What it calculates
Use the result as a scenario, not a black box
Revenue can be decomposed into two drivers: how many transactions occur and how much each transaction is worth. That makes the model useful for testing whether a traffic strategy, merchandising strategy or pricing strategy has the bigger potential effect.
How the math works
Daily revenue = transactions/day × average order value. Monthly revenue = daily revenue × open days. Annualized revenue = monthly revenue × 12. Scenario revenue = monthly revenue × (1 + growth rate).
Example
At 220 transactions per day and a $62 average order, daily sales are $13,640. Over 30 operating days that is $409,200 per month. An 8% scenario raises the monthly target by $32,736.