Table of contents
- What is Revenue?
- Basic Revenue Formula
- Alternate Revenue Formula for Recurring Business Models
- Types of Revenue for Small Businesses
- Why Startups Must Track Revenue Carefully
- How to Track Revenue Growth (Step-by-Step)
- Common Mistakes to Avoid
- Tips to Improve Revenue in 2025
- Revenue vs Profit: Know the Difference
- Key Takeaways
- Conclusion
- Frequently Asked Questions (FAQs)
Understanding your business’s revenue is the first step toward scaling it. Whether you’re running a D2C startup, a SaaS product, or a local food delivery service, knowing the revenue formula helps you track growth, manage cash flow, and impress investors.
What is Revenue?
Revenue is the total income a business earns from its core operations, before any costs or expenses are deducted.
In simple terms, it’s the money coming in through sales of products or services.
Example:
If a startup sells 500 mobile covers at ₹200 each, its revenue is:
500 × ₹200 = ₹1,00,000
Basic Revenue Formula
The most commonly used revenue formula is:
Revenue = Number of Units Sold × Price per Unit
This works best for:
- Retail stores
- E-commerce businesses (like Flipkart sellers)
- Product-based startups
Alternate Revenue Formula for Recurring Business Models
For subscription-based or service-based businesses:
Revenue = Number of Customers × Average Revenue Per User (ARPU)
Example:
A SaaS startup has 1,000 users paying ₹499/month:
1,000 × ₹499 = ₹4,99,000 Monthly Revenue
Types of Revenue for Small Businesses
Understanding the types of revenue helps you better analyse and track:
| Type of Revenue | Description | Example |
| Operating Revenue | Core business income | Product/service sales |
| Non-Operating Revenue | Income from other sources | Investment returns, asset sales |
| Recurring Revenue | Predictable & regular | Monthly subscriptions |
| Transaction-Based | One-time purchases | Sale of a course or a t-shirt |
Why Startups Must Track Revenue Carefully
Tracking revenue helps startups:
- Identify their most profitable products
- Forecast future growth and plan expansion
- Evaluate customer lifetime value (CLTV)
- Calculate the break-even point
- Prepare for investor funding rounds
Real Example from India
Take Mamaearth, an Indian D2C beauty brand:
- They sold over ₹1,000 crore worth of products in FY 2023-24.
- Their revenue tracking model focused on monthly active customers × ARPU.
- This allowed them to scale fast while minimising ad spend.
How to Track Revenue Growth (Step-by-Step)
1 . Determine sales volume
- Get the number of units sold from POS, Shopify, or CRM
2 . Identify pricing
- Use average selling price (ASP), especially if discounts are applied
3 . Calculate gross revenue
- Apply the formula: Units × Price per Unit
4 . Track over time
- Compare M-o-M or Y-o-Y
5 . Segment revenue
- Split by product line, location, channel (online vs. offline)
6 . Use accounting tools
- Try Tally, Zoho Books, or QuickBooks for automatic tracking
Common Mistakes to Avoid
- Ignoring refunds/returns
- Not updating prices in calculations
- Not segmenting revenue streams
- Confusing revenue with profit
Tips to Improve Revenue in 2025
- Launch bundled offers to increase order value
- Use customer retention tools like WhatsApp or email marketing
- Sell across multiple channels (Amazon, your website, marketplaces)
- Upsell/cross-sell with personalised suggestions
- Track and improve conversion rates
ALSO READ – What Is Marginal Revenue? Definition, Importance & Use in Pricing
Revenue vs Profit: Know the Difference
| Category | Revenue | Profit |
| Definition | Total income from sales | Income after all costs/expenses |
| Formula | Units × Price | Revenue – Expenses |
| Focus | Top-line | Bottom-line |
Key Metrics Related to Revenue
- MRR (Monthly Recurring Revenue)
- ARR (Annual Recurring Revenue)
- ARPU (Average Revenue Per User)
- Revenue Growth Rate
- Revenue Churn
ALSO READ – Revenue vs Profit: A Beginner’s Guide to Financial Basics
Key Takeaways
- Revenue = Number of Units Sold × Price per Unit
- Recurring businesses can also use Revenue = Number of Customers × Average Revenue Per User (ARPU)
- Understanding revenue helps in budgeting, forecasting, and raising investments
- Ideal for tracking monthly, quarterly, or annual growth
- Crucial for GST filings, funding pitches, and tax returns in India
Learn more about Business skills here to unlock new growth opportunities
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Conclusion
Tracking your revenue using the right formula is not just about counting sales—it’s about measuring real growth. For Indian startups and small businesses, this can be the difference between scaling up and staying stagnant. Whether you’re selling fashion, tech, or courses, revenue is your north star.
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Frequently Asked Questions (FAQs)
Revenue = Number of Units Sold × Price per Unit.
ARPU stands for Average Revenue Per User; used for subscription or SaaS businesses.
Revenue is total earnings; income is what’s left after expenses.
Use MRR = Number of subscribers × Monthly fee.
Not always. It can include credit sales as well.
No, but net income can be if expenses exceed revenue.
Gross is total sales; net subtracts returns, discounts, etc.
At least monthly, ideally weekly for startups.
Percentage increase in revenue over time.
Tally, Zoho Books, Vyapar, and QuickBooks are commonly used.
