Net Revenue

Net revenue is the revenue that remains after subtracting refunds, discounts, chargebacks, and revenue share obligations from gross revenue. It represents the actual dollars that flow into the business from sales activity. For SaaS companies, net revenue is the foundation of gross margin and unit economics calculations.

formula.sh

Net Revenue = Gross Revenue − Refunds − Discounts − Chargebacks − Revenue Share

> Gross Revenue: total billed to customers before any deductions
> Refunds: payments returned to customers
> Discounts: promotional or negotiated reductions applied at billing
> Chargebacks: disputed transactions reversed by the payment processor
> Revenue Share: amounts owed to affiliates, resellers, or platforms

example

example.sh

You billed $100,000 this month. Refunds: $2,000. Discounts applied: $3,500. Chargebacks: $500.

$100,000 − $2,000 − $3,500 − $500

→ $94,000 net revenue

why it matters

Gross revenue is what you invoice; net revenue is what you keep. The gap between the two is a signal about discount pressure, product-market fit, and payment quality. A high refund rate suggests customers are not finding value. High chargebacks suggest fraud or billing confusion.

Unit economics like CAC payback period and LTV:CAC should always be calculated on net revenue, not gross. Using gross revenue inflates LTV and makes your business look more efficient than it is.

common mistakes

✗Calculating gross margin on gross revenue instead of net revenue — this overstates margins

✗Ignoring discount rate creep — heavy discounting erodes net revenue silently over time

✗Not tracking chargeback rate separately — a rate above 1% will trigger payment processor penalties

pro tips

✓Monitor your net revenue retention rate monthly — it captures expansion, contraction, and churn in one number

✓Set a maximum discount policy and enforce it — ad hoc discounting destroys net revenue predictability

✓If refund rate exceeds 2%, investigate immediately by cohort and plan type

the mrrsucks take

Your net revenue is like your gross revenue but after it paid for everyone who hated the product and wanted their money back. Think of it as gross revenue doing the walk of shame.

faq

Is net revenue the same as profit?+

No. Net revenue is revenue after deductions but before any costs. Profit is what remains after subtracting all operating expenses from net revenue.

What is net revenue retention (NRR)?+

NRR measures how much revenue from a cohort of existing customers grows or shrinks over time. It includes expansion, contraction, and churn. Above 100% means expansion outpaces churn.

Zero revenue roasts›

related metrics

./install-the-daemon

$9. 365 roasts. one public endpoint of pure shame.