Enter the previous year’s sales and your average annual growth year to year into the calculator to determine a sales forecast.

Sales Forecast Formula

The following formula is used to estimate a sales forecast.

SF = (1 + AGR/100) * PS

  • Where SF is the sales forecast for the following year
  • AGR is the average annual growth rate in terms of sales percentage growth (%)
  • PS is the previous years sale

Definition

What is a sales forecast?

A sales forecast is an estimation of the future amount of sales a company will make in any given period. This can be on a scale of weeks, months, years, or any other time period. The most common forecasts are yearly and quarterly.

In order to make a proper sales forecast, a company must have a history of sales and growth in order to project into the future.

Example Problem

How to calculate a sales forecast?

The following example goes over the necessary steps in order to calculate or estimate a sales forecast.

First, determine the previous year or period sales. In this example, we will look at the last year’s sales. The company we are looking at had a total of $100,000.00 in sales.

Next, determine the average annual growth rate. This can be done by taking the previous 3 years’ sales growth and taking the average. In this example, the average annual growth was 5%.

Finally, calculate the sales forecast for the next year using the formula above:

SF = (1 + AGR/100) * PS

SF = (1 + 5/100) * 100,000

SF = $105,000.00