What Is the Difference Between Revenue and Sales?

Revenue includes money generated by non-sales activities

An investor looks over a company’s income statement

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The investing terms “revenue” and “sales” are frequently used interchangeably even though there are key differences between them.

“Sales” refers to the amount of money a company generates over a period of time by providing its products or services to customers.

Revenue” refers to the total income a company earns over a specific time period. Revenue includes total sales, but it also may include income generated through non-sales activities such as investments, sale of assets, and allowances.

Key Takeaways

  • Revenue is the total income a company earns over a specific time period, including non-sales income from investments, sale of assets, and other activity.
  • Sales are the amount of money a company generates over a period of time by providing its product or services to customers.
  • Income statements and other corporate reports differentiate between gross sales and net sales.
  • Gross sales are the total amount of sales without adjusting for discounts, returns, and allowances.
  • Net sales is a calculation that takes those three factors into account.

Understanding How Revenue and Sales Are Different

Companies issue income statements that summarize how much revenue they earned over a specific time period, such as a quarter or a year. An income statement lists both the total sales for that period—also known as gross sales—and gross revenue.

Revenue is typically greater than sales if a company has other sources of income. It may be equal to sales if a company does not have any other source of income, and it can be less than sales if a significant amount of discounts, returns, and allowances are factored in.

Electric carmaker Tesla’s 2021 first-quarter report provides an example of how gross revenue includes more than total sales of the company’s product or service. Tesla reported a net income of $438 million for the quarter and $10.4 billion in revenue. Two significant non-sales factors that boosted the company’s revenue were $518 million in revenue from the sale of emissions credits to other automakers and the sale of Bitcoin that added $101 million to its gross revenue.

The Difference Between Revenue and Sales


Revenue Sales
Definition The total income a company earns over a specific time period The amount of money a company generates over a period of time by providing its product or services to customers
How It’s Calculated Gross sales plus all other income (investments, sale of assets, royalties, interest, etc.) Multiply the total goods or services sold by the price per unit. Gross sales are all sales reported within a time period without deductions. Net sales are gross sales minus discounts, returns and allowances.
What It Reflects A company’s ability to generate money by allocating its resources to maximize earnings A company’s ability to sell its goods and services to make a profit

Gross Sales

Gross sales are total sales prior to accounting for three factors: discounts, returns, and allowances. Allowances are any money that is returned to a customer for any reason after a sale.

Net Sales

Net sales are the final amount of sales revenue earned by an organization after all the deductions and adjustments are accounted for. In an income statement, net sales are sometimes referred to as “income.”


Because net sales are a better indication of a company’s ability to generate a profit than gross sales, they are a more accurate sales figure to company managers, analysts, and investors.

The Bottom Line

Whether you are looking at a company’s revenue and its sales for investment purposes or to assess the business strategy, it is important to understand these two terms are not interchangeable. Mistaking sales for revenue could leave out important sources of income or significant deductions because of discounts or merchandise returns. It is also important to understand that some revenue sources may be singular events that should not be factored into long-term performance expectations.

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  1. Tesla. "Q1 2021 Update," Slide 4.

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