We’re here to tell you that all revenue is good revenue. But there are nuances that you need to know when operating your SaaS business when it comes to revenue.
Those nuances come into play when understanding the different types of revenue in your SaaS business.
In this article, we’re going to define the types of revenue from NET revenue to Net Sales revenue, what is sales and look at how Baremetrics helps measure your revenue metrics.
What is Revenue?
Revenue is the money earned by a business due to sales, inbound assets, or even paying out on an investment.
While revenue may be used to account for a business's sales, it may also include money from other sources. Additionally, revenue can be recorded as gross and net revenue for a company, similar to how sales are tracked.
Before going into revenue and sales, it's necessary to understand how these measures are calculated. Many platforms calculate revenue metrics, most don’t offer you the deep insights into your business like Baremetrics does. Baremetrics is a business metrics platform that calculates 26 key performance indicators for your company, including MRR, ARR, LTV, and total customers.
As Baremetrics connects directly with your payment systems, your data is immediately fed into the your dashboard. Sign up for a free trial and begin accurately and efficiently tracking your subscription income.
Types of Revenue
The following are some of the most common revenue streams:
1. Gross revenue
Gross revenue is the actual money generated by a company, including sales and non-operating income, before any deductions or cost reductions are made.
2. Net revenue
Net revenue is a company's net income after all expenditures, such as the cost of goods sold and overhead, are deducted (rent, utilities, or payroll). This category includes all expenditures directly connected to sales activities and obligations for payments, rent or mortgage, utilities, and other overhead costs associated with the firm’s running.
It's worth noting that, although gross and net sales may be computed similarly, the valuation of a business's sales usually excludes non-operational income such as interest or investment earnings, contributions, and other sources of income.
3. Non-operational revenue
The total income of a business may also include non-operating revenue sources. Types of non-operating revenue sources may include:
- Liquidated assets
- Cash acquired on interest and investments
- Government money from quarterly or annual tax refunds
- Profits from one-time events, such as collecting lawsuit settlements and fees
While sales formulae are usually similar, calculating gross and net revenue considers all incoming and outgoing cash flow, not only the cash flow generated by a business's sales.
What is Sales?
The term "sales" refers to the income generated by a business through the sale of its goods or services to consumers.
Unlike revenue, a company's sales value reflects just the incoming cash flow directly connected to the sale of its products or services and is regarded as a subset of the overall revenue generated.
Since sales are one element of a business's revenue, they may be further segmented into gross and net sales values. Businesses' financial statements may contain net sales in relation to the total revenue.
See Also: Cash Flow Statements: Examples and Solutions for Your SaaS Business
Types of sales
1. Gross sales
Gross sales are the total income generated by a company minus the total cost of items sold directly associated with manufacturing or otherwise providing its services and products. Gross sales may also determine total revenue, hence why sales are a subset of revenue for a business.
2. Net sales
After deducting all costs of products sold and operational expenditures, net sales is the worth of a business's entire sales profit. This value is a critical financial metric for determining a business's sales profitability, as it indicates how lucrative and in-demand a company's goods and services are.
It is critical to remember that sales profitability, or the gross profit margins of a company, may only provide insight into the profitability of the business's goods or services. In comparison, total revenue offers insight into a business's overall financial health.
Revenue vs sales: what's the difference?
The key difference between revenue and sales is that revenue can represent the whole of a business's income, while sales represent just a portion of that money. There are many significant distinctions, such as the purpose for which each revenue may be utilized, the source of each income, and the impact each of these values may have on a company.
1. Source of revenue vs. sales
Revenue and sales are two distinct sources of money for a business. For example, in addition to sales, a company's total revenue may include money from liquidated assets, interest or investment income, contributions, or royalties. However, the sources of revenue for a business's sales are usually limited to the cash flow generated through sales transactions.
Related Read: Revenue vs. Income
2. Value of revenue vs. sales
Sales include cash earned from paying consumers, while revenue refers to the entire amount of money earned by a business over a certain period. As a result, revenue is often higher. However, when sales income exceeds the overall revenue generated by a company, it may indicate that the business has incurred more expenditures or expenses. The difference in value between revenue and sales may affect net income variations.
