what’s the purpose of making a revenue forecast for a ERP software product?

Question

Boss often ask me to do that,but I have not found any benefits of that.
And we often do it when we have determine the product'smaketing positioning.
Do we do it at the wrong stage?

Answer 1

There are a number of reasons to create a revenue forecast.

The primary reason is to determine the marketing and sales budget you can afford.

Other reasons for creating a forecast is to force discussion on the size of the market and the share of the market a company's products can attain.

Usually a positioning exercise will reveal a market's dynamics - drivers of growth and drivers of share by customer types, their needs and how various companies/products meet those needs. Market share will be determined by a company's ability to deliver against a customer's needs. For example, if your customers care about ease of use and overall performance, benchmarking how your competitors and how your company delivers against these needs should reveal how each company obtained its market position.

If you have a good handle on how the market is growing and how customers make decisions on which products it will buy, these assumptions will help shape a revenue forecast and the product's corresponding allocation of engineering, marketing, sales, resources. This exercise can also focus the company/product's resources on delivering against its most important drivers. (e.g. To obtain another 10% share and $50MM in revenue next year, we need to create the following products with these characteristics by XX date.)

Answer 2

Making a revenue forecast for any product has several purposes, but the primary one may be to use as a foundation for marketing & advertising expenses, which are often a % of sales.