Sales Budget

The sales budget is a detailed financial plan that shows the expected sales of goods and services of an enterprise for a particular market in a particular time period. It is classified on the basis of products or sales territories or sales representatives or consumers, etc. The purpose of sales budgeting is to plan for and control the expenditure of resources viz. money, material, people and facilities, etc., necessary to achieve the desired sales objectives.

The sales budget is the starting point in preparing the master budget and it shows the expected number of sales units of a period and the expected price per unit. All other components in the master budget such as production, purchase, raw materials, inventories, labor, expenses, etc., are depend on it either directly or indirectly. The sales budget is constructed by multiplying the budgeted sales in units by the selling price. It is prepared after preparing sales forecasts. The budget is prepared by marketing manager with the help of marketing research manager, regional sales managers, branch managers and salesmen.

Advantages of sales budget

A sales budget offers the following benefits for the progress of the business enterprise



  • It is helpful in farming sales programming so as to achieve the sales targets of the firm.
  • Useful in allocation of resources to different products, sales territories, etc. for realizing the sales forecast.
  • Can reveal the areas/products in which the company needs to strengthen its position.
  • Helpful in keeping expenses under control so that the objectives of net profits are achieved.
  • Serves as a yard stick for evaluating progress and sales performance of the company.

Factors affecting the Sales budget

There are many external and internal factors that affect the sales budget of any business enterprise.  Thus, while preparing a sales budget, the marketing manager must consider the following factors:

Internal factors

Internal factors are the factors which relate to the internal conditions and circumstances of the enterprise itself. The factors such as volume of sales, trend of the sales, long-term trend of sales, profitability of different products, production capacity, expansion programme of the enterprise, plan of new products, product diversification, plan or product developments, seasonal fluctuations, selling and distribution channels, possibilities of marketing research, price policy, advertisement and sales promotion policy, ability and efficiency of salesman, etc., affects the sales budget of the enterprise. These factors can be easily controlled by the enterprise and hence if any improvement or changes are required, it could be easily incorporated, without any wastage of time and money.

External factors

The external factors such as purchasing power of the general public, industrial and taxation policy of the government, changes in needs, habits & preference of the consumers, situation of competition in the market, distribution of wealth in the country, National production and per capita national income, etc., influence the sales budget of any organization. These factors are not within the company’s control and based on assumptions, they are budgeted.

Latest E-Books