How to calculate revenue

The revenue can be calculated in two ways: direct and reverse. Each of them is used in a specific situation. The methodology for using direct accounts is based on the fact that demand is known in advance. And using the calculation method, revenue is determined in case of unstable demand.

Instruction manual

1. Calculation of revenue using the direct account method:

Determine the number of products sold over a given period of time.

2. Indicate the price per unit of products, goods or services sold.

3. In order to calculate revenue, multiply the number of products by the price per unit. The resulting number will be the proceeds from the sale of products.

4. There is a dependence of the quantity of goods sold on the coefficient of elasticity of supply, which can also significantly affect revenue. To verify this, it is enough to consider three cases: when the coefficient is greater than or less than unity, and when it is equal to zero.

5. In the case when the coefficient of elasticity is much less than unity, then a change in price by one percent will lead to a change in demand by less than one percent.

6. If the coefficient is greater than one, then a one percent price change will lead to a more than one percent change in demand.

7. If the coefficient is equal to one, then a change in the price by one percent will lead to a change in demand by one percent.

8. Thus, you can calculate the dependence of demand on the price per unit of output, and hence the revenue from its sale.

9. The calculation of profit by the calculation method with unstable demand:

Find the number of products that are not sold at the beginning of the current period.

10. Determine the number of goods intended for release for the current period.

11. Now calculate the planned balances from the number of unsold goods at the end of the current period.

12. Then, take away from the amount of unsold product at the beginning of the current period the planned balances of unsold products at the end of this period, and add the number of goods that are being prepared for release during the reporting period. Thus, you will find revenue from product sales. So, you managed to calculate revenue by the calculation method with unstable demand.