Normally a sales forecast includes not just sales, but cost of sales as well. Although not all Web plans include cost of sales, it's a good idea, and easier to do while you're doing your forecast than later on. After you've done your research, as you make your forecast, remember to include costs of sales as well as sales. Even though many Web plans ignore these costs, you are better off to include them.
The simple sales forecast example, shown again here below, also includes a simple cost of sales projection. As with the sales in the top block, the costs are projected as educated guesses, row by row, and are summed in the last row.
Sample from Web Strategy Pro
The unit cost projection shown below is really just a different view of the same forecast table shown as the unit sales forecast. Like that forecast, it is based on unit projections.
Just as the unit sales forecast projects price per unit and multiplies price times units for sales, the cost projection projects cost per unit and multiplies units times unit cost to calculate total cost of sales for each item. The bottom row adds up the item rows to calculate total direct cost of sales.
Sample from Web Strategy Pro
Your direct cost of sales might not be your total cost of sales. For example, in Palo Alto Software, our direct cost of sales includes the packaging, disks, manuals, and assembly of software products. Our total cost of sales also includes additional costs of shipping, fulfillment, and royalties. You don't need to calculate all of your costs in a Web plan, but in many cases it can give you a more accurate forecast for your plan.
In both cases, the source spreadsheet hides the monthly columns for April through October for the purpose of illustration, so you can see the annual total without scrolling. The other months are there, even if they don't show.
This units-based cost forecast has the advantage of breaking your assumptions down into meaningful parts. Depending on your type of business, most people find it easier to guess units and cost per unit than to just guess cost values. Also, as you review and adjust your forecast, you can adjust either unit sales or price per unit while you make changes. And you can consider the impact of changes in either way.
