One way to budget revenues is to take the budgeted cost of sales and add a profit margin. The unit cost of each product plus your expected profit margin would give you a budgeted sales price. In this case, you should use the "all-in" cost, to ensure that your selling price is sufficient to cover all your costs and still leave you with a margin. Budgeted revenue would then be the quantity of units times the budgeted selling prices.
But there are market forces that should also be taken into consideration, that may affect the price you can reasonably expect to charge in order to be competitive in the marketplace. In preparing the budget for revenue, you may want to collect information on competitors’ prices. Since you are most likely starting a business in which you already have knowledge and expertise, you may be well aware of these market factors. The important aspect in budgeting is to try to quantify these aspects and incorporate them into budgeted selling prices, and budgeted revenue.
If you are introducing a new product, you may be able to budget revenue based on prices for similar products, adding an incremental amount based on the expected added value of your product. If you have done a market study, this information will be valuable in building the budget.
Services
If you are in the service business, your inventory is your time. The building blocks for budgeting rervenue in this case are the number of billable hours available, and the rate to be charged per hour. Hours and rates should be broken down by person, if the business involves different persons performing different functions.
Billable rates may vary, depending on the person’s qualifications and experience. And billable hours may vary depending on the person’s functions. A person dedicated almost entirely to customer service will have a different number of billable hours than a person who primarily performs administrative and support functions. The nonbillable hours may be factored into the billable hours, by incrementing the billing rate to be charged. Or the nonbillable hours may be left out and absorbed as overhead within the operating expenses.
Here again, market dynamics will need to be taken into consideration. But you can reasonably estimate your revenue by determining your billable hours per month times the rate you expect to charge.