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Net Sales represents the total revenue generated from the sale of products or services, less any discounts, returns, or refunds.
With Databox you can track all your metrics from various data sources in one place.
Net sales refer to the total amount of revenue an organization generates from its primary business operations after deducting discounts, returns, allowances, and any sales-related expenses.
The metric is often reported in a company’s income statement or profit and loss statement and it’s a key component in calculating standard financial ratios.
To calculate your company’s net sales, you need to subtract all the direct costs associated with producing and delivering your offer.
Here’s a general formula you can follow:
Net Sales = Gross Sales – Sales Returns and Allowances – Sales Discounts – Cost of Goods Sold – Other Operating Expenses
Let’s say a business wants to calculate its net sales for the entire year and it reported these expenses in its financial reports:
Using the formula, we can calculate the net sales for the business was $220,000.
Note that you might need to adjust the formula based on your specific business or accounting requirements.
Net sales is one of the most important financial metrics for any business, so making sure your numbers are in line with the industry standards and what your competitors are seeing is essential.
And because direct benchmarks can give you the most useful insight, we pulled some of the data from our Benchmark Groups product that you can use to make comparisons:
A good net sales number for Shopify stores is from $33,000 to $52,000 per month, according to Shopify Benchmarks for All Companies.
A good net sales number for WooCommerce stores is from $11,000 to $20,000 per month, according to WooCommerce Benchmarks for All Companies.
If you want to stay on top of future trends and be able to instantly compare your performance to companies just like yours (in any given industry), you can join our Benchmark Groups – it’s free for everyone!
Keep in mind that while these numbers might give you some useful insight, it’s important to remember that net sales are highly dependent on your specific industry, size, business model, product, and similar factors.
And generally, it’s better to look at the net profit margin (%) than specific numbers because it provides a more comprehensive understanding of financial performance.
As a rule of thumb, 10% is considered an average net profit margin, whereas 20% is considered “good”.
But again, remember to consider your specific factors and don’t follow these numbers blindly.
No matter what industry a company is in, increasing net sales is a key priority for pretty much any modern organization.
Now, the exact tactics you’ll use to establish healthy growth and increase your net sales will depend on your specific audience and what’s currently working in the industry, and you will need to test and refine constantly.
We compiled some best practices that the leading experts we talked to recommend and that could be worth trying out in your own business:
More resources to help you increase net sales:
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Databox is a business analytics software that allows you to track and visualize your most important metrics from any data source in one centralized platform.
To track Net Sales (Legacy) using Databox, follow these steps:
This dashboard gives an overview of your WooCommerce store, including total sales, popular products and new customers.
Net sales consist of all sales-related transactions, such as cash sales, credit sales, and any other forms of revenue earned by the company, after deducting any sales returns, allowances, and discounts.
You can calculate net sales revenue following this formula:
Net Sales Revenue = Gross Sales – Sales Returns – Sales Allowances – Sales Discounts
The three main types of deductions that affect net sales include sales returns, sales allowances, and sales discounts.