The revenue velocity formula, worked through with real numbers

The formula

Revenue velocity (per day) = opportunities × win rate × average sale ÷ days to close

Each part is something you can measure:

• Opportunities: qualified enquiries or open quotes in the period. Not every phone call, only the ones that could become a sale.
• Win rate: the share of those opportunities that became a sale, as a decimal (30% = 0.30).
• Average sale: the typical value of a won job, order or contract, before tax.
• Days to close: the average number of days from first contact to a signed deal or paid invoice.

Multiply the daily figure by 30 for a rough monthly number, or by 90 for a quarter.

Working it out from ordinary records

You don't need a CRM. You need three lists, which most businesses can produce from email, a quoting tool or an accounting package.

1. A list of enquiries or quotes from the last 90 days, with the date each one arrived.
2. A list of won deals in the same period, with the value and the date the deal was signed or invoiced.
3. A note of which quotes were won, so you can match a won deal to its first contact date.

Then:

• Count the qualified opportunities in list one.
• Divide the number of wins by the number of opportunities for the win rate.
• Add up the values in list two and divide by the number of wins for the average sale.
• For each won deal, count the days from first contact to signature, and average them.

If you can only match a sample, match 30 to 50 deals. A careful sample beats a careless total.

A worked example

A business-to-business service firm pulls its last 90 days:

Velocity = 50 × 0.30 × $4,000 ÷ 45 = $60,000 ÷ 45 ≈ $1,333 a day, or about $40,000 a month.

Why small gains multiply

Now suppose the firm improves each figure by 10%:

New velocity = 55 × 0.33 × $4,400 ÷ 40.5 = $79,860 ÷ 40.5 ≈ $1,972 a day.

That is roughly 48% more revenue per day from four changes of 10% each. The figures multiply, so modest progress on all of them beats a heroic effort on one. Doubling opportunities alone would only double velocity if win rate and price held steady, and in practice more leads often bring a lower win rate.

Reading the result: which lever first?

The formula's real value is diagnostic. Compare each figure with what you think is realistic for your business:

• Average sale looks low compared with what the work is worth: start with pricing and packaging. It is the fastest lever because it affects the next invoice.
• Win rate is under what you would expect for the quality of your enquiries: start with the sales routine, especially follow-up.
• Days to close is long compared with how quickly customers actually need the work: look at reply speed, proposal clarity and decision dates.
• Opportunities are the only problem, and everything else is healthy: then, and only then, add a new channel.

Repeat purchases sit outside this formula, which only measures one pass through the pipeline. Add a fifth figure, the share of last year's customers who bought again, and see the retention workstream if it is low.

Adapting the formula to your kind of business

The four figures look slightly different depending on how you sell.

• Contractors and home-service firms. Opportunities are quote requests or site visits. Days to close is usually short for repairs and long for larger projects, so calculate the two separately.
• Professional practices. Opportunities are consultations or proposal requests. Average sale may be a first engagement fee, with the real value in repeat work, which is where retention comes in.
• Distributors and wholesalers. Opportunities may be quotes to existing accounts. Win rate and average order matter most, because customers already know you.
• Subscription and contract businesses. Treat a renewal as its own opportunity with its own win rate. A renewal rate that slips from 90% to 85% can quietly cost more than any new-sales problem.

Whatever the model, write down your definitions on the first day and keep them. The figures are only comparable if they are measured the same way each time.

Five common mistakes

1. Counting every call as an opportunity. Your win rate will look terrible and you'll fix the wrong thing. Qualify first.
2. Mixing service lines. A $300 repair and a $15,000 project don't belong in one average. Calculate each main line separately.
3. Using list price instead of what was paid. Discounts hide inside the average sale. Use invoiced amounts.
4. Changing definitions between readings. If "opportunity" means something different next month, the comparison tells you nothing.
5. Ignoring the time dimension. A faster close puts cash in the bank sooner. For a business that pays staff weekly, that matters even if total revenue is unchanged.

How the sprint uses velocity

In a 90-day sprint, the leak diagnosis calculates these figures for each main service line in the first ten working days. They become the baseline on the revenue ledger. Every two weeks, the same figures are recalculated in the same way, so changes can be traced to specific actions.

By day 90 the comparison shows which figures moved and by how much. It is the clearest way we know to tell genuine progress from a lucky month.

Try it now

Pull your last 90 days tonight and fill in the four figures. Then improve each by 10% on paper and see what the result would be. If the gap between the two numbers is worth a quarter of focused work, call, text or email and bring the figures with you. You can also read how the four levers fit together on the services page.