I’d like to think I took a page out of T. Pain’s book when I transitioned from sales to sales operations. I’ve closely followed his career from rapper to singer, and just like rap continues to influence T. Pain’s music, my sales background affects how I approach the world of sales ops. In fact, one of the biggest impacts my sales background has on my sales ops success is how I understand sales revenue — not just a top-down view of a key sales metric, but a measure of collaborative effort that secures a company’s success.
From one salesperson to another, here’s my take on sales revenue — what it is, how to calculate it, and how to forecast it to ensure you’re on track to hit targets.
What you’ll learn:
What is sales revenue?
Why is sales revenue important?
Sales revenue formula
Strategies for forecasting sales revenue
What is sales revenue?
Sales revenue is the total income your company has brought in from selling its products or services during a specific time period.
The most important components are:
Gross sales revenue: The total amount of money you receive from products or services sales.
Net sales revenue: The total after you’ve subtracted the cost america phone number list of goods sold,Opens in a new window or COGS (production and marketing costs) from the gross sales figure.
Here’s how I think of it: Sales revenue is “the now,” or the state of sales in your current fiscal period. It’s relevant to sales reps, as it’s the number a sales team gets paid commission on, but it’s also relevant to sales leaders as they use it to determine the health of the company and progress toward pre-determined targetsOpens in a new window.
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What should be included (and not included)?
As noted above, sales revenue includes income collected from new sales during a defined fiscal period. There’s an important asterisk to note, however: This includes income from new products and services sold, but not any income that comes from sources other than sales, like interest, dividends, or asset sales. If you have partnerships where money comes in from your referrals, that’s a great revenue stream, but it would not be included in your sales revenue total either. Also not included: future sales income, like a done deal that hasn’t yet been paid for.