Revenue Formula

Revenue is the total income earned through the sale of goods and services by the company. Thus, revenue is the most important factor to determine the progress of any business. The revenue formula is used to find the revenue. We calculate the revenue by finding the product of the number of sales and selling price. In this section, we will be discussing the various aspects of the revenue formula, and understand the variables involved. Let us learn the revenue formula with a few solved examples.

What is Revenue Formula

The word revenue means the amount of income generated by the company by the sale of goods and services through its operations. Revenue is also called total earnings or the profit acquired by the company. The revenue formula depends on the business of the company. For example, a product sale is calculated by taking the average price at which the goods are sold further multiplied by the total number of product sales. In the case of service companies, revenue is calculated by multiplying the number of customers by the average price of services. 

Revenue is computed by multiplying the number of goods sold and the average selling price of the goods. Revenue formula is given as,

Revenue Formula = Number of goods sold × Sales Price

Revenue Formula = No. of customers × Average price of services

Examples Using Revenue Formula

Example 1: Using the revenue formula, determine the revenue of a day if a shopkeeper sells 200 articles each costing $25.

Solution:

Here, quantity = 200 and selling price = $25

Using the revenue formula, we get

Revenue = quantity × sales price 

= $(200 × 25)

= $5000

Therefore, the revenue of the shopkeeper for the day is $5000.

Example 2: Find the sales price of the goods if 75 goods are sold and revenue is $900.

Solution:

Here, quantity = 75 and revenue = $900

Using the revenue formula, we get

Revenue = quantity × sales price 

$900 = 75 × selling price 

Selling price = $(900 ÷ 75) = $12

Therefore, the price of goods is $12

Example 3: Find the number of goods by using the revenue formula, if the selling price is $40 and the revenue is $6000. 

Solution: 

Here, revenue = $6000 and selling price = $40

Using the revenue formula, we get 

Revenue = quantity × sales price 

6000 = quantity × 40 

Quantity = 6000 ÷ 40 

Quantity = 150 

Therefore, the quantity is 150.