Difference Between Sales vs Revenue
There is usually a great deal of confusion over the meaning of sales vs revenue, but they are both completely separate entities that represent very different aspects of business. One is an action, whereas the other is a result. It is entirely understandable why many people blur the lines between the meanings of the two words because they both directly relate to money.
But one (sales) is a way of making money, while another (revenue) directly relates to an amount of money that a business holds at any given time. One way of getting revenue is through sales. We are now going to explore the definition of the two words in more detail to help you fully understand where the two differ.
Definition of Sales
The term sales means the exchange of a commodity for money or an action undertaken to acquire money. So, the difference between sales and revenue is that ultimately a sale is something that you do in order to increase your overall business revenue.
For instance, you might work in the field of car sales. If this is the case, your primary objective is to sell automobiles. Every time you sell an automobile for money, you are increasing the overall revenue of the business you work for. It is the number of sales that a company makes overall that directly leads to the amount (in money) that the company retains or reaches in revenue.
The overall aim of any business is ultimately to increase its revenue by means of delivering either high-yield (value) or high-volume (many) sales. Sales are created by the exchange of goods or the delivery of a service in exchange for money to feed into an overall revenue stream or pot.
Definition of Revenue
Revenue is typically defined as the overall income of a business. So immediately, we can see that the difference between sales and revenue is fairly considerable. They do definitely relate to one another, and one does not typically exist without linking to the other. But they both cover different elements of business operations.
You can actually have more than one revenue stream too. So, we have already discussed that a sale can come from the exchange of goods or services. Many effective businesses have more than one way to increase their sales volume. How they do this is by offering a combination of goods and services together, which they can use to make sales and increase their revenue.
A sale involving the exchange of goods and a sale involving the delivery of a service would both feed directly into an overall revenue “pot,” but they would both belong to different revenue streams. This would be due to the goods and service relating to different customer interaction types.
Main Differences Between Sales vs Revenue
It is now time to sum up the difference between revenue and sales in an easily accessible table.
|Basis of Comparison||Revenue||Sales|
|Definition||A financial outcome||An action performed to increase financial gain|
|How is it used?||To gauge the monetary value of a business||To increase the monetary value of a business|
|Characteristics||An individual, overall figure created using different totals from different areas of a business||An individual action or combination of several actions used to create an overall monetary figure|
|Can one exist without the other?||Revenue can exist without sales if revenue has been gained without selling goods or services||It is impossible for sales to exist without the existence of revenue|
|In business operation||The outcome of skill and overall productivity||An activity that involves the use of skill and productivity|
In the future, you may find yourself pondering, “What is the difference between sales and revenue?” If you do, we encourage you to come back to the above table at any time.
Difference Between Sales and Revenue: Conclusion
You now have all of the information you require to set these two words apart. The overriding message to take home is that a sale is an action and revenue is an outcome.If you remember this sentence going forward, you are not likely to have questions about the subject again.