The sales budget represents the quantities that are expected to be sold at a given price taking into account discounts and rebates. The sales forecast is based on market share and sales growth rate and marketing efforts. Forecasts can be made by product line or by geographic region.
The sales budget is a top-down approach drawing on economic and industry data. But it also takes a bottom-up approach using forecasts from salespeople and sales managers. Sales people and managers are well aware of the strengths and weaknesses of the products or services as well as of the competition.
The sales budget is in some cases a negotiation process between salespeople and managers. Managers want to set ambitious sales goals to maximize revenue while salespeople will set goals that they will be able to meet the targets to maximize their earnings.
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