Revenue & Sales

Sales, pricing and recurring-revenue metrics used in business and SaaS

TR = P \times Q

Total revenue is the selling price multiplied by the number of units sold.

NR = GR - R - D

Net revenue is gross revenue less returns, refunds and discounts — the amount actually recognised.

AR = \dfrac{TR}{Q}

Average revenue is total revenue divided by units sold — equal to price per unit in a single-price market.

MR = \dfrac{\Delta TR}{\Delta Q}

Marginal revenue is the extra revenue earned from selling one additional unit.

g = \dfrac{R_1 - R_0}{R_0} \times 100\%

The percentage change in revenue from one period to the next.

MRR = N \times ARPU

Monthly recurring revenue is the number of active subscribers times average revenue per user per month.

ARR = MRR \times 12

Annual recurring revenue annualises the monthly recurring revenue of a subscription business.

ARPU = \dfrac{TR}{N}

Average revenue per user divides total revenue over a period by the number of users.

CLV = \dfrac{ARPU \times m}{c}

Lifetime value estimates the gross profit a customer generates over their lifetime, using margin and churn.

c = \dfrac{C_{lost}}{C_{start}} \times 100\%

Churn rate is the share of customers lost during a period relative to those at the start.

NRR = \dfrac{M_0 + E - C - D}{M_0} \times 100\%

Net revenue retention measures recurring revenue kept from existing customers, including expansion, contraction and churn.

R_{be} = \dfrac{FC}{CMR}

Break-even revenue is fixed costs divided by the contribution-margin ratio — the sales needed to cover all costs.