Revenue & Sales

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

The Revenue & Sales category brings together the key formulas businesses use to measure income, track growth, and understand customer value, from Total Revenue and Marginal Revenue to MRR, ARR, churn, and customer lifetime value. It’s useful for students revising for exams, analysts building reports, and anyone working in sales, finance, or SaaS. These formulas matter because they turn raw sales data into clear insights for pricing, planning, and smarter decisions.

Total Revenue

TR = P \times Q

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

Net Revenue

NR = GR - R - D

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

Average Revenue

AR = \dfrac{TR}{Q}

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

Marginal Revenue

NEWIntermediate

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

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

Revenue Growth Rate

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

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

Monthly Recurring Revenue

NEWIntermediate

MRR = N \times ARPU

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

Annual Recurring Revenue

ARR = MRR \times 12

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

Average Revenue Per User

ARPU = \dfrac{TR}{N}

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

Customer Lifetime Value

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

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

Churn Rate

NEWIntermediate

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.

Net Revenue Retention

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.

Break-Even Revenue

NEWIntermediate

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

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