Revenue Forecasting

When you manage a lot of products, you have virtually endless things that might demand your attention in any one day, so you need a way to work out which products really deserve your love and attention. If time is limited (and it always is) should you tweak the forecasts and fine tune inventory planning decisions for Product A or for Product B?

In business, of course, the natural way to answer that question is with another question: “How much money is on the line?” If the potential revenue from product line A is $75,000 and the potential revenue from product line B is $5,000 then you’ll want to devote the majority of your time reviewing and optimizing forecasts for product line A.

As such, SkuBrain now lets you think in revenues as well as units.

Product revenue share

Concrete inventory purchasing decisions will, of course, need to be made in units (you send purchase orders to your suppliers for specific quantities of specific SKUs). And when looking at the forecasts for individual SKUs, it can also often be quite informative to see unit level forecasts. However often as not, and especially when reviewing aggregate level forecasts, you’ll want to think and plan in revenues.

The new unit value switch above your forecast lets you easily switch between planning in units and planning in revenues:

Unit-value switch

And, of course, you can switch between units and values in both the split view and the forecast view.

Where do the revenue values come from?

Under the hood, SkuBrain is performing an extremely simple “forecast” for the unit sales price of each of the items you sell. For historic sales, this is simply the average price at which each of these units was sold in any particular period. For periods on the forecast horizon it uses the average selling price for all time.

Eventually you’ll be able to view and modify these unit prices in the same way that you can currently adjust unit forecasts however, for the time being, SkuBrain users will no doubt be relieved to be able to think in revenues (even if they have to act in units)!