How to calculate sales revenue
Sales revenue is what you sold multiplied by what you charged, minus what you gave back. Enter your numbers to see gross, net and annual revenue.
Your numbers
Sales revenue
- Gross monthly revenue
- Discounts and returns
- Net monthly revenue
- Annual net revenue
- Revenue per deal after discounts
These figures come from the numbers you enter. They are planning estimates, not a forecast, and revenue is not the same as profit.
The math, step by step
No hidden assumptions. Every number above comes from these steps.
- Gross monthly revenueUnits or deals sold per month × average price.
- Discounts and returnsGross monthly revenue × your discounts and returns percentage.
- Net monthly revenueGross monthly revenue − discounts and returns.
- Annual net revenueNet monthly revenue × 12. This assumes every month looks like the one you entered.
- Revenue per deal after discountsAverage price × (1 − discounts and returns percentage).
Using revenue numbers to plan new business
Work back from a target
Start with how much new revenue you want in a year. Divide it by your average deal value to get the number of new customers you need. Divide that by your close rate to get the number of sales conversations it takes. If you want $240,000 in new revenue and an average first-year deal is $12,000, you need 20 new customers. At a 25% close rate, that is 80 qualified conversations a year, or about 7 a month.
Decide what a customer is worth
For one-off sales, use the average deal value. For retainers and subscriptions, use the first year of revenue, or the average lifetime if you know it. This number sets how much you can afford to spend to win a customer, so be honest with it. A high estimate makes every channel look affordable.
Compare it with what new customers cost
Take what a channel costs per month and divide it by the conversations it produces. A channel that costs $3,000 a month and produces 4 qualified conversations costs $750 per conversation. At a 25% close rate that is one new customer a month for $3,000. If a customer is worth $12,000 in the first year, the channel pays for itself. If a customer is worth $2,000, it does not.
Revenue is not profit. Once you know what a channel brings in, check the margin on that revenue before you scale it.
FAQ
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Multiply the number of units or deals sold by the average price. That gives gross sales revenue. Subtract discounts, refunds and returns to get net sales revenue, which is the number most businesses report.
Gross revenue is everything you billed at full price. Net revenue is what is left after discounts, refunds, returns and credits. Net is the better number for planning because it is what you actually keep from sales.
No. Revenue is money coming in from sales. Profit is what remains after you pay for the product or service, your team, and your overhead. A business can grow revenue and still lose money.
Add up the discounts, refunds, returns and credits you gave over a period and divide by gross sales for the same period. If you rarely discount and have no returns, set it to zero.
Yes. Use new deals or clients per month as the units and your average deal value as the price. For monthly retainers, enter the value of a deal over the period you want to measure.
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