Glossary - Planning and finance

Sales forecast

A sales forecast is an estimate of the revenue a business will take in a future period, usually built up from how many customers will order, how often, and at what average order value. For an ecommerce brand it is the top line that the budget, the hiring plan and the ad spend all hang from. A useful sales forecast is built from drivers you can check each month, not a growth percentage added to last year.

Forecast revenue = New customers × first-order AOV + Returning customers ordering × returning AOV

Variable	What it covers
New customers	Planned acquisition spend ÷ new-customer CAC. Ties the forecast to the marketing budget.
First-order AOV	Average value of a first order, often lower than a repeat order. See average order value.
Returning customers ordering	Active customers × the share expected to order again in the period, from your repeat purchase rate and cohorts.
Returning AOV	Average value of a repeat order.

A top-down version (sessions × conversion rate × AOV) also works. The customer split is more useful because it shows how much of the forecast depends on new spend.

Worked example

Planned acquisition spend for the quarterA$60,000

New customers: A$60,000 ÷ A$75 new-customer CAC800

New-customer revenue: 800 × A$90 first-order AOVA$72,000

Returning orders: 5,000 active customers × 18% ordering900

Returning revenue: 900 × A$110 AOVA$99,000

= Sales forecast for the quarterA$171,000

Contribution at a 40% CM ratio before marketing, A$171,000 × 0.40A$68,400

Less acquisition spend: contribution after marketingA$8,400

Worked example / demonstrative numbers. A healthy-looking revenue forecast leaves thin margin once the spend that produces it is taken off. The CM1 to CM3 step-down shows the full sequence.

What is a good sales forecast?

A good sales forecast is one you can explain and check, not one that happens to land. There is no universal accuracy target, because achievable accuracy depends on how seasonal the business is, how much history it has and how much depends on paid acquisition. Three tests matter more. First, it is built from drivers (customers, frequency, order value) so a miss can be traced to the driver that moved. Second, it is linked to the spend plan: a forecast that assumes 800 new customers without the budget to buy them is a wish. Third, it carries a range. A single number hides the uncertainty; a low, base and high case, as in scenario analysis, shows how much the plan can absorb.

The other test is whether it goes past revenue. Two forecasts with the same top line can carry very different margin depending on the discount plan and channel mix, so the sales forecast should flow straight into contribution margin and cash.

Sales forecast vs related terms

Term	What it estimates	How it differs from a sales forecast
Demand forecast	Units customers will want, per SKU.	Units for buying stock; the sales forecast is revenue for the P&L.
Demand planning	What to buy and when.	A decision process; the sales forecast is one of its inputs.
Budget vs actual	The gap between plan and outcome.	Checks the forecast after the fact, line by line.
Customer lifetime value	What one customer is worth over time.	A per-customer value; the forecast is a period total.

Common mistakes

Last year plus a percentage. It cannot tell you whether growth needs more customers, more orders or bigger baskets, so nobody knows what to do when it misses.
Forecasting new customers without the spend. New customers cost money. If the budget does not fund the CAC, the forecast is not a plan.
Assuming CAC holds as spend rises. Extra spend usually buys more expensive customers. See marginal CAC.
Stopping at revenue. A revenue forecast with no margin line cannot tell a profitable quarter from a busy one. See revenue up, no profit.
Ignoring returns and discounts. Forecast net revenue after planned promotions and expected returns, or the top line will overstate what the business keeps.

Sales forecast FAQ

Split it into new and returning customers. New customers come from planned spend divided by CAC, multiplied by first-order AOV. Returning revenue comes from active customers, the share likely to reorder, and repeat AOV. Add the two, then adjust for seasonality and planned promotions.

A demand forecast estimates units per product so you can buy stock. A sales forecast estimates revenue for the period so you can budget. They should agree: units times price across the range should land near the revenue forecast.

Most ecommerce brands forecast the next quarter in detail and the rest of the year in outline, then roll it forward monthly. Go further ahead if supplier lead times mean stock for next season must be ordered now.

Build from drivers you can observe early, such as CAC and first-order AOV, use wide ranges, and update monthly. A driver-based forecast improves quickly as real numbers replace assumptions.

Demand forecasting Scenario analysis Budget vs actual Average order value Repeat purchase rate New-customer CAC Target MER calculator All 14 free tools →

Inside Blufire, S11 Planning & Forecasting projects revenue, CM1, demand and cash as forecast fans, prices a COGS, AOV or discount change in the Scenario Lab, then tracks the plan against actuals. See forecasting and testing the plan.

Updated September 2026