Tracking your sales revenue gives you an indication of your company’s value (partially determined based on “business booked,” or amount of revenue generated) and how your performance is trending. Those trends can help you frame strategies that keep you growing.
For example:
Is revenue up year over year, or quarter over quarter? If so, can you pinpoint the strategies that made that possible and double down on them?
If you’re down, how much is the shortfall? How does this affect your overarching sales targets and how can you adjust strategies to stay on course?
When you track this metric, especially across different sales categories, you can measure profitability, assess your tactics, plan your operating expenses, and make informed strategic decisions. Maybe you need to drop an underperforming product line, for instance, or put more resources behind an emerging service offering.
For instance, at Copado, we keep an eye on the sales revenue that’s america phone number list coming from our freemium model (i.e., our basic, non-subscription-based product). It helps us decide whether we should continue investing in building it out or whether it’s beginning to cannibalize users from other products. If the freemium model starts to get too good because we offer too much, we’ll see revenue drop off from users who don’t graduate to the paid version.
Revenue vs. sales revenue
Revenue is the total amount of money your business brings in. Because it covers everything, it can include things like dividends, interest, and referral income — income that doesn’t come from your core business. If you’re in sales, you know that’s not revenue that adds money to your paycheck. Instead, you’re concerned with sales revenue. Your company may get revenue from contract renewals, for instance, but that’s not a new sale. You know that the only way you’ll get paid on renewals is if you upsell the contract to generate net-new sales revenue.
Here’s a simple way to think about the differences:
Revenue = all income that your company generates
Sales revenue = all income generated from the sale of your company’s products or services
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Sales revenue formula
To calculate gross sales revenue, you need a defined fiscal period and the following numbers from that period:
For product-based companies: Total number of units sold x average price per unit
For subscription-based companies: Average contract value
For service-based companies: Total number of customers x average price of services
Then, subtract the cost of goods sold to find your net sales revenue.