Two ounces, three pounds, five tons…
It is time to start predicting the future. If you have not started selling your product or service yet, this may feel like making up numbers. There is some truth in that, but if you take your time and give each number some thought, then the values you come up with will be educated guesses and will lead to useful results.
The first predictions are your average sale. We focus on the average because you may sell your product at different prices or may have two services, one at a low price to entice new customers and another at a high price to earn the bulk of your profits. If so, then answer the following two questions with a best guess about the average sale. If you have just one product and one price, then this is easier.
In the average sale, how many units are purchased? What is the average price per unit?
Going back to the examples, the average unit sale for a car dealer is a single car.
For airlines, the unit is the one-way flight, but the average sale contains two units, typically arranged as a round-trip flight.
At a supermarket, the average sale is one shopping cart. For a magazine, the average sale is a one-year subscription.
For Google, this question is complicated, as advertisers buy one ad at a time but typically have a monthly budget, purchasing up to a fixed amount of ads in a given month. Thus, for Google or any business like it, the second figure—average revenue per customer—is easier to predict, and the financial plan should rely more on that value than the estimated number of units.
