starting MRR and exclude New. Round to one decimal. No commentary. Under 80 words. No bullets or numbering. Do not mention the sales manager or total MRR growth percentages.

Common mistakes when you ask AI for this

  • Leaving out reactivations. The AI counts only new logos as New. Try: Say: "New = new logos + reactivated customers."
  • Counting New in retention. The AI includes new MRR in net retention and gets 106.5%. Try: Add: "Retention uses starting MRR and excludes New."
  • Mixing gross and net. The AI forgets that gross retention ignores expansion. Try: Say: "Use the definitions given for gross and net."
  • Markdown extras. The AI adds bold labels, headings and a closing note. Try: Say: "Plain text, no bold. Output only the lines asked for."
  • Trusting the AI to count words. AI is bad at counting and runs past word limits. Try: Ask for fewer words than the real cap and keep each line short.

What a strong prompt includes

  • Names the four lines
  • Includes reactivations in New
  • Excludes New from retention
  • Asks for arithmetic
  • Caps length

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