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Completing your revenues

How to build your sales forecasts with Numberslides
Written by Max Valentine
Updated 10 months ago

So your sales forecasts are obviously critical to your financial forecasts.  The sales is the money that you generate by selling your product, service and/or offering.  It is otherwise known as your revenue, turnover or income at it is the lifeblood of your business.

At Numberslides, we look at the based drivers of your sales.  By drivers, we mean the critical elements that mean your sales go up or down.  There can be any number of drivers of revenue but at Numberslides we focus on one base formula and build the drivers around this

Revenue = Price x Volume

This is the universal and base calculation for Revenue, we need to concentrate on the Volume side of the calculation.  The pricing is down to you.  We cover pricing in this section.  Let's take a look at a few revenue drivers we cover:

🎁 Transaction based

When selling services and sales the main driver is visitors (footfall / lead generation) and converting those visitors to customers.  This builds the volume of orders.  To forecast the revenue, we then need to understand the price that is being paid. When your business  i.e. the sales of goods and services (e.g. shops, cafes, mechanics etc), we call this "Transaction revenue".  

Revenue = Product Price x Product Volumes

🕸 Traffic based

When selling services and sales the main driver is visitors (traffic) and converting those visitors to customers. The drivers of traffic depend on your whether your business is online or offline. With an an online business then traffic is generally driven by visitors to your platform/website and is generally made up of your organic visitors, paid for visitors and affiliate visitors.   The paid visitors is, in turn, driven by your cost per click and marketing budget.  Once the visitor goes to your platform then they are converted into a paying customer or user - so the assumed conversion rate is important. 

Revenue = Product Price x Product Volumes

We can go one stage further and understand the key driver of volume:

Product Volumes = Website Visitors x Conversion Rate

👟 Activity based revenue

Some service are charged by the time (lawyers, accountants) so the clear driver here is the number of hours that are assigned to the client. If charging a fixed rate then this would be the number of projects in the given time period that would drive the volume,

Revenue = Volume of Time (hours/days) x Rate (hourly /daily)

or if on a fixed contract this would be

Revenue = Volume of projects x fixed fee 

🧠 Advisory / broking

Generally, these are commission based businesses. Commission is a % fee on some gross (before your commissions have been deducted) contract value. This could be the gross value of houses sold, funds raised or assets under management. The other part of the equation is the commission:

Revenue = Gross Contract Value x the Commission Rate

Now let's look at completing revenue on the Platform:

STEP 1   Click on the revenue section

STEP 2   Select your revenue type

STEP 3   Select your days given (more explained on this here)

STEP 4   Enter the revenue line name (this is how it will appear in your forecast)

STEP 5   Click "Add revenue line"

That is you revenue line set up, now we need to enter the drivers which differ between revenue types - you do this using the revenue driver section that appears based on your selections as below:

The beauty of Numberslides is that you can add as many revenue lines and/or product as you wish so you can either group products e.g. "soft cheeses" and "hard cheeses" or literally list each SKU or product model - it is up to you.

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