Revenue
Total income from sales before any costs are deducted.
Formula
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Example
$20 × 3000 units = $60k revenue
How it works
Revenue is the total money a business brings in from selling goods or services before subtracting any expenses. The formula works because each unit sold contributes the same selling price, so multiplying the price per unit by the number of units gives the full sales total. It does not account for costs like wages, materials, or rent, so it is not the same as profit.
When to use it
Use this formula when you want to estimate sales income for a product, store, event, or service. It is especially useful for planning targets, comparing sales performance, or checking how changes in price or quantity affect income.
Worked example, step by step
Price per item = $15 Units sold = 240 Revenue = Price × Quantity Revenue = $15 × 240 Revenue = $3,600 Final answer: the business earns $3,600 in revenue.
Common mistakes to avoid
- Confusing revenue with profit and forgetting to subtract costs
- Using the wrong unit price, such as a discounted or tax-included price when it should not be
- Multiplying by the number of customers instead of the number of units sold
Did You Know?
Revenue is the “top line”; every deduction flows down from it toward the bottom-line profit.
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BasicThe price to charge after adding a percentage markup to unit cost.
Discounted Price
BasicThe final price after applying a percentage discount to the list price.
Sales Tax
BasicThe amount payable once a sales-tax or VAT rate is added to the price.
Contribution Margin
IntermediateThe amount each unit sold contributes toward covering fixed costs and profit.
Contribution Margin Ratio
IntermediateContribution margin expressed as a fraction of the selling price.
Break-Even (Units)
IntermediateThe number of units that must be sold to exactly cover all costs.