WooCommerce Net Sales (Legacy)

What Are Net Sales

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.

How to Calculate Net Sales

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:

• Gross Sales: $500,000
• Sales Returns and Allowances: $20,000
• Sales Discounts: $10,000
• Cost of Goods Sold: $200,000
• Other Operating Expenses: $50,000

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.

What Is a Good Number of Net Sales

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.

How to Increase Net Sales

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:

• Go from a low profit margin to a moderate one (don’t aim immediately for a high one): Most of the time, new businesses will have to start off with lower prices compared to competitors until they develop a market reputation. And lower prices equal low profit margins. But after you start establishing your reputation, don’t start increasing your prices drastically right off the bat. Aim for a moderate profit margin first, that will make the transition to higher prices a lot smoother.
• Launch affiliate programs and make them simpler for the affiliates: While some claim that affiliate programs are just not that effective anymore, it’s probably because most lack the proper approach. Instead of just launching a program and giving a brief announcement about it, make sure you really incentivize affiliates to take part. This includes giving supporters a good percentage of each sale, helping them set up banners, and having an affiliate support team that they can turn to for any additional assistance. With a well-designed affiliate program, you can quickly see a solid boost in your net sales.
• Focus on the “Big 5” of an organization’s profitability: When constantly trying to increase net sales and profitability, it’s easy to scatter your focus and energy all over the place. If this happens, remember to prioritize the “Big 5” of profitability – acquisition, client advocacy, retention, project profitability, and project margin. This can put you on the right track and help you identify new opportunities for higher profits.

More resources to help you increase net sales:

• 4 Most Important Accounting Reports for Your Small Business
• The 11 Best Ecommerce Payment Processing Tools
• 5 Real-World Finance Report Examples and Templates to Inspire Your Own
• How to Write a Great Financial Report? Tips and Best Practices
• How to Determine Markup Percentage for Small Businesses: What’s Good, Bad, and Average?
• Shopify Sales Reports: Definitions, Metrics, & Templates to Grow Your Online Store
• The 22 KPIs That Every Sales Rep Should Be Tracking
• 25 Sales Performance Metrics to Track for Maximizing Sales Potential
• How Databox Helped Gravity Digital to Become More Efficient & More Profitable