Company case studies

Spotify. Higher prices.
Better profits?

Your subscription costs more. Find out how much of that could reach profit by building the model yourself.

5% higher average subscription revenue

3% fewer average subscribers

Does revenue rise?
Does profit?

A hypothetical pricing experiment. You will separate these assumptions from Spotify’s reported results.

Start the 10-minute challenge Download the workbook

Free to practise. No account needed. Continue through all eight exercises for a guided model build of about 55 minutes.

You are preparing the 2026 operating forecast.

Start with Spotify’s published 2025 figures. Forecast quarterly subscribers and average revenue per user, build Premium and advertising revenue separately, then work through costs to operating profit.

Compare a base case, stronger pricing and slower growth. Finish by explaining the subscriber loss you could tolerate—and the cost assumptions behind that answer.

Starting data
Calendar 2025 actuals
Forecast
Four quarters of 2026
Level
Beginner to intermediate
What you need
Basic spreadsheet formulas; a laptop or desktop for the browser sheet

One model, eight exercises.

Each step includes a prepared sheet, three hints and a formula check. Earlier steps are filled in for you. Sign in to carry your own completed work between exercises.

  1. The five-percent price challenge

    Separate price and volume, then find the subscriber loss that offsets higher ARPU.

    10 min

  2. Read the reported numbers

    Reconcile the historical revenue and operating-profit totals before forecasting.

    5 min

  3. Build subscribers and monthly ARPU

    Roll subscribers forward and use a period average to forecast billable volume.

    8 min

  4. Forecast Premium and advertising revenue

    Build subscription revenue from its drivers and preserve advertising seasonality.

    7 min

  5. Model segment costs and gross profit

    Apply separate cost assumptions to Premium and advertising.

    6 min

  6. Find the operating-profit effect

    Forecast operating expenses independently and connect them to profit.

    6 min

  7. Read annual results and compare scenarios

    Aggregate balances, flows and ratios correctly, then explore the finished model.

    5 min

  8. Test the profit break-even point

    Make the cost response explicit and explain the pricing decision.

    8 min

Times are estimates for a scaffolded build, not a timed assessment.

Then change the assumptions.

The worked playground recalculates the same model as you switch scenarios or edit the blue inputs. Test your view of pricing, subscriber growth and costs. Your changes save in this browser.

It contains the worked formulas, so start with the exercises if you want to build them first.

Open the worked playground

Explain the decision behind your numbers.

Write a short recommendation in the model’s memo area. Review it against these four questions. The spreadsheet grade checks calculations; this judgement is self-reviewed.

  • Have you stated your recommendation and cited the relevant revenue or profit result?
  • Have you distinguished revenue break-even from profit break-even?
  • Have you explained how your assumed cost response affects subscriber-loss tolerance?
  • Have you named two limitations and the evidence you would request before making a real pricing decision?
Download the exercise guide and worked explanations

The data behind the case

Historical figures come from Spotify’s Q4 2025 shareholder update, published on 10 February 2026. The source sheet preserves the reporting periods and units. Later 2026 results are excluded.

Forecast growth, segment cost ratios and cost behaviour are hypothetical. The model approximates average subscribers using opening and closing balances. ARPU includes price, product mix and currency effects. Operating profit is not cash flow.

Read Spotify’s financial update