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Formula, in Forecasting

Sales Forecast Formula: Calculate Projected Revenue

The sales forecast model compounds your starting MRR by a monthly growth rate and adds pipeline each month (opportunities times conversion times deal size). It reports projected MRR and cumulative revenue at your chosen horizon.

6 variables. Published Mar 12, 2026. Updated Mar 27, 2026. By AI Biz Hub.

Formula
Projected MRR (each month) = Current MRR x (1 + Monthly Growth) + New Opportunities x Pipeline Conversion x Average Deal Size, compounded over the forecast months

Variables

PM

Projected MRR

Recurring revenue at the forecast horizon, in currency units. The primary output after compounding each month.

SM

Starting MRR

Recurring revenue at month zero, in currency units. The base the model compounds.

MG

Monthly Growth

Organic month-over-month growth of existing MRR, as a percent. Compounds each month and is the biggest long-horizon lever.

NO

New Opportunities

New pipeline opportunities entering each month, as a count. The top-of-funnel volume.

PC

Pipeline Conversion

The share of opportunities that close, as a percent. Multiplies opportunities into won deals.

ADS

Average Deal Size

The average recurring revenue per won deal, in currency units. Multiplies converted opportunities into new MRR.

Step by step

  1. 1

    Set the baseline case with the real calculator inputs.

    Starting Mrr = 80,000, Monthly Growth Percent = 5.00%, Pipeline Conversion Percent = 22.0%, Avg Deal Size = 1,200

  2. 2

    Enter pipeline conversion as a percent; the tool divides it by 100. Make sure it reflects opportunity-to-close, not opportunity creation, so won deals are not overcounted.

    A 15% close rate is entered as 15; the model applies 0.15.

  3. 3

    Apply the formula and read the first calculator outputs, not just the headline assumption.

    The calculator lands with projected mrr at horizon at $311,753 and cumulative forecast revenue at $2,332,421.

  4. 4

    Re-run with conservative, expected, and optimistic conversion rates to produce a forecast range instead of a single fragile number.

    At the defaults, moving conversion from 10% to 20% lifts projected MRR from about $220,071 to $296,473, since starting MRR and organic growth also drive the total.

Worked example

Sales Forecast sample case

Starting Mrr

80,000

Monthly Growth Percent

5.00%

Pipeline Conversion Percent

22.0%

Avg Deal Size

1,200

New Opportunities / Month

40

Forecast Months

12

Each month MRR grows 5% and adds 40 opps times 22% times $1,200 = $10,560 of pipeline. Compounded over 12 months from $80,000, projected MRR reaches $311,753.

The calculator lands with projected mrr at horizon at $311,753 and cumulative forecast revenue at $2,332,421.

Common variations

Rate assumptions can be modeled as monthly, annual, gross, or net depending on the decision.
Scenario variants are useful because fixed assumptions rarely survive contact with real life unchanged.
Use Sales Forecast Calculator to compare the baseline result with one stressed case before relying on a single answer.

Run the numbers next

Questions people ask next

How do you calculate a sales forecast?

Each month the model grows existing MRR by the organic growth rate and adds pipeline: new opportunities times pipeline conversion times average deal size. It compounds this month by month over the forecast horizon to project MRR and cumulative revenue.

Should the conversion rate be entered as a percent or a decimal?

Enter pipeline conversion as a percent; the tool divides it by 100 internally. Make sure it reflects opportunity-to-close, not opportunity creation, so won deals are not overcounted. For example, a 15% close rate is entered as 15.

Why does the conversion rate matter so much in the sales forecast?

Conversion is an uncertain input and a real swing factor in the pipeline term. At the defaults, moving it from 10% to 20% lifts projected MRR from about $220,071 to $296,473, not a clean doubling, because starting MRR and organic growth also drive the total.

How can I make the forecast less fragile?

Re-run the calculation with conservative, expected, and optimistic conversion rates to produce a forecast range instead of a single fragile number. The forecast revenue figure is a planning number only as reliable as its conversion-rate assumption, so a range communicates the uncertainty better than one point estimate.

Sources

  1. Forecasting Revenue: A Guide for Businesses , Investopedia
  2. The Ultimate Guide to Sales Forecasting , HubSpot

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