The Rule of 78 in VoIP Sales

One of the keys to understanding recurring revenues in VoIP Sales is the Rule of 78. This is a simple concept, so let’s not complicate it. It goes like this:

  1. You make a new sale in January of $1000. That will recur for all 12 months in the year, bringing you $12,000 in revenue.
  2. In February, you close another deal for $1000. That will recur for the remaining 11 months of the year, bringing you $11.000 in revenue.
  3. For that same $1000 sale, March yields $10,000, April $9000, all the way to December with $1000.
  4. So, if you add that up, you get $12,000 + $11,000 + …. + $1,000, which equals $78,000.
  5. Using numbers rather than dollars, it’s 12 + 11 + 10 + 9 + 8 + 7 + 6 + 5 + 4 + 3 + 2 + 1 = 78
  6. For you math smarties, it can also be done as (12 + 1) x 6 = 78
  7. So, if you calculate your average revenue per user and your average users per account, you’ll get the average revenue per account. Multiply that by 78, and that’s your projected sales revenue

​Got it? This is also why Sales in the first quarter are so important. They really set up the rest of the year.

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