Estimated Revenue

Estimated Revenue is one of the most important fields on the Opportunity form in Microsoft Dynamics 365 for Sales. This field is used to help predict actual revenue and is the basis for the Sales Pipeline within an organization.

Many companies estimate the revenue of a project in different ways. People use factors like probability, budget, opportunity close date, and a number of combinations and calculations to project the revenue.

Aside from estimated revenue, companies want to know the weighted estimated revenue, which is often a combination of the estimated revenue based on the probability the revenue will be realized., Here is an easy and straightforward method for determining estimated weighted revenue.

As best practice creates the ‘Probability’ field as an option set dropdown with four options of 25%, 50%, 75%, and 90%. (  Maybe an extra one for 5% which is more of an unqualified suspect than an opportunity.)

This takes much of the guesswork out of determining probability. Because this number is largely subjective, by only having four options it keeps an organization consistent in its probability choices.

Using 90% for the fourth choice as opposed to 100% is done on purpose because if the probability were 100% then one would theoretically be closing the opportunity as won and not need to put in a probability.

There should be clear stage gate definitions to move to the next level. E.g. meeting with C-level, shortlisted, approved the budget in place, ROI justification etc.

Create a new field on your opportunity form for ‘Estimated Weighted Revenue’. This will be a simple currency field. In Dynamics, with the addition of Calculated and Rollup fields, there are many possibilities to do our calculations within the field itself.

In this example create a Business Rule to calculate estimated revenue from the probability. The important thing to note here is that you cannot calculate a currency or numeric value off an option set value. This is why we will use a business rule for our calculation.

Now that we have our new Probability dropdown and Estimated Weighted Revenue currency field on our form create a business rule to calculate that estimated weighted revenue. This calculation will be based on both Estimated Revenue and Probability % so you must have a value for estimated revenue already for the calculation to work.

Open a new business rule, give it a name, and add the first condition. For this condition, the first option in our Probability field is 25%.

                IF – Probability = 25%

Next add a Set Field Value Action:

                THEN – Estimated Weighted Revenue – (Choose Type = Formula)

                Field – Est. Revenue – (Choose Operator for multiply * ) – (Choose Type = Value) and Input .25

(See Below)

Next, continue to add conditions for if the probability option set equals 50%, 75%, and 90%. You can click Add and continue to add conditions and branches for however many probabilities you may have. You will do this, in the same way, the first IF THEN statement was created.

Then, Validate, Save, and Activate your Business Rule. Verify your Estimated Weighted Revenue is for example 75% of your Estimated Revenue if your Probability is 75%. Consider locking your weighted estimated revenue field now that this is defined by the business rule.

Measure the actual outcome against the tool  - sales often want to predict a lower target to make life easier, managers may want o maximizes the expected outcome of meeting C-level expectations

In practice there too many unknowns and a lot of luck, e.g people change mid-sale, there may be competitors you don’t know about, is there really a budget, who is the real decision maker, on what else could they better spend the money e.g. another salesman or a new factory – is there a compelling business reason to change? Or To go with you?  Generally, the deal is not won till someone gives you some money and success is usually lower than prediction and usually takes a lot longer. So the time bucket is also important.  Also useful to measure the actual against the predicted order date and to update the calculations accordingly. This si double edged- if you forecast next month then it may be 2 months later, but if you forecast 3 months away then the pressure to close comes off and a lot can change in 3 months – economy turns down, they lost a major account, a new competitor arrives, your key contact leaves, they shop around for lower quotes etc.

So it's important to have qualifications before progressing to the next stage- see the Infor sales guide on this.