Revenue – The value of all sales made by selling goods and services over a certain period
Note: Revenue is just goods and services. Turnover is all money in, everything.
To remember what revenue means use the following mnemonic:
She charged them to rev a new (revenue) sports car and the income generated paid for it.
The formula to calculate revenue is:
Revenue = Units Sold x Sales Price Per Unit
Example: If you sold ten old teddy bears at a car boot sale for £3.50 each, your total revenue would be: 10 x £3.50 = £35
OR it can be worked out by:
Revenue = Number of Customers x Sales Price of Each Service
Example: If ten people paid to have their hair cut at £10 each the total revenue would be 10 x 10 = £100
(Note: Profit and revenue are very different concepts. A business could sell £100,000 worth of products, generating revenue of £100,000, but could still make a loss. If the products cost £80,000 and the staff costs to sell them were £25,000, then the loss would be £5,000. The revenue of a company does not take into account the costs).