Sales vs. revenue: what’s the difference and why it matters
Understand the difference between sales and revenue, and why separating them is vital for e-commerce decision-making.
Sales and revenue are often used interchangeably, but they’re not the same. For e-commerce analytics, knowing the difference is essential. Misinterpreting these terms can cause poor reporting and misguided strategies. Here’s what you need to know.
What are sales?
Sales = total value of products sold before returns, discounts, and fees. For example, 100 shirts sold at $20 = $2,000 in sales.
Takeaway: Sales reflect demand but not final income.
What is revenue?
Revenue = actual income after deducting discounts, refunds, and allowances. Using the example above, if $200 in refunds and $100 in discounts, revenue = $1,700.
Takeaway: Revenue tells the “real money” story.
Why the difference matters
Confusing sales with revenue can overstate performance. You might think growth is happening, but refunds may cancel it out.
Takeaway: Always track both numbers to stay accurate in reporting.
Impact on KPIs
AOV: Based on sales but adjusted revenue gives true value.
CLV: Better calculated from net revenue per customer.
Profit margin: Only meaningful when based on revenue.
Takeaway: Using the wrong base can distort metrics.
Example scenario
A WooCommerce store recorded $50,000 in sales. After $8,000 in refunds, actual revenue was $42,000. If they had only looked at sales, they’d overestimate cash flow and overspend on ads.
Conclusion: Sales show volume, revenue shows reality. Both are critical, but revenue is what pays the bills.
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