The management of a company is aware that the likelihood of profitability, or sales and sales volume, depends heavily on how customers view the company’s goods and services. Senior executives therefore implement practical strategies to entice clients away from competitors, generate income, instill in staff the idea of long-term revenue growth, and provide accurate performance data.
The quantity of goods sold by a company over a specific time period, such as a year or fiscal quarter, is referred to as sales volume. The amount of money a company makes during the time period under consideration is known as sales, or sales revenue. Sales volume and sales are related because total sales are equal to sales volume times the unit price.
Sales Units & Sales Volume to Achieve Target Profit
Why is sales volume important?
Sales volume is crucial because it can identify a company’s most effective sales strategies. It assists you in selecting the most successful sales representatives, marketing initiatives, and business locations. Sales volume may also reveal your best-selling products and which ones you should stop offering because few customers are interested in them.
What is sales volume in business?
In business, the number of products a company sells is known as sales volume. It is the total number of products a company sells in a given time frame, whether it be monthly, quarterly, or annually. Some larger companies might calculate sales volume on a daily basis. The sales volume metric places more emphasis on how many products consumers buy than on how much money the company makes.
Sales volume examples
Here are two instances of how calculating sales volume can help a business run more smoothly:
Example 1
FragraDance, a candle retailer, intends to close one of its two locations in order to lower operating expenses. Both Location A and Location B are home to one of its stores. The owner, Jenna, requests a rough estimate of the annual sales volume for each location’s two most popular scents: vanilla and cinnamon. She intends to close the store due to the decreased sales. When she looks at the inventory records for the store, she sees that Location A sold 100 units of cinnamon and 200 units of vanilla last month.
She multiplies these numbers by 12 to obtain an annual sales volume for Location A of 1,200 units of cinnamon and 2,400 units of vanilla. The records for Location B reveal that 500 units of cinnamon and 1,000 units of vanilla were sold here last month. She multiplies these numbers by 12 to arrive at 6,000 units of cinnamon and 12,000 units of vanilla sold annually. She makes these calculations and decides to close Location A because it doesn’t sell as many of the company’s best-selling items.
Example 2
A company called Gloves & Goals sells sporting equipment. The store’s manager, Megan, wants to assess the effectiveness of her two salespeople, Andre and John, in selling the kid-sized soccer goals. Although she only has information on their weekly performance, she is interested in their anticipated monthly performance. Megan multiplies Andre’s sales of 15 soccer goals from the previous week by four to arrive at a monthly sales volume of 60 goals. John had a monthly sales volume of 20 goals, but only sold five goals last week.
Megan makes use of this knowledge to enhance Gloves & Goals’ operations. Since Andre had more success closing sales, she schedules him to work as the front-end salesperson more frequently. She teaches John to be a receiver and stocker because she thinks he’ll do better in those positions.
How to calculate sales volume
Here are four steps for calculating sales volume:
1. Determine what product you want to examine
First, determine which product you want to examine. Instead of attempting to calculate the total number of all of your selling products, it might be more effective to concentrate on a single product. For instance, you might concentrate on one brand and flavor of protein shake to estimate sales volume for a health supplement store.
This step can also be used to decide whether you want to take into account whole product cases or individual units. Finding the sales volume for whole product cases produces a smaller number, which might be more useful for figuring out how much more of a product to order for a future period. You might be able to better understand a particular sales team’s performance by looking at the sales volume for individual units.
2. Determine the time period you want to study
Decide whether the sales volume for the week, month, quarter, or year is what you are interested in. While a smaller company might prefer to look at longer time periods, a larger company might want to consider smaller time periods. If necessary, you can even examine several time frames to get a precise picture of when and how much the company sold.
3. Collect data on how much you sold
Find out how many items or cases your business sold during a specific time period. You can get this data from your companys computer records. To ensure your calculations are accurate, limit the data you extract to the number of products the business sells.
4. Multiply the number of items by the time period
Multiply the quantity of goods sold by the chosen time period in your business. This response provides the typical sales volume over a given time period. This number can be used to calculate total sales and other measurements.
What is percentage sales volume?
The amount of sales from a particular salesperson, retailer, or territory is referred to as percentage sales volume. You can use this number to identify specific trends in your industry. For instance, a business owner operates five storefronts in the Northeastern U S. and five stores that operate in the Southwestern U. S. If the company sold 500 items total, and 400 of them came from Northeastern stores, then the Northeastern stores’ share of the sales volume is 80%. Using this data, you can determine whether the product is more popular in the Northeastern United States. S.
Determining the break-even sales volume
How many items must be sold for a store to break even in order to make no money? Two figures can help you determine the break-even sales. The first figure represents the potential overall spending of a business, and the second one represents the profit per unit of output. To determine the break-even sales volume, divide the first and second numbers. The calculation looks like this:
How much a company might spend / profit per item is the break-even sales volume.
For instance, a water bottle company’s break-even sales volume would be $5,000 if it spent $10,000 over six months on its top bottle and made $2 profit per bottle sold:
10,000 / 2 = 5,000
FAQ
What is sales volume example?
You must multiply the number of items you sell each month by the required time frame, such as a year, in order to calculate your sales volume. Your sales volume would be 3,600 if you sold 300 lightbulbs per month. This means that you sell 3,600 bulbs a year.
What is the difference between sales and volume?
Sales Volume vs. Revenue Sales volume is the number of products a company sells over a specific time period, like a year or fiscal quarter. The amount of money a company makes during the time period under consideration is known as sales, or sales revenue.
Is sales volume the same as revenue?
Sales volume is not to be confused with sales revenue. The number of items sold over a specific time frame, frequently a quarter or an entire year, is referred to as sales volume. However, sales revenue measures how much money a business makes over a specific period of time.
What is sales volume and value?
There are two types of market share: value and volume. The company’s overall shares of its cumulative segment sales serve as a measure of its value market share. A volume market share, on the other hand, compares the precise number of units that an entity sells to the total number of units that are sold in the market.
