Net Revenue

Net revenue is the amount a business keeps after subtracting sales that were returned, money refunded, and any discounts or allowances given to customers. It works because gross revenue counts all sales at the original selling price, but not all of that money is ultimately retained or recognised as revenue. This formula helps show the true sales value before other operating costs are considered.

Use this when analysing sales income for a business, especially in retail, e-commerce, or any company that offers discounts or accepts returns. It is also useful in financial reporting when you need the revenue figure after customer concessions have been taken into account.

• adding returns and discounts instead of subtracting them
• using net revenue as if it were profit
• forgetting that refunds and allowances reduce revenue even if the sale was originally recorded