Total Business Revenue Calculator
Estimated Total Revenue
How Do You Calculate Revenue?
In the simplest terms, revenue is the total amount of money a business generates from its core operations before any expenses are deducted. Often referred to as the "top line," revenue is the starting point for calculating profit.
Understanding the Revenue Formula
Depending on your business model, you may calculate revenue in several ways:
- Product-Based Revenue: Calculated by multiplying the number of units sold by the sales price per unit.
- Service-Based Revenue: Calculated by multiplying the total billable hours by the hourly rate charged to clients.
- Recurring Revenue: Common in SaaS businesses, this is the number of active subscribers multiplied by the monthly subscription fee.
Gross Revenue vs. Net Revenue
While the calculator above determines Gross Revenue, it is important to understand Net Revenue. Net revenue is the amount remaining after subtracting discounts, returns, and allowances from the gross total. If you sell $10,000 worth of goods but customers return $500 worth, your Net Revenue is $9,500.
Step-by-Step Example
Let's say you run a boutique coffee equipment shop:
- You sell 50 espresso machines at $800 each. (50 × 800 = $40,000)
- You provide 20 hours of consulting/setup at $100 per hour. (20 × 100 = $2,000)
- Your Total Revenue is $42,000.
Why Revenue Matters
Revenue is a key indicator of market demand and business health. However, high revenue does not always mean high profit. A company can have millions in revenue but still lose money if its Cost of Goods Sold (COGS) and operating expenses exceed its total income. Investors look at revenue growth over time to determine if a company is successfully expanding its market share.