As a business owner, our focus is to always calculate the revenue and see what can be improved. If you understand the revenue, that means you understand your business and then it becomes easier to grow it in the long term. That’s not always the simplest thing to do. And on top of that, it might require some very challenging decisions to be made as well. But if it’s done adequately, it will be worth the effort in the long term.
What is total revenue, and why is it important?
Total revenue isn’t just a single form of revenue. The idea behind total revenue is that it’s all the income you generated from the sales of services and products, no matter where the revenue source come from. Whether it’s an investment, customer success, marketing, sales, all of those add up into the total revenue and they are something to keep in mind here.
Obviously, total revenue is normally higher when compared to the sales revenue, because it cumulates revenue that stems from multiple channels. However, the way you calculate total revenue is usually the same, regardless of your niche.
The key factors influencing total revenue
Needless to say, there can be a lot of different factors that influence total revenue. Those can vary in their own rights, and they could play a major role into the profitability of your company in the long term. Factors include your investments, marketing costs, sales, product prices, if you have any discounts, bundle packages and so on.
The more you focus on increasing your total revenue, the more it will show. Plus, aside from the aforementioned things, there are other factors like the competitive landscape, market trends, consumer preferences and so on. You need to analyze them and figure out how to improve and how to enhance things, and in doing so, it can be well worth the investment.
Revenue vs. profit – understanding the difference
A lot of people might think that profit and revenue are the same thing. However, that’s not the case at all. In fact, knowing the difference between profit and revenue can help you take better business decisions.
And usually, it all comes down to this. Revenue entails how much you earn by selling products and services. When it comes to profit, that means how much money you actually keep in the end, after you take all the expenses involved with the revenue generation process. Making this calculation might not seem that important, but you always want to know how much you earn in the form of revenue, but also remove expenses to see the real profit.
The best formulas for calculating total revenue
Calculating the total revenue is actually very easy, because you have to do this “Price X Quantity”. You take the price of each product, and then multiply with the amount of units you sold. Once you do that, you will know how much revenue you generated. Plus, you know how much you sold, which can prove to be a very good metric on its own.
The equation for total revenue explained
What’s great about this total revenue equation is that it’s fairly easy to understand and it provides a very good amount of info about your business. With that being said, what you want to focus on is the product price and ensure that it’s accurate. Then, you also want to focus on the quantity, and how much you sold for each one of your products.
Once you have this info, you can start deducting expenses and all the other stuff. It’s handy, because it will give you plenty of info about the process as a whole. And it might even be a powerful and effective tool for your business, when you really want to have great calculations regarding profitability.
How to track and increase total revenue in WooCommerce?
If you use WooCommerce, you can go to the sales reports and analytics in your dashboard. That will usually show the total revenue. It’s the best and most effective ways to know the total revenue, without having to worry about any issues. Obviously, profit-related plugins will also show you the total revenue, if you want even more detailed info.
If you want to increase total revenue, here are some ideas:
- Try to provide discounts and offers to your customers.
- Increase the website speed, it’s great if you want to build trust with clients, while offering a better user experience.
- Show any extra fees right away, don’t surprise people right at the end.
- Add security methods to ensure payment info is protected.
- Provide users with a quick checkout option, it helps with cart abandonment problems.
- Add cross-sells and up-sells
Knowing the total revenue can be a major approach that could boost your revenue. It does take a little bit to access that info, and getting used to all that stuff can take time. But make no mistake: metrics like this are inherently important, and they will surely provide your business with a lot of information!
