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  • Pro-Forma

Sales Channel Assumptions

Updated: Feb 27, 2019


Q: I'm trying to forecast sales via in-store resellers in my Pro-Forma Model, but not quite sure how to do that. Should I be setting up the reseller as a sales channel? If so, how do I use that to forecast the sales and revenue for one of my offerings?


A: Yes, we recommend leveraging our Sales Channels feature to make that really easy to model out and easy for others, such as investors, to diligence as they review your plan. How quickly you can get resellers in place in the market and your assumptions for your ramping sell-through rates per resellers are going to be key considerations for how you scale. We will give you a fictitious example to make it easier to follow:


1. First, in the Sales Channels Assumptions section of the Input Tab (Section 1.1) enter the number of resellers you plan on placing in stores over the life of your plan. In this case, we've assumed that you're planning for a January 2020 business launch and having your first reseller in service by March and then adding 3 resellers per month for the rest of your plan. This gives you an easy way to see and keep track of the number of resellers you are planning and when (a key assumption that investors will want to see and know).


2. Next, estimate your sell-through rates of the # of sales or customers per reseller per month. These are the sell-through rates from the 1st month of a reseller install to the later months. Typically, the longer a reseller (or any channel) is in place, the more your sell-through rates will increase over time. This is a key benefit of using the Reseller functionality to plan your reseller placements - it clarifies the # of resellers AND the increasing sell-through rates. In this example, we show 10 customers per month and growing at a rate of 1 per month (we are using a smaller number to more easily see the impact of the app's features).


3. The Reseller functionality then calculates your total unit sales for you for each month based upon the two inputs above. This is a calculation of the growing number of resellers being placed and the growing sell-through rates for each passing month that a reseller is in place from its original placement date.


4. Now, when you add an offering, you will enter all assumptions inputs, including pricing, acquisition costs, offering costs, etc. and when you get to the sales forecast methodology, you will select the appropriate sales channel, which will then automatically bring in your Sales Channels unit sales from your earlier inputs in 1 - 3 above.


5. Then you can see the results on all reports. We are highlighting here just two:


a. Key Metrics: This report shows a host of key metrics for your plan, including your sales channels. Expand to the Monthly view and you (and your investors performing due diligence) can quickly see the ramp up of your resellers and sales or customers per reseller (on average as your # of resellers over different time periods all have an impact on that) and your total # of customers for each period.


b. Sales Detail: This sales report starts out with the sales calculations, revenue, cost, and gross margin for each time period. We are showing the monthly view to clearly show the ramp up of unit sales (New Subscribers and Total Subscribers), which matches the Sales Channel Ramp Up Rates we entered above.


The reseller functionality will provide more clarity on the impact of your assumptions and makes it easier to jump in to tweak any of the inputs independently to see the impact.


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