Baremetrics measures churn, LTV and other critical business metrics that help them retain more customers. Want to try it for yourself?
Conduct a Net Revenue analysis using Baremetrics
Baremetrics' control center includes a dashboard with 26 business metrics. Apart from these 26 indicators, you can use tools like Recover to recoup funds from rejected payments and Cancellation Insights to get a better understanding of why clients leave.
While competitors like Amazon Pay allow Net Revenue analysis, Baremetrics was explicitly designed for Net Revenue analysis and included all you need. Check out this demo account to get a feel for the Baremetrics dashboard without having to join up!
Metrics of Revenue using Baremetrics
1. Monthly Recurring Revenue (MRR)
You can monitor your monthly revenue. You can split it according to a client’s location, plan type, and other criteria. You may create objectives, modify existing goals, and keep track of particular dates when a new product was released. You can even view your notes directly on the graphs to keep a close eye on the state of your company. You can calculate the MRR using the Baremetrics tool.
2. Annual Run Rate (ARR)
This statistic forecasts your current revenue over the next 12 months. It is based on the assumption that nothing should change in the next year. It is predicated on the assumption of no new clients, no churn, and no additions. While this is an improbable scenario, the measure itself assists company leaders in considering the one-year horizon. The ARR can be calculated using the Baremetrics tool.
3. Net Revenue
This statistic indicates the amount of money collected daily. Net Revenue is calculated as Gross Volume (both recurring and non-recurring) minus Refunds. The Net Revenue can be calculated using the Baremetrics tool.
4. MRR Growth Rate
This statistic is simply the percentage change in monthly revenue generated from one month to the next. It may be computed on a daily, weekly, or monthly basis, as well as annually. You can utilize the Baremetrics tool to determine the MRR.
This statistic includes all one-time expenses that your company incurs. For instance, use fees, overages, and any other payments not associated with a subscription. The Baremetrics client may manually enter this data through the Baremetrics API. The other sources of revenue can be evaluated using the Baremetrics tool.
It's important to understand the differences between net revenue vs net sales
When doing business, it’s critical to understand financial concepts that contribute to your company’s success. The reason being these metrics reflect the company's financial growth. Investors analyze financial key performance indicators (KPIs) of various businesses to decide which is the best investment. Internally, businesses utilize financial indicators to assess potential investments and monitor internal financial performance.
To remain viable, businesses must recognize the value that these indicators provide and understand where they stand as a company. When you identify the areas that need improvement, any changes made in your company will (more than likely) come from insights into key metrics.
Our suggestion? Use a tool like Baremetrics to track your subscription and bring you detailed-insights to grow your company. Baremetrics can connect straight to your payment gateway, such as Stripe, and gather data about your customers and their behavior into a clear dashboard.
Dunning, 26 metrics, engagement tools, and customer analytics are all available via Baremetrics. MRR, ARR, LTV, total number of customers, total expenditures, and quick ratio are just a few of Baremetrics measures’ indicators.
Baremetrics vs. Competitors
Baremetrics is a comprehensive and reliable business metrics monitoring solution for MRR, churn, and the overall number of subscribers. Baremetrics connects directly to your payment gateway, allowing for precise monitoring of your financial metrics. When comparing Baremetrics to other solutions for Net Revenue analysis, select Baremetrics for deeper insights.
Request a free Baremetrics trial
You should immediately join up for a free Baremetrics trial and begin monitoring Net Revenue. Comparing Net Revenue analysis with the other tools to the Baremetrics experience will help you choose which works best for you. Visualize your data with precision on attractive Baremetrics dashboards!
Baremetrics monitors 26 metrics and adds eight data-enhancing tools to help you get the most out of your metrics.
To view these stats in action, join up for a free Baremetrics trial. Additionally, you may test the functionality of the Baremetrics dashboards by logging onto our open demo account.