How to Calculate Sales Revenue - Maverrik | Business Growth Skip to content
How to Calculate Sales Revenue featured image

How to Calculate Sales Revenue

Knowing how to calculate sales revenue doesn’t require a degree or special software. You only need an understanding of a few business-related terms. Here are some of the most common ones you’ll need to understand:

Gross Profit 

This refers to the total sales price you’ll receive after expenses are taken out. This includes any fees you will incur for having your services performed, as well as the cost of labor. It is the total profit you’ll earn from the sale.

Percentage of Sale 

This represents the percentage of the total revenue you earn when you sell a product. This number is usually based on a percentage of what you sell, not a specific dollar amount. This percentage is also known as a gross profit percentage. 

Net Revenue

This is the profit you’ll actually make from the sale minus all expenses. This figure includes all costs and fees related to the sale. These include things such as your overhead costs (the costs of running your business) and taxes (if applicable).

Average Cost of Sales

The average cost of the items you sell and the number of items you sell to make up the gross profit. This is the percentage of what you would actually make with each sale.

Cost of Goods Sold

This is the amount you will have to pay for the goods you sell. This includes the cost of materials, labor and other miscellaneous charges. If you sell many different types of items, your cost of goods sold will be a lot higher than the gross profit. If you buy the items in bulk, your cost of goods sold will be lower.

Cost of Sales

This is the amount of money you will lose if you don’t sell the item. when you have to return it because you don’t have the money for it. The more money you pay to get it back, the higher your cost of sales is. This includes inventory costs, fees for returning items, and the cost of shipping costs as well as taxes, handling costs and handling charges on returned goods.

Calculating Sales Revenue 

A simple method of calculating sales revenue for products is: 

Units Sold x Average Price = Sales Revenue 

For service-based companies: 

Customers x Average price of services = Sales Revenue 

So, why go through all that terminology for a simple equation? Simple. So you can consider all the factors that make up your sales. You need to keep your sales and costs into consideration whilst creating a strategy. There could be a lot of money you’re not making, but until you work out what that may be you’ll be kept in the dark. So, ensure you’re brushing up on your terminology.

Luke Tew

Luke Tew

Head of Digital Media at Maverrik - Developing businesses with content.
SHARE
SHARE
SHARE

Digital Course

Content Creation Made Easy

Digital Course

Social Selling with Sales Navigator

PDF Download & Video

How To Book 10+ Meetings A Week From LinkedIn

More to explore

How To Turn on LinkedIn Dark Mode featured image

How To Turn on LinkedIn Dark Mode

One of the most requested tools on social networking sites is the inclusion of a dark mode and LinkedIn has been working on theirs for a while now. The feature
Read More
Should I Turn My Passions into Projects? featured image

Should I Turn My Passions into Projects?

Are you thinking about turning a passion into a project? Something that you can actually earn a living from and do as a full-time career? If you are…stop! I’m not
Read More

JOIN THE NEWSLETTER

Subscribe to get our latest content by email.

Scale Your Business eBook

Build A Crowd And Convert Them Into Paying Clients