Sales Revenue Calculator
How can the sales revenue calculator help you?
The correct calculation of sales revenue is crucial for a very business owner. It will allow you to estimate future profits and help in business planning and budgeting.
However, calculating sales revenue using product price and quantity may seem simple, but it’s easy to make silly mistakes, mainly if you operate on big numbers. Our tool will prevent you from making mistakes.
Benefits of calculating sales revenue
- Prepare the sales plan
- Estimate future revenue
- Calculate the impact of the discounts on the revenue
How to calculate sales revenue?
Although the revenue calculation may seem easy, things get more complex once you apply the discounts. Below we present helpful formulas for calculating the sales forecast with or without markdowns.
Sales revenue formula
If you wish to calculate the revenue, multiply the product price by the quantity you sold.
Revenue = Price * Quantity
Sales revenue with discount formula
If you wish to include the discount value in the calculation, use the equation below.
Revenue = Price * Quantity * (1 - Discount)
- Price - the selling price of the item
- Quantity - the number of items sold
- Discount - the percentage value of price decrease
What is good sales revenue?
Good sales revenue should generate a margin higher than all the operating costs needed to fulfill the transaction.
Note that by operating costs, we mean not only the cost of goods sold (COGS) but also the:
- Transactional fees
- Fixed costs
- Cost of work
The variable costs are pretty easy to calculate since they are strictly connected to the particular transaction. The fixed costs, however, are more tricky. So it is better to add some extra percentage points of margin to ensure there is room for profit.
How can you increase sales revenue?
If you wish to increase your sales revenue, you should optimize the following aspects of your business.
- Consider increasing the sale prices.
- Lower the discounts.
- Try to increase the number of customers.
- Offer products in bundles so you can increase the total number of pieces sold.
- Improve customer satisfaction so you can benefit from the number of recurring customers.
Of course, it is easier said than done, but in order to grow your business, you need to keep an eye on those factors and constantly improve them.