Divide your yearly revenue goal by your average sale. That is how many sales you need in a year. Divide that by 12 for the monthly number. Then divide the monthly number by how often a conversation turns into a sale, and you know how many conversations you need each month.
Start with what the business needs to pay you
A revenue goal pulled out of the air is hard to plan around. A better starting point is what you want the business to pay you this year, plus what it costs to run. Add those together and you have a revenue goal that means something.
If you want to pay yourself $70,000 and the business costs $30,000 a year to run, your goal is $100,000. Your accountant can help you add taxes and savings on top. The point is that the number comes from your life, so you will care about hitting it.
The math, step by step
- Find your average sale. Add up what you earned from clients last year and divide by how many sales it took. If you are new, use the price of the offer you sell most.
- Sales per year. Revenue goal divided by average sale.
- Sales per month. Sales per year divided by 12.
- Conversations per month. Sales per month divided by your close rate. If one in every three consultations becomes a client, your close rate is one in three.
A worked example
Revenue goal: $100,000
Average sale: $2,000
Sales per year: $100,000 ÷ $2,000 = 50
Sales per month: 50 ÷ 12 = about 4
Close rate: 1 in 3, so conversations per month: 4 × 3 = 12
Twelve conversations a month is a number you can plan a week around. It tells you how much marketing you need, which is more useful than posting more and hoping.
If you sell more than one thing
Most service businesses do. Work out the number for each offer on its own, then add them up. A coach might plan 30 single sessions, 15 three-month packages and one group program. Each has its own price and its own close rate, and each needs a different kind of marketing to fill it.
This is also where timing matters. A bookkeeper is busy before tax season. A studio fills up in January and slows in August. Spread your sales across the months you can actually make them, so a slow month is planned for instead of a surprise.
If the number looks impossible
Sometimes the math says you need 40 new clients a month and you can serve 10. That is useful to know now, before you spend a year trying. You have four levers:
- Raise your price.
- Add a higher-priced offer, so fewer sales cover more of the goal.
- Sell more to the clients you already have.
- Adjust the goal, on purpose, with a plan for next year.
Any one of these changes the whole plan underneath it. That is why the number comes first.
Common questions
What if I don't know my close rate?
Look at your last ten consultations or inquiries and count how many became paying clients. Three out of ten is a close rate of one in three. If you have no history yet, make a cautious guess and update it after your first month.
Should I count repeat clients?
Yes. A returning client is a sale. Many owners find that a good share of their goal can come from people who already know them, which takes pressure off finding new ones.
Is a monthly number better than a yearly one?
Use both. The yearly number sets the goal. The monthly number is what you can act on, and it tells you early if you are falling behind.