How to Forecast Website Traffic Revenue
The starting point for any website traffic revenue estimate is the amount of traffic reaching your website, this can be estimated using the techniques discussed in our website traffic estimator post.
Having estimated the amount of traffic, in this post we are going to use this figure as the first line of the website traffic revenue projection (available in Excel format at the link below) and apply the following techniques.
Using the Website Traffic Revenue Estimator
The conversion rate represents the percentage of traffic to your website which actually makes a purchase. The conversion rate will vary from business to business and will depend on where the traffic is coming from, for example if you use affiliates the conversion rate will be much higher. To keep things simple we suggest you use an average rate for all traffic – in this example we have used 1%, unless you have historical information to support your numbers, we suggest you keep it low.
When it comes to sales projections, you need to set a balance between too little and too much information. Most businesses have different types of sales e.g. product lines, departments, customer groups etc. so you’ll eventually need an estimate for each main type. We would suggest no more than six types and perhaps a final one for sundry sales. If you can’t breakdown into types at this stage then work with a total sales figure. In this example we have broken down sales into two product types, these might be actual products, widget A and widget B, or they might be groups of products eg Equipment, Food, Export etc. In our example projection we have Product A and Product B and have chosen a 60%/40% sales mix.
To calculate the sales units for each product, you simply multiply the traffic to your website by the conversion rate, and multiply this by the sales mix %
E.g. Sales units for product A=Traffic to website x conversion rate x sales mix for product A
For month 1 = 5,950 x 1% x 60% = 36 units of product A
Website Traffic Revenue Projections
Website traffic revenue projections are obtained by multiplying the unit sales for each product by the unit price for each product. The unit price will either be a known commodity, if you are dealing with individual products, or you need to use an average price for a group of products. If unit sales of products within a group are not similar, you should use a weighted average price.
Website Traffic Revenue Projection Download
The website traffic revenue projection template is available for download in Excel format by following the link below.
The revenue forecast produced by this template can be used as the starting point for our Financial Projections Template, as part of a business plan for a website based business.
Finally a few words of warning, avoid wishful thinking, (take 20-30% off the figure you first thought of), avoid too much detail in analyzing the types of sale you have, and make sure the sales are within your businesses capacity, for example if you are manufacturing widgets with a given capacity, there’s no point in projecting sales well above this unless you have plans to expand.
And finally, remember you are planning not accounting.
Users use the free website traffic revenue plan template to generate sales projections at their own risk. We make no warranty or representation as to its accuracy and we are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of an website traffic business plan sales forecasting software that you might use when considering how to start your own website based business. It is purely illustrative. This is not intended to reflect general standards or targets for any particular company or sector. If you do spot a mistake in the website traffic revenue projection template, please let us know and we will try to fix it.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.