Net Revenue Calculator
Shipping margin made visible.
Shipping margin made visible. Most ecommerce runs shipping at a loss, which is a deliberate choice and worth being explicit about.
Net revenue
$1,106,000
79% of gross sales
Shipping runs at a $28,000 loss, which is a deliberate choice in most stores and worth being explicit about. It is a marketing cost dressed as a logistics one.
How the Net Revenue Calculator works
Most ecommerce runs shipping at a loss, which is a deliberate choice and worth being explicit about. It is a marketing cost dressed as a logistics one, and it belongs where it can be seen.
Also known as: revenue after returns and discounts · net sales calculator · gross to net revenue
Getting from gross to net
Net revenue is gross sales minus returns, refunds, discounts and allowances. It is what you actually earned, and it is the top line every downstream calculation should use.
The deductions are specific. Returns and refunds, which is money given back. Discounts and promotional allowances, if not already netted. Chargebacks. Sales tax or VAT collected, which was never yours in the first place.
The tax point catches a lot of small sellers. VAT collected sits in gross sales in most platform reports and is a liability rather than revenue. A business reporting VAT-inclusive turnover and comparing it against costs excluding VAT is overstating its margin by the VAT rate, which is a substantial error.
The size of the gap
In a low-return category with little discounting, net revenue might be 95% of gross. In apparel with a 28% return rate and regular promotions, it can be 65%.
That is a difference large enough to invalidate every ratio built on the wrong figure. A marketing budget set at 15% of gross revenue is 23% of net revenue in the second case, which is a completely different business decision.
Which is why the discipline of reporting net rather than gross matters operationally rather than just accounting. Teams that plan on gross revenue systematically overspend by the size of the gap, and in high-return categories that gap is where the profit was.
Timing, and why the gap moves
Returns lag sales, so net revenue in any given month reflects sales made earlier. In a growing business this flatters the current month, because returns against a smaller prior month are being deducted from a larger current one.
The effect reverses in a decline and does so sharply. A business whose sales fall after a peak sees returns from the peak deducted from the smaller current revenue, and the net revenue figure falls faster than gross.
The January effect in seasonal retail is exactly this. December's returns land in January against January's much smaller sales, which is why January net revenue can be startlingly low and why cash planning that uses gross figures fails at precisely that moment.
Where the deductions hide
Promotional discounts frequently do not appear as a deduction at all; they appear as a lower price. A product sold at £40 instead of £50 shows £40 of gross revenue and no discount line, which makes the discounting invisible in the accounts.
Tracking it requires comparing realised price against list price, which most platforms will report if asked. The resulting discount rate is often higher than anyone estimated, because it accumulates across sitewide sales, coupon codes, loyalty discounts and free shipping thresholds.
Free shipping is a discount and belongs in the same analysis. Offering free delivery above a threshold is a price reduction of the delivery cost on every qualifying order, and it should be measured as such rather than sitting in fulfilment costs where its size is obscured.
Using net revenue as the base
Every ratio that matters should be built on net revenue: gross margin, contribution margin, marketing efficiency, and any per-order economics.
Return on ad spend calculated on gross revenue is the most common offender. A 4:1 ROAS on gross revenue in a category with 25% returns is a 3:1 on net, and the difference between those two is frequently the difference between profitable and not.
The practical fix is to set the reporting default once. If the dashboards show net revenue and the ad platform shows gross, apply a standing adjustment and document it. Businesses that leave the two side by side without reconciling them end up making decisions on whichever number was in front of the person deciding.
Where to go next
The Net Revenue question rarely arrives on its own. These are the ones that usually come with it:
- Gross Merchandise Value Calculator — The number people quote, never the number they bank.
- Gross Profit Margin Calculator — Revenue minus cost of goods, as a percentage.
- Operating Cash Flow Calculator — Profitable but broke, quantified.
- Etsy Fee Calculator — Every Etsy fee on one sale, itemised.
Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price, check the platform's current fee schedule before you price a product against it. This is not tax or business advice.
Frequently asked questions
How is net revenue calculated?
Gross sales less returns, less discounts, less sales tax collected on behalf of the authorities. Shipping charged to customers is revenue; shipping you pay is a cost.
Should sales tax be in revenue?
No. It is collected on behalf of the tax authority and remitted, so it never belonged to the business. Including it inflates revenue and distorts every margin calculation downstream.
Is shipping revenue?
What the customer pays is revenue; what you pay the carrier is a cost. Netting them and reporting only the difference hides how much delivery is being subsidised.
Why does the distinction matter?
Because margin percentages are calculated on revenue. Getting the denominator wrong makes every margin figure in the business wrong by the same amount.
Related calculators
Gross Merchandise Value Calculator
The number people quote, never the number they bank.
OpenGross Profit Margin Calculator
Revenue minus cost of goods, as a percentage.
OpenOperating Cash Flow Calculator
Profitable but broke, quantified.
OpenEtsy Fee Calculator
Every Etsy fee on one sale, itemised.
Open