While your gross sales amount gives you a high-level view of your overall income over a period, it doesn’t tell you much about your business’s profitability. However, you can use your gross sales figure to help determine other important sales metrics, such as your net sales and gross profit margin amounts.
Gross sales vs. gross revenue
Often used interchangeably, gross sales and gross revenue qatar number for whatsapp are not the same thing. The section above defines what gross sales is: Your company’s total income from sales. But gross revenue is the organization’s total income from all sources, not just sales. Therefore, gross sales may be a primary metric for sales managers, whereas gross revenue will be of importance to the company as a whole.
How to calculate gross sales
Calculating your gross sales is easily achieved using the following simple formula:
Gross Sales = Number of Units Sold x Unit Price
In other words, if you were to calculate your sales team’s gross sales over the past quarter, you’d need to know the total number of products sold and the price paid for each.
For example, if a cybersecurity company sold three different types of alarm systems at $35, $60, and $110 each, and 54, 33, and 12 units, respectively, your calculation would look like this:
What is net sales?
Net sales is the remaining sales revenue after subtracting deductions from your gross sales figure. There are three types of deductions to subtract from gross sales to get to your net sales amount, and they are:
Allowances: A reduction in price related to a product or service issue.
Discounts: Special pricing based on criteria determined by the company.
Returns: Reimbursements and costs related to product returns.
This is the metric accountants include in the company’s income statements and sales managers add to their reports. It’s a valued metric because your net sales figure illustrates your organization’s gross sales profit, giving you insight into your business’s financial health.