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Gross Revenue vs Net Revenue: Learn the Key Differences

Not everyone is a natural financial analyst, so don’t feel bad if you’re not completely sure – you’re in good company. According to Gartner , only 45% of sales leaders have high confidence in the accuracy of their forecasts (including both gross and net revenue forecasts). Even if you’re smashing your sales quota , you need a deeper understanding of your sales trends to adjust your strategy and keep an edge over your competitors. Knowing the difference between gross and net revenue — as well as how to track them — is key to this effort. This guide will explain everything you need to know about the difference between gross and net revenue, and provide resources on the best tracking tools available online. Table of Contents [ Show ] What is gross revenue vs net revenue? Quite simply.

Gross revenue is the total amount

Your sales without including deductions (costs incurred to close those sales). Net revenue is your total revenue minus deductions like allowances, discounts, and returns. Both are calculated at summary dates throughout the Country Email List fiscal year, usually monthly or quarterly. Why do you need to track and understand gross revenue versus net revenue? Total revenue provides an objective measure of your company’s ability to generate revenue. With this data, you can make informed decisions about what you need to do to increase sales to achieve your predetermined goals. It’s also a good measure of how successful your team is at closing deals. When you track net sales, you can see which deductions are affecting your bottom line — things like product promotions, discounts, and coupons.

With an overall view of your net sales

You can look to reduce deductions that reduce profits or add incentives to encourage more sales. How to Banco Mail calculate total revenue To calculate your company’s total revenue, add up the total sales revenue over a certain period of time. Most people track this monthly, quarterly, or annually. To ensure your total revenue calculation is as accurate as possible, you must carefully account for all your sales data , which means considering all sources of sales data. Also, remember that total revenue does not include taxes, fees, or any deductions. Here is the formula to calculate total revenue: Sales quantity x unit price = total revenue Example of calculating total revenue For example, Casey, who sells dog sweaters online, had a total of 10,000 orders in the last fiscal year. The selling price of one of her sweaters is $35. 

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