What Defines Percent of Sales Method?

Subject: Finance
Pages: 2
Words: 297
Reading time:
< 1 min

The percent sales method of forecasting is approach of forecasting used by financial institutions and companies to predict their growth in sales. This method based of percentage of sales is primarily used to estimate and allocate the amount of resources needed in case the company grows in the coming year.


Each company has its own characteristics, which can be in the scale of the business and the strategy for achieving goals, in the principles of recruitment and many other important elements. The sales processes in different companies will necessarily differ from each other, sometimes in the details, and sometimes dramatically. A reference model that satisfies absolutely all entrepreneurs simply does not exist. As a result, the firm must be able to predict upcoming growth and sales based on percentage growth. This technique does not mean that one company cannot learn from another and make certain changes to its own sales methods, but you must always do this deliberately. In the vast majority of cases, simply applying the method of percent of sales without appropriate adjustment will not bring any benefit to the business.

By improving sales methods, you can make interaction with customers more effective. However, innovation should be done only after a thorough analysis of the situation, and methodologists should control the process. If in your own staff there are no such professionals, then you can always ask for help from a company that offers services to develop sales skills. Today there are a lot of similar companies on the market, and almost everyone has their own unique technique. Somewhere the emphasis is on the sales funnel, and the main focus is on the final stage. Thus, being able to predict state of growth allows to deliberately allocate sufficient amount of resources.