GlossaryPricing & Profit
Net Sales
Also called: net turnover
What is Net Sales?
Net sales is gross sales minus returns, cancellations and discounts — the revenue a business actually retains from trading. It is the figure gross profit is calculated against.
Why Net Sales matters
Margin percentages computed on gross sales overstate performance. Net sales is the only base that reflects what customers really paid after everything given back.
Net Sales formula
Net sales = Gross sales − Sales returns − Discounts − Cancellations
This is the denominator for gross margin.
How Net Sales works in practice
Reconcile net sales with the taxable value reported in your GST returns each month. A persistent gap usually points to discounts recorded outside the billing system.
Frequently asked questions
Net sales. Using gross sales inflates every margin percentage you report.