In business, there are various terms and acronyms that may sound unfamiliar to the average person. Gross revenue is one such special term. So, what is gross revenue?
Gross revenue is the total amount of money that a company brings in through sales before any expenses are deducted. For example, if a company sells 100 units of product for $100 each, the company has earned $10,000 in gross revenue.
This blog post will define gross revenue and describe how to calculate it. Read on to find out why this metric is so important in business.
What gross revenue is & how it’s calculated
Gross revenue is the sum of all sales activity for a given period. It is the total revenue collected by a business before any deductions and expenses are calculated.
It’s crucial to note that gross revenue only represents revenue generated from sales and not other income sources, like interest or investments. Additionally, gross revenue does not reflect a company’s bottom line because it doesn’t include expenses.
The benefits of maximizing gross revenue
There are several reasons why you should focus on maximizing your company’s gross revenue. Here are some of the more important ones.
Brings in new talent
Companies with a track record of high gross revenue are more attractive to potential employees as they are perceived to have greater growth potential.
A 2015 study by Glassdoor found that four out of five employees expect perks in the first twelve months of employment. By increasing your gross revenue, you show potential employees that your company has the perks they’re looking for.
It helps you stay competitive
Having high gross revenue means more resources to invest in marketing, research and development, and other areas to help you stay ahead of the game.
For example, if you’re competing to win a large government contract, having a high gross revenue will give you the edge over your competitor. As such, this is a critical component to winning new clients and maintaining a strong market position.
Investors want evidence that your company is financially stable and has the potential for massive growth. So when pitching your business to potential investors, showing a high gross revenue will demonstrate that there’s demand for your product or service and room for growth.
How to increase your company’s gross revenue
There are several strategies companies use to increase their total gross revenue. Here we’ve listed the most popular ones.
Invest in marketing
One of the best ways to increase your company’s gross revenue is to invest in marketing activities. There are three main ways to boost income through marketing.
- Online Ads
- Email Marketing
- Social Media Marketing
- Influencer Marketing
Increase the number of sales channels
Increasing the number of channels through which you make sales is an effective way to boost your company’s gross revenue. Consider expanding into new markets or launching new products or services that you can sell through existing channels.
Offer discounts or promotions
A recent survey found that customers who received coupons spent 24% more on average than those who didn’t. As such, offering discounts or creating promotions can encourage customers to purchase more, generating additional revenue for your business.
Gross revenue is an important indicator of a company’s financial health and growth potential. And a high revenue indicates that the company is in good health. As such, this is one metric you should strive to maximize if you want to run a successful business.
Check our net revenue guide if you want to learn more.