Sales budget template: the short answer
A sales budget works backwards from the revenue goal: how many deals and how much pipeline you need, how many reps you need, how quota is split per rep and month, and what sales pay costs. Download our free sales budget template in Excel, enter your own assumptions and see the result straight away.
Download the sales budget template (Excel, free)
The workbook has six sheets, ordinary formulas and no macros, so it works in Excel, Google Sheets, Numbers and LibreOffice. It contains example data for a team of 10 reps with a revenue goal of DKK 24 million, so you can see how the numbers connect before you enter your own. You only type in the lavender cells; everything else is formulas. Amounts are plain numbers in your currency. Below we go through the template step by step with the example numbers.
What is a sales budget?
A sales budget is the plan for how the sales organisation reaches the year's revenue goal and what it costs. It answers three questions: how much do we need to sell, how many reps do we need, and what does sales pay cost as a percentage of revenue? A forecast is something else: an ongoing estimate of what you will actually land, based on pipeline and history. The budget is made before the year; the forecast is used to steer during it.
Many sales budgets are a single number per month. The problem is that the number says nothing about whether it is realistic. The template connects the goal to the factors that decide whether it can be reached: deal size, win rate, sales cycle, number of reps, ramp time for new reps and rep attrition.
How the template is built
| Sheet | What you do | What it shows |
|---|---|---|
| Instructions | Read | Step by step, colours and how the workbook calculates |
| Assumptions | Enter revenue goal, deal size, win rate, sales cycle, quota, ramp, attrition, pay and seasonality | All the numbers the rest of the workbook builds on |
| Capacity | Nothing | Deals, opportunities, pipeline, coverage and number of reps |
| Quota allocation | Enter reps, start month and whether they are new | Quota per rep per month with seasonality and ramp |
| OTE and commission | Can change the three attainment levels | OTE, pay mix, commission rate and commission at 80, 100 and 120% |
| Summary | Nothing | Key figures, sales pay cost, cost of sales and pipeline per month |
Step 1: From revenue goal to pipeline
The first step is to translate the revenue goal into deals and pipeline. The formulas are simple:
- Deals to win = revenue goal ÷ average deal size
- Qualified opportunities = deals ÷ win rate
- Pipeline needed = revenue goal ÷ win rate
- Pipeline coverage = pipeline ÷ revenue goal, which equals 1 ÷ win rate
Example: With a revenue goal of DKK 24,000,000, an average deal size of DKK 150,000 and a win rate of 25%, you need to win 24,000,000 ÷ 150,000 = 160 deals. That takes 160 ÷ 25% = 640 qualified opportunities and a pipeline of 24,000,000 ÷ 25% = DKK 96,000,000, a coverage of 4.0x. That is just over 53 new opportunities a month on average.
The sales cycle decides when the pipeline has to be created. With a 3-month sales cycle, the pipeline for December's quota must be in place in September. The Summary sheet therefore shows how much new pipeline must be created each month to reach the quota three months later.
Step 2: How many reps do we need?
The number of reps depends on how much a fully productive rep can sell and how much capacity you lose on new reps ramping up and on reps who leave. The template calculates:
- Capacity per rep = annual quota × planned attainment
- Fully productive reps (FTE) = revenue goal ÷ capacity per rep
- Loss per new rep = ramp months × (1 − ramp productivity) ÷ 12
- Loss per rep who leaves = (hiring time + ramp loss in months) ÷ 12
Example: Annual quota is DKK 3,000,000, and you budget with 90% average attainment, so each rep contributes DKK 2,700,000. That requires 24,000,000 ÷ 2,700,000 = 8.89 fully productive reps. A new rep has a ramp period of 4 months at 50% productivity and so loses 4 × 50% ÷ 12 = 0.17 of a year's capacity. A rep who leaves costs 2 months of hiring time plus a new ramp: (2 + 2) ÷ 12 = 0.33. With 7 reps at the start of the year and 15% annual attrition, the formula gives 9.86, so 10 reps: 3 new reps for growth and about 1.5 replacement hires during the year.
Note that 8.89 fully productive reps become 10 positions once ramp and attrition are included. That gap is often missing from the hiring plan. To compare the size of your sales team with other companies, see our data on salespeople per employee. The template answers the other question: how many reps your own goal requires.
Step 3: Quota per rep and month
In the Quota allocation sheet you enter the reps with start month and whether they are new. The sheet spreads the annual quota over the months using the seasonality from Assumptions and reduces the quota during ramp. Before the start month, the quota is 0. You can give individual reps their own annual quota, for example a key account manager with fewer but larger customers. Read more about setting quotas under sales quota in the glossary.
Example: Seasonality is 7% in January, 4% in July and 11% in December. The 7 experienced reps each have a quota of DKK 3,000,000, for example DKK 210,000 in January and DKK 330,000 in December. The three new reps start in January, February and April and have half quota for their first four months:
| Rep | Start | Quota during ramp | Quota for the year |
|---|---|---|---|
| 7 experienced reps | January | No ramp | DKK 3,000,000 each, DKK 21,000,000 in total |
| New rep 1 | January | January to April, 50% | DKK 2,520,000 |
| New rep 2 | February | February to May, 50% | DKK 2,280,000 |
| New rep 3 | April | April to July, 50% | DKK 1,830,000 |
| Total | DKK 27,630,000 |
Total quota is DKK 27,630,000, or 115.1% of the revenue goal. At the planned attainment of 90%, that gives expected revenue of DKK 24,867,000, which is DKK 867,000 above the goal. The buffer has to cover reps who leave and hires that are delayed, which the quota plan cannot foresee. If expected revenue is below the goal, Summary shows the gap in red. For a more detailed quota plan with territories, part-time reps and fixed quotas, use our sales quota planning template.
