Difference between Sales and Revenue

Key difference: Sales and Revenue are two terms that every company comes across when dealing with their financials. The term ‘sales’ refers to the actually selling of the products. Hence, ‘sales’ is the income that the company made via selling its products and services. Whereas, ‘revenue’ actually refers to income from all sources, i.e. sales + returns from property, patent, service, etc. Often revenue may also deduct any and all discounts from sales.

Sales and Revenue are two terms that every company comes across when dealing with their financials. While, the two terms are interrelated, they do not actually mean the same thing. Let us look at the definition of the two words.

Dictionary.com defines ‘sales’ as:

  • To transfer (goods) to or render (services) for another in exchange for money; dispose of to a purchaser for a price: He sold the car to me for $1000.
  • To deal in; keep or offer for sale: He sells insurance. This store sells my favorite brand.
  • To make a sale or offer for sale to: He'll sell me the car for $1000.
  • To persuade or induce (someone) to buy something: The salesman sold me on a more expensive model than I wanted.
  • To persuade or induce someone to buy (something): The clerk really sold the shoes to me by flattery.
  • To make sales of: The hot record sold a million copies this month.
  • To cause to be accepted, especially generally or widely: to sell an idea to the public.
  • To cause or persuade to accept; convince: to sell the voters on a candidate.
  • To accept a price for or make a profit of (something not a proper object for such action): to sell one's soul for political power.

Whereas, Dictionary.com defines ‘revenue’ as:

  • The income of a government from taxation, excise duties, customs, or other sources, appropriated to the payment of the public expenses.
  • The government department charged with the collection of such income.
  • Revenues, the collective items or amounts of income of a person, a state, etc.
  • The return or yield from any kind of property, patent, service, etc.; income.
  • An amount of money regularly coming in.
  • A particular item or source of income.

The term ‘sales’ refers to the actually selling of the products. Hence, ‘sales’ is the income that the company made via selling its products and services. Whereas, ‘revenue’ actually refers to income from all sources, i.e. sales + returns from property, patent, service, etc. Often revenue may also deduct any and all discounts from sales.

Let us consider an example:

A company that sells bicycles sells 10 bicycles in a week for $100 each. So the company’s sales for the week are $1000. However, one of the customers was an old friend so he received a 10% discount on his bicycle. Also, the company received a $25 dividend from a government bond they had invested in. So, the company’s revenue for the week was $1000 – $10 + $25 = $1015

Image Courtesy: gamifiedenterprise.com, expertmagentodevelopers.com

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