Transaction revenue is for any business that sells goods and/or services.
Profit is made from the margin that is made on selling each unit - that is to say the difference between the price you sell at and the cost for you to build, assemble, deliver or buy in the goods or service.
The basic formula for transaction revenue is unit cost x volume. Let's look at a computer store as an example:
The business sells computers for £1,000 each, over the course of a month, the business sells on average 20 computers. Based on this price per unit and average volume, it means the business annual revenue is:
1,000 x 20 x 12 (months) = £240,000
Had the unit cost been higher or more volume sold, then the revenue would be higher as well. We have identified the two basic drivers of transaction revenue - the unit cost and the volume.
Now let's look at building transaction revenue in Numberslides:
- Select the revenue from the dropdown menu
- Select Average Days Given
- Enter a "Ramp up period"- this is the period that it takes your business to hit the full sale volumes - enter 0 if these are your Month 1 volumes
- Name your product name e.g. widgets or mobile phones
- Click "Add Product"
- Next enter for each forecast year the order volume and average retail price
- Also in this section, you enter your product margin - the % of the retail price that you take home as profit