Sales Calculator

This easy-to-use calculator can be a game changer for your business. It allows you to predict your sales volume based on the number of sold items, the purchase price of a single item, and the profit margin or markup you set.

The sales calculator will reveal the gross profit, generated revenue, and cost of goods sold (COGS). Read on to learn how to make the best out of this calculator.

How Can This Calculator Help You?

Now that you know which values you can derive from this calculator, let's see how you can put those numbers to practice.

Sales Forecasting

Sales forecasts can help you predict your company's revenue based on the number of products you sell in a given period. These forecasts are necessary to plan for staffing, new product lines, and marketing strategies.

Most importantly, sales forecasts help you avoid potential risks, like falling behind targets. One way you can use the sales calculator for this purpose is to calculate the revenue from the units you sold in a week.

You'll be able to compare your weekly revenue to the quarterly or yearly target you set. Assuming your target is $75,000 in the first three months, you'll need to make at least $12,500 in the first two weeks.

Estimation of Transaction Profits

Profit calculations take considerable time, which can make you lose exclusive deals to your competitors. If you're aiming for high-profile clients, you must show willingness to collaborate by responding promptly to their offers.

Still, you should ensure you'll get a considerable return on investment. The sales calculator will help you quickly estimate potential profits from new transactions.

It will provide you with measurable values, which will help you negotiate win-win deals.

Building a Pricing Policy

A pricing policy gives you the flexibility to set different prices for different products. You can choose between seven major pricing strategies: cost-plus, value-based, or competitive.

A competitive pricing approach is a great starting point. You can then use the sales calculator to adjust the prices, considering your firm's costs.

However, we believe that it's best to take a trial-and-error approach. The sales calculator will provide regular feedback every time you update your strategy.

Individual Order Valuation for Large Orders

Sometimes, you can receive bulk orders, and you'll need to give a discounted price. It can be even more confusing in the case of special requests.

The sales calculator will help you determine the cost per unit. Then, you can add a reduced markup to find the purchasing price per unit.

Similarly, if you're purchasing materials in bulk, you can determine the material cost per unit by dividing the total expenses by the number of desired units.

Sales Calculator for Businesses

In today's dynamic economic climate, you'll need to regularly revise your calculations. If one factor in the equation changes, your profits can significantly change.

In this section, we'll mention some of the most common cases that require you to recalculate the profitability and sales volume.

Change in Purchase Prices

You might change prices more frequently than you'd expect for several reasons. To start with, seasonal discounts are one of the most common reasons for price changes.

Before you decide to post a 70% discount update for your customers, use the sales calculator to ensure the price drop won't cause major losses.

You might also need to reduce the purchase prices if you notice that they don't attract enough customers or in the case of fierce competition.

In all cases, make sure you're covering your costs in the long run. When you eventually build a loyal customer base, you can use the sales calculator again to set higher purchase prices based on a new markup.

 Change in Costs

Oil and gas prices are among the major contributors to higher costs. They'll directly affect your transportation fare and the energy bills at stores, offices, and warehouses.

Your costs might also get higher if your brand embraces higher quality material for premium products.

Before you decide to raise the purchase price, we recommend trying the sales calculator to check if your markup can accommodate the increase in prices. It can sometimes be better to retain your customer base at the expense of your profit margin.

Change in Business Size

As your company grows, you're more likely to benefit from economies of scale. This is because you'll be selling more items while your fixed costs are stable.

As a result, each product will have a lower share of fixed costs. For instance, if you're renting a warehouse, each item will have lower storage costs as you store more products.

Similarly, the transportation cost per item decreases if you're paying the same rent for a truck.

However, your business can grow to a point where it will have to face diseconomies of scale. Relating to our examples, additional products will cost less until you have to rent another warehouse or truck.

The sales calculator will help you view how your cost per item drops as you sell more. It'll also estimate the number of units you need to sell if your business growth incurs new costs.

Wrap Up

Let's sum up how to use the sales calculator for business success. You can simply use it for setting prices using a cost-plus strategy that adds a fixed margin.

Added to that, the calculator will prove helpful when assessing the costs of individual items and estimating both revenues and profits.

Most importantly, you can easily adjust your strategies based on measurable values in a short period of time.

Authors

Created by Lucas Krysiak on 2022-11-24 16:22:48 | Last review by Mike Kozminsky on 2022-12-10 15:10:25