The revenue formula (step‑by‑step)

This calculator uses a transparent model you can audit quickly. Start with gross revenue, adjust for discounts and refunds, then add upsells and recurring add‑ons.

Gross revenue is the simplest version of revenue: the amount you would earn if every sale happened at your listed price with no reductions. If your average price per sale is P and you sell U units per month, then your monthly gross revenue is:

• Gross (monthly) = P × U

This number is useful because it’s a clean “topline” benchmark. But it can also be misleading if you run promotions or experience a high refund rate. That’s why we immediately move to net revenue.

If your average discount is D%, then customers are only paying (1 − D%) of your listed price on average. A 10% discount means customers pay 90% of the list price. The discount‑adjusted revenue is:

• After‑discount revenue = Gross × (1 − D/100)

Discounts can be strategic, but planning requires your effective price. Here, discount is modeled as an average across the period.

Refunds and chargebacks reduce the money you keep. If your refund rate is R%, then you keep (1 − R%) of the post‑discount revenue:

• Net revenue = Gross × (1 − D/100) × (1 − R/100)

This is the number you can build around. Even small refund reductions improve every sale you already earned.

An upsell is an add‑on purchased by a portion of customers. If your upsell take rate is T% and the upsell value is V, then:

• Upsell revenue (monthly) = U × (T/100) × V

Upsells work best as “next step” solutions (setup help, premium templates, faster shipping, extra seats). Small take rates can still matter because they compound with volume.

Some businesses have a recurring component: subscriptions, membership, support retainers, or recurring add‑ons. This is modeled as MRR (monthly recurring revenue) added on top. For a quarterly period we add MRR × 3; for a yearly period we add MRR × 12. If you don’t have recurring revenue, leave it at 0.

Two planning outputs are included:

• Annual run‑rate: what your revenue would be in a year if the current month repeated.
• 12‑month forecast: a projection assuming your monthly revenue grows (or declines) by the growth slider.

The forecast uses simple compounding and sums 12 months. It’s not “fancy”—it’s a quick way to see what a single growth assumption implies.

Revenue is not profit. This does not subtract COGS, fees, payroll, taxes, or overhead. Use the output as your topline, then model costs separately.

Three fast scenarios (so you can sanity‑check)

Use the examples below to sanity‑check your inputs. If you have real data, plug in your averages.

Price = $49, units/month = 100, discount = 10%, refunds = 3%, upsell 15% at $19, MRR = $0.

• Gross = 49 × 100 = $4,900
• After discount = $4,900 × 0.90 = $4,410
• Net after refunds = $4,410 × 0.97 ≈ $4,277.70
• Upsells = 100 × 0.15 × 19 = $285
• Total monthly ≈ $4,562.70

Price = $1,200, units/month = 8 projects, discount = 0%, refunds = 0% (contracted), upsell 25% at $400, MRR = $2,000 support retainer.

• Gross = 1,200 × 8 = $9,600
• Upsells = 8 × 0.25 × 400 = $800
• Recurring = $2,000
• Total monthly = $12,400 (run‑rate ≈ $148,800)

Price = $80, units/month = 2,000, discount = 25%, refunds = 6%, upsell 10% at $12, MRR = $0.

• Gross = 80 × 2,000 = $160,000
• After discount = $160,000 × 0.75 = $120,000
• Net after refunds = $120,000 × 0.94 = $112,800
• Upsells = 2,000 × 0.10 × 12 = $2,400
• Total monthly ≈ $115,200

Pattern: volume creates topline, but effective price and refund rate decide dependable revenue.

A simple operator routine (10 minutes)

The best use is a set of scenarios that help you decide faster:

Use your last 30–90 days of data if you have it. If you’re pre‑revenue, pick a realistic baseline (not your dream case). Set your price and a monthly unit estimate. Then set discount and refunds based on the reality of your market (if unsure, choose 10–15% discount and 3–5% refunds as a starting point for many consumer offers).

• Conservative: lower units, higher refunds, lower upsells.
• Baseline: your most likely reality.
• Optimistic: slightly better levers (not miracles).

Change one input at a time (e.g., discount −2 points, upsell +3 points). Pick the lever with the best “revenue per unit of effort.”

Test one lever for two weeks (bundle, refund policy, post‑purchase upsell), then update your averages with real results.

Monthly is best for operations. Quarterly helps with project cycles and seasonality. Yearly is for planning—don’t let it hide volatility.

Frequently Asked Questions

• What’s the difference between revenue and profit?

  Revenue is money earned from sales. Profit is what’s left after subtracting costs (COGS, payroll, tools, ads, rent, taxes, etc.). Use this calculator for topline planning, then use cash flow / unit economics tools for profit.

• Should I use average price or list price?

  Use average price actually paid if you know it. If you only know list price, then use list price plus an average discount to approximate the effective price.

• How do I estimate discounts if I run multiple promos?

  Take total discount dollars given in the period and divide by gross revenue (or compute the weighted average discount across orders). If you’re early, choose a conservative average (10–25% depending on your market).

• Does “refund rate” include failed payments?

  Not automatically. Refund rate is intended for money that you return after a sale (or chargebacks). If failed payments meaningfully reduce collected revenue, model that as a higher “refund/chargeback” percentage.

• How should I set the monthly growth slider?

  Use it as a planning assumption. If your current channel is stable, 0–5% monthly might be realistic. Aggressive growth (10–20% monthly) can happen short‑term, but rarely stays constant all year. If you’re uncertain, run three scenarios and compare the 12‑month totals.

• Why is there an “MRR” field if I’m not a SaaS business?

  Many businesses have some recurring component (support retainers, subscriptions, maintenance plans, memberships). If you don’t have it, leave it at 0. If you do, this helps your revenue model reflect the “base” you can build on.

• Can I use this for a marketplace or multi‑product store?

  Yes—use blended averages: average order value as “price”, orders per month as “units”, and blended discount/refund rates. For more detail, build separate scenarios for each product line and add the totals.

• Is this a financial statement tool?

  No. It’s a planning calculator. For accounting‑grade reporting, use your bookkeeping system and recognized revenue rules. This tool is for fast decisions, scenario thinking, and revenue lever awareness.

Make the output more accurate

If you want the estimate closer to “money in the bank”, also consider:

• Payment processing fees: model as a % of revenue (often 2–4%).
• COGS / fulfillment: subtract variable costs per unit.
• Churn: if you use MRR, churn will reduce the recurring base over time.
• Seasonality: run separate scenarios for peak vs off‑peak months.
• Revenue recognition: important for accounting; less important for fast planning.

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