Thank you for subscribing!

It's great to feel loved.

Total Revenue Formula – Why Should Business Owners Use It?

Apr 09, 2020 2 min read

Total revenue is the amount a company or business owner receives for the services or products they sell in a specific period of time. The total revenue formula helps business owners to decide whether they should raise their prices, or offer a discount on their goods.

So, here’s the formula as well as the reason why business owners should know how to calculate it.

Total Revenue Formula

Here’s the formula that will help you calculate your total revenue:

Quantity Sold x Price = Total Revenue

Let’s say you sell shoes and the cost of one pair is $200.
If you sell 100 pairs per month, your total revenue would be $20,000.

100 x $200 = $20,000

The same total revenue formula can help you to calculate how many more shoes you’d need to sell to make the same amount before your discount. This time, you’d need to divide your previous total revenue amount by your discounted price.

  • Total Revenue = Quantity Sold x Price
  • So, Quantity Sold = Total Revenue / Price
  • If your discounted price is $180, then:
  • Quantity Sold = $20,000 / $180 = 111.11 shoes

This means that you need to sell at least 112 pairs of shoes to get the same total revenue you got before your discount. If you believe that the discount will bring more sales, it’ll be a fantastic move for you.

However, it takes more than just a gut feeling to predict the outcome. You need to understand the market price for shoes like the ones you produce, and the size of your target market.

sales reports

Total Revenue vs. Marginal Revenue

Marginal revenue is closely linked to total revenue since it presents the change in the total revenue with reference to a change in a different variable. It shows the change in revenue due to a change in the total amount of products sold.

Marginal revenue shows how much revenue increases as a result of selling an extra unit of a product or service. It’s calculated with the help of the total revenue formula or dividing the change in total revenue by the change in the quantity sold.

The Importance of Total Revenue

Knowing the total revenue is the basics business owners need to determine their pricing.

Imagine you’re an independent contractor who charges $100 per hour for your services. If you want to work 40 hours per week, out of which 10 would be for non-billable work, your total revenue per week would be $3,000 (30 hours x $100/hour).

If you’re not satisfied with this amount, you’ll probably have to consider raising your prices. But, if you think it’s enough, you should start considering possible expenses such as tax obligations or supplies and materials. In that case, knowing your total revenue will give you the start you need to explore your pricing options.

sales reports


Using the total revenue formula helps business owners to see if they are gaining or losing money. In that way, they know if their business is growing, or they need to change something to get better results.

Written by Mike

Former data analyst and the head of Whatagraph blog team. A loving owner of two huskies, too.

Knowing what micro conversions are and understanding their importance is imperative for converting high-quality leads. Tracking them will help you see how people are engaging with your site. This valuable information will bring you closer to the main conversion goals or generating more sales.
Whatagraph team
May 14, 2021 7 min read
Leverage ratio represents a category of financial measurements that provide useful data concerning the amount of a company’s incurred debt and the company’s ability to meet its financial obligations. Originally created to evaluate companies in the stock market, leverage ratios have nowadays found their use outside the stock market, helping important financial institutions ward off default or bankruptcy.
Whatagraph team
May 14, 2021 4 min read
For any retailer who wants to stay and remain competitive in the harsh world of business, data analytics might just be ‘the order of things.’ The figures in your retail business should always be on the radar, from foot traffic and sales to inventory levels and expenditures, so that you can gauge your retail business' success and progress.
Whatagraph team
May 12, 2021 11 min read