Key takeaways
- Sales revenue is units sold multiplied by the price paid, for a set period.
- Net sales revenue is gross sales revenue minus returns, discounts and allowances.
- Revenue is not profit: costs come off afterwards.
- Revenue is counted when it is earned, which is not always when the cash arrives.
How do you calculate sales revenue
Multiply the number of units sold by the price of each unit, then add up the result for every product or service you sell. Say an invented software company, Brightwell, sells 40 annual subscriptions at £3,000 each and 10 onboarding packages at £1,500 each in a quarter. Its sales revenue for the quarter is £120,000 plus £15,000, which is £135,000.
When prices vary deal by deal, as they often do in B2B sales, it is easier to add up the value of each closed sale. The answer is the same: the total customers agreed to pay for what you delivered in the period.
What is the difference between gross and net sales revenue
Gross sales revenue is the total before any deductions, and net sales revenue is what remains after returns, discounts and allowances. If Brightwell's £135,000 included £6,000 of discounts agreed after invoicing and a £2,000 refund, its net sales revenue would be £127,000.
Net sales revenue is the figure most finance teams report, because it is closer to what the business actually keeps. Sales teams should know which of the two their target is set against.
Is sales revenue the same as profit
No. Sales revenue is the money coming in from sales; profit is what is left after costs. Take away the cost of sales, the direct cost of delivering what you sold, and you get gross profit. Take away operating costs such as salaries, rent and software, and you reach operating profit.
A business can grow revenue and still lose money if the cost of winning and serving each customer grows faster. That is why revenue targets usually sit beside a margin or cost target.
When is sales revenue counted
Under accrual accounting, which most companies use, revenue is counted when it is earned by delivering the product or service, not when the contract is signed or the cash arrives. A customer who pays £12,000 upfront for a year of software is usually recognised as £1,000 of revenue each month.
This is why sales teams often talk about bookings, the value of contracts signed, while finance talks about revenue. Both matter, and your accountant decides the rules that apply to your business.
How do sales teams use sales revenue
Sales teams use revenue as the headline target and break it down to plan their work. Splitting it by segment, product, region or new versus existing customers shows where growth is coming from and where it is stalling.
From there, revenue connects to the other sales metrics: divide it by average selling price to get the number of deals needed, and compare it with pipeline to see whether there is enough in play to reach the target.
Where Pebbles Ai fits
Common questions
Is sales revenue the same as turnover?
In UK usage, turnover usually means a company's total revenue from its normal trading, so for most businesses it is the same figure as sales revenue.
Does sales revenue include VAT?
No. VAT is collected on behalf of the tax authority, so sales revenue is recorded excluding VAT.
What is the difference between revenue and bookings?
Bookings are the value of contracts signed in a period. Revenue is the part of that value earned by delivering the product or service, which for a subscription is spread over its term.
About this page. Written by the Pebbles Ai team for people who run sales, marketing and growth. Last updated .
