QS Study

Some considerations should be kept in mind while Estimating Sales Revenue –

A company generates sales revenue as a result of operating activities. It is the amount of money that is brought into the business from the sales of products and/or services over a period of time. Calculating a company’s sales revenue helps to find out whether a profit was made or if losses were incurred.

Following considerations should keep in mind while estimating sales revenue:

The total number of potential customers with which a company can realistically do business described sometimes as the “addressable market.”

Sales team productivity variables: the number of productive sales reps in the market, the number of calls each can make, the number of calls and an average length of time expected to close a sale, average close rate(s) per rep and per product and any ramp-up time required for new products or reps.

The incentive structure of the sales team and its potential impact on product sales. For example, if sales reps are rewarded based on gross monthly sales, then one should not be surprised if they spend their time selling products with the highest price tags.

Online sales channel productivity variables: the number of products that customers will be comfortable purchasing online, the speed and effectiveness of the fulfillment process, the type of marketing investment required to drive the level of the transaction, activity sought.

Any seasonality associated with buyer behavior.