Step 4: OTE, pay mix and commission rate
The OTE and commission sheet is based on the standard plan in Assumptions: base salary, variable pay at 100% and an optional accelerator above quota. The commission rate is variable pay divided by quota.
Example: Base salary is DKK 42,000 a month, DKK 504,000 a year, and variable pay at 100% is DKK 216,000. OTE is DKK 720,000, and the pay mix is 70/30. The commission rate is 216,000 ÷ 3,000,000 = 7.2%, and with an accelerator factor of 1.5 the rate above quota is 10.8%. Quota is therefore 4.2 times OTE. How to choose the pay mix and the ratio between quota and OTE is covered in our guide to OTE and quotas, and you can compare several roles in our OTE and pay mix template.
| Attainment | Sales | Commission | Total pay |
|---|---|---|---|
| 80% | DKK 2,400,000 | DKK 172,800 | DKK 676,800 |
| 100% | DKK 3,000,000 | DKK 216,000 | DKK 720,000 |
| 120% | DKK 3,600,000 | DKK 280,800 | DKK 784,800 |
At 120%, commission is 3,000,000 × 7.2% + 600,000 × 10.8% = 216,000 + 64,800 = DKK 280,800. New reps in ramp have the same rate but a lower quota, and therefore earn less commission at the same attainment. If you pay a guaranteed commission during ramp, it is not in the template and must be added.
Step 5: Commission cost and cost of sales
Summary brings together the whole team's sales pay at the three attainment levels. Revenue is total quota times attainment. Base salary is the same in every scenario, because it is paid regardless of results, and other pay costs are set to 10% of pay as an example of pension, ATP, insurance and similar. Cost of sales here means sales pay cost as a percentage of revenue.
| 80% | 100% | 120% | |
|---|---|---|---|
| Revenue | DKK 22,104,000 | DKK 27,630,000 | DKK 33,156,000 |
| Total base salary | DKK 4,872,000 | DKK 4,872,000 | DKK 4,872,000 |
| Total commission | DKK 1,591,488 | DKK 1,989,360 | DKK 2,586,168 |
| Other pay costs (10%) | DKK 646,349 | DKK 686,136 | DKK 745,817 |
| Total sales pay | DKK 7,109,837 | DKK 7,547,496 | DKK 8,203,985 |
| Cost of sales | 32.2% | 27.3% | 24.7% |
| Commission as % of revenue | 7.2% | 7.2% | 7.8% |
Base salary for the 10 reps is 116 pay months × DKK 42,000 = DKK 4,872,000, because new reps are only employed from their start month. Two things are worth noting. Cost of sales falls as attainment rises, because base salary is fixed. And commission as a percentage of revenue rises from 7.2% to 7.8% above quota because of the accelerator. That is the price of rewarding overperformance, so it is worth calculating before the plan goes out. To calculate commission for a single rep, use the commission calculator.
Common mistakes in sales budgets
- Quota = goal: the sum of quotas equals the revenue goal, so the budget only holds if every rep hits 100%.
- New reps on full quota from day one: ramp costs capacity, and it must be in both the quota plan and the hiring plan.
- No attrition: reps leave, and the position stays empty for some months before a new rep is trained.
- The same quota every month: seasonality makes quota unrealistic in some months and too easy in others.
- Pipeline too late: with a long sales cycle, the pipeline for the fourth quarter must be created in the second and third.
- Commission cost only at 100%: also calculate 120%, so the accelerator does not come as a surprise.
Once the budget is in place and you need to calculate commission month by month, see our free commission Excel template. You can find all our templates in the overview of free commission and sales compensation templates.
Prowi and the sales budget
The budget is the plan; the hard part is following it. Prowi calculates commission continuously from CRM data according to the rules in your plan, reps see their earnings and attainment in a mobile app, and once admins approve the statements, the approved amounts go on to payroll, straight into Zenegy or as a payroll file for systems such as Danløn and Visma Dataløn. That way you can see during the year whether commission cost is following the budget. Book a demo to see it with your own numbers.
FAQ
How do you build a sales budget?
Start with the revenue goal and work backwards: deals = goal ÷ deal size, pipeline = goal ÷ win rate, and number of reps = goal ÷ (quota × expected attainment), plus the loss from ramp and attrition. Then split quota across reps and months, and calculate sales pay at different attainment levels.
How many sales reps do we need?
Divide the revenue goal by what a fully productive rep realistically sells in a year, and add the capacity you lose on new reps ramping up and on reps who leave. In the template's example, DKK 24 million requires 8.89 fully productive reps, but 10 positions.
How do you split quota across months?
Give each month a weight based on seasonality, for example lower in July and higher in December, and split the annual quota by the weights. New reps get no quota before the start month and a reduced quota during ramp. The template's Quota allocation sheet does it automatically.
How much pipeline do you need?
The pipeline needed is the revenue goal divided by the win rate. With a 25% win rate, pipeline must be 4 times the goal, and with 20% 5 times. Use your own win rate from the CRM rather than a general rule of thumb.
How do you calculate the commission rate from OTE?
The commission rate is variable pay at 100% divided by quota. With DKK 216,000 in variable pay and a quota of DKK 3,000,000, the rate is 7.2%. The rep then earns exactly the variable pay when quota is reached.
Is the sales budget template free, and does it work in Google Sheets?
Yes. The Excel file is free and uses only ordinary formulas without macros, so it works in Excel, Google Sheets, Numbers and LibreOffice.