Having a Sales Goal:
In the big corporate world, companies have a plethora of resources to know what's going to happen in the future. The use programs to do "long range planning" and they are able to predict what will happen in the next year, 3 years, 5 years, 10 years and so on!
The benefit of doing these projections is so that you know going into each new-year of business, how much money you can and will make. Now don't get me wrong, even the big fortune 500 companies don't always meet there goals, but having the knowledge to know how to plan to meet them, is a step in the right direction.
What is a Sales Goal:
So I know you're asking yourself now… what is a sales goal and how do I come up with one if I am just a little business by myself, or even just a hobbyist starting out. I promise you, you can!! A sales goal tells you how many of each type of session you offer that you should sell in a time frame. This will help you reach the amount of income that you want to make. That way you're not guessing about how many more sessions you need to book to make what you need to each year. It also is a great tool to use when it comes to raising your prices or giving yourself a session amount goal!
Now Let’s Do Some Math!!
The challenge with photographers in planning is that we have a mixture of packages that we offer. To figure out how many of each session you have to hold to make your goal you do a little math. Open up Excel or your Google Docs program and let's try it-
1. Look at the last year of sessions that you have and in separate columns, list out each session, how many of each session you had, and how much money in total you made from all those sessions in that type.
2. In the last column, total up the sales from all your sessions than divide each session types total by the total sales. This is called your Sales Mix percentage.
3. For example- If you have a mix of packages totaling $28,600 and in the past year you had 11 sessions of Package A. totaling $1,100 and 10 sessions of Package B. totaling $2000 dollars. Your total sales would be $3,300. To get your sales mix percentage you would than divide $1,100/$28,600 and get 3.85% and then $2,000/$28,600 and get 6.99%. Keep doing this for all your session types. When you have all the percentages in for all the different packages, the total percentage should = 100%.
4. Now that you have your percentages from last year, you can calculate how much money of each type of session, you need to make in the new year to make your goal. You would take the total amount of money you want to make in the next year, let's say its $40,000 an you would multiply the percentages for each session type by that $40,000. This will give you the total amount you need to make for each package.
5. Example - $40,000 X 3.85% is $1,538.
6. The last step is to come up with your new session prices for the upcoming year (or if you are not changing prices, you can put your old ones in!) and divide your session price by the total dollar amount that you need to make for that Package.
7. Last example!! (WOOHOO) Take Package A. which you newly priced at $200 and divide it by $1538.46 and you get 8 sessions, rounded up or down. Then take Package B. which is $400 and divide that by $2,797 and you get 7. Do this for each session type you have listed.
8. Now you sit back and take a look at alllll the numbers you just produced!
What Do I Do With This Info??
Now you have the numbers what do you do with them?? You know that to make your goal of $40,000 next year your prices, you have to sell a total of 72 packages. Based on your sales mix from the prior year, you can see how many of the different types of packages you may be able to sell to reach your goal.
If you play with the numbers by weeks, months, days, change your pricing, add packaging, add a post-tax amount (take what you want to make and divide it by about 1.35, which is a rough tax estimate, and use that number) or any other fun combination you can think of, it can give you a lot of insight for what your business will look like next year and how to start thinking about marketing to get you there.
Do you feel ready to set up your sales goal and achieve it?? I know you are going to rock it!! Check back with us or sign up for our newsletter for other business tips and advice!