An example
Three $10,000 opportunities at 80%, 50% and 20% give 8,000 + 5,000 + 2,000 = $15,000 of weighted forecast.
The problem with subjective probability
If each salesperson picks whatever percentage feels right, the forecast is the sum of the team’s optimism. The answer is to tie the probability to the stage, not to each opportunity: if “proposal reviewed” is 40%, it is 40% for everyone. And that 40% comes from your history, not from a hunch.
How to know it works
By measuring the gap between forecast and closed deals every month. If the gap is large and always goes the same way, the stage probabilities are poorly calibrated: recalculate them with the year’s data.
The usual mistake
Using the weighted forecast to commit to targets. It is a tool for managing the pipeline, not a commitment. To commit to a number, you have to look at the opportunities one by one.