Sales forecast
Sales forecast: a prediction of future sales built from market and trend data, distinct from the sales budget, which is the committed plan for revenue and volume derived from it.
What it is
See it move
A skincare retailer's prior year sales were €480,000. Applying 5% expected market growth gives a sales forecast of €504,000, purely an estimate of demand. Management then adds an expected €26,000 from a planned advertising campaign, adopting a sales budget of €530,000. The forecast is the market's estimate; the budget is the plan management actually commits to.
The formula
Variables
- Sales forecast for the coming period (€)
- Actual sales in the prior period (€)
- Expected growth rate (decimal)
A simple trend-based sales forecast: projects next period's sales from the prior period's actual sales and an expected growth rate.
Check yourself
A stationery wholesaler recorded sales of €360,000 last year. Its market analysts project the underlying market will grow by 4% this year. What is the sales forecast for this year, using only the projected growth rate?