Revenue

Revenue is the money a business earns from selling its products over a period of time, such as a week, a month or a year. You may also see it called total revenue, sales revenue or turnover — all four terms mean the same thing. Only sales of goods or services count as revenue. Money from a loan or from the owner's savings is finance coming in, not revenue, because nothing has been sold to earn it.

Working out revenue

Revenue depends on two things: the price each product sells for and how many are sold. The formula is:

Revenue = selling price × quantity sold

For example, an online shop sells phone cases for £9 each and sells 300 in a month. Revenue is £9 × 300 = £2,700. If the owner raises the price to £12 and still sells 300 cases, revenue rises to £3,600, because each sale now brings in more money.

The table shows why quantity matters as much as price: cutting the price to £7 still raised revenue in April, because far more phone cases were sold. Revenue is not the same as profit — it is the money taken from sales before any costs are deducted, so a business with high revenue can still make a loss if its costs are higher.

When nothing is sold

If a business makes no sales, its revenue is zero. On a break-even diagram, which plots revenue against output, the revenue line therefore starts at the origin (0, 0): no units sold means no money earned, and each extra unit sold adds the selling price to revenue.