Appfigures Gross Revenue

What Is Gross Revenue

Gross revenue is a financial metric that represents the total amount of money a business generates from its primary operations before deducting any costs or expenses.
While gross revenue doesn’t reflect a company’s profitability, it does provide an overall measurement of its top-line performance.

How to Calculate Gross Revenue

To calculate gross revenue, you need to multiply the total number of units sold by the price at which those units were sold.

The formula is straightforward:

Formula: Gross Revenue = Number of Units Sold x Price per Unit

So, if a company sells 500 units of a product at a price of $20 per unit, its gross revenue would be $10,000.

What Is a Good Gross Revenue Margin

Gross revenue margin is highly relative and it’s based on several key factors, including your industry, competitive landscape, and specific business type.
In general, you won’t get much useful information by comparing your margin across industries, it’s a better idea to look at your niche peers.

For example, manufacturing companies typically have gross revenue margins ranging from 20% to 40%. However, highly specialized or niche manufacturing businesses may record even higher margins.
On the other hand, the software industry often enjoys higher gross revenue margins due to its relatively low production costs. Gross revenue margins in the software sector can range from 70% to 90%.

Ultimately, the goal for any business is to achieve a gross revenue margin that allows for covering costs, generating profit, and remaining competitive within its industry.
And while higher margins indicate better profitability, it’s crucial to consider specific industry dynamics and other financial metrics as well.

How to Increase Gross Revenue

Gross revenue is one of the top financial metrics that stakeholders and C-level managers keep an eye on, and businesses are constantly looking for new approaches to try and increase it.
And while different strategies will work for different industries, there are some best practices that many top experts employ regardless of specific circumstances.

We talked to hundreds of experts over the last few years and found that a few go-to strategies they turn to include:

• Avoid over-servicing: Every business wants to make the best possible impression on potential prospects, but make sure you don’t fall into the over-servicing trap. Before you count it as the “cost of doing business”, double-check exactly how much you’re spending on marketing, engaging, positioning, and similar client acquisition strategies.
• Overdeliver your customer experience: A lot of companies believe that they’re overdelivering to their customers, but in reality, they’re simply executing the customer’s order. Find ways to go one step further, ask the customers what they want, research competitors that have a good reputation and engagement rates, and look for unique ways to make all of your prospects feel special. All of this will boost customer experience and contribute to your top line.
• Reward existing customers: When acquiring new prospects, many businesses tend to overlook their existing customer bases. Reward your loyal customers frequently with personalized offers, discounts, tailored-for-them bundles, and similar incentives. Repeat business is one of the best ways to boost gross revenue.

More resources to help you improve:

• How to Calculate & Optimize Average Revenue Per User (ARPU)
• 6 Most Important Sales Enablement Metrics for Any Business
• 9 Tried and Tested Ways a Sales Analysis Can Help You Generate More Revenue
• 17 Financial KPIs Every Sales and Marketing Team Should Track
• 9 Vital Small Business Financial Reports for Your Organization