What is Net Sales?

Net sales is what your store actually sold once discounts and refunds come off the top. It's the number most store decisions should start from - pricing, marketing budgets, stock orders, hiring - because it reflects money you get to keep from selling products, not money that passed through the checkout and then left again.

Gross sales is the more flattering number, which is exactly why it's dangerous. A store that discounts heavily or takes back a lot of returns can post impressive gross sales while net sales barely move.

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What Is Net Sales?

Net sales (sometimes called net revenue) is gross sales minus discounts and refunds over a period. Gross sales is the full price of everything ordered. Discounts are the coupon codes, automatic promotions and price reductions applied at checkout. Refunds are the money you sent back for returns, cancellations after payment and goodwill allowances.

Shipping and tax are usually kept out. Tax was never yours - you collect it and pass it on. Shipping charges mostly cover a cost you pay to a carrier. Neither is product revenue, so mixing them into net sales makes the number harder to compare from month to month.

🧒 Explained simply You sell 20 cups of lemonade at $1 each, so the price tag on the day says $20. But you gave your neighbours $2 off with a "friends" deal, and one kid spilled his cup and you gave him his dollar back. You actually kept $17. That $17 is your net sales - the $20 was just what it looked like.

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How to Calculate Net Sales

Net Sales = Gross sales − Discounts − Refunds

Say a store has the following month:

• Gross sales: $50,000
• Discounts: $4,000
• Refunds: $3,000
• Shipping charged: $2,500
• Tax collected: $3,500

Net sales = $50,000 − $4,000 − $3,000 = $43,000. The shipping and tax are reported next to it, not inside it.

A few edge cases to settle once and then keep consistent:

• When to count refunds. Most stores subtract a refund in the period it was issued, not the period of the original order. Either works, but switching between the two will make months jump around.
• Cancelled and unpaid orders. Orders that were never paid should not be in gross sales at all.
• Gift cards. Selling a gift card is not a product sale yet - the sale happens when it's redeemed.
• Shipping refunds. If you refund shipping, keep it with shipping rather than with product refunds.

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Why Net Sales Matters

It's the honest top line. Every other sales metric - average order value, revenue per visitor, gross margin - should be built on net sales. If the base number includes shipping, tax or money you later refunded, everything above it inherits the error.

The gap tells a story. The difference between gross and net sales is your discounting and returns problem in a single figure. If the gap widens month after month, you're either buying sales with coupons or selling products that come back.

It keeps comparisons fair. When you compare this month with last month, or one tool's report with another, you need the same definition both times. A common mistake is putting your net sales next to another tool's "revenue" without checking whether that figure includes shipping and tax.

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What Is a Good Net Sales Figure?

There is no universal benchmark for net sales - the right number depends entirely on your store's size, category and stage. A more useful check is the ratio of net to gross sales, tracked over time.

If that ratio is steady, your discounting and returns are under control. If it's falling, discounts or returns are eating more of each sale, and it's worth finding out which one before the next promotion goes live. Compare the ratio by month, by product category and by customer segment rather than looking for an outside figure to measure against.

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How to Improve Net Sales

1. Make discounts work harder

Blanket sitewide codes give money away to customers who would have bought anyway. Target offers at specific products, first orders or lapsed customers instead, and check whether each promotion actually lifted net sales, not just order count.

2. Cut avoidable returns

Many returns come from a mismatch between what the customer expected and what arrived. Better size guides, more product photos, honest descriptions and clear dimensions all reduce the "not as described" refund.

3. Raise average order value

More spent per order lifts net sales without new traffic. Bundles, free-shipping thresholds and relevant add-ons at checkout are the usual levers.

4. Bring customers back

Repeat customers typically need less discounting to convert. A simple post-purchase email sequence and a reason to come back - a refill reminder, a new collection - grows net sales from people you've already paid to acquire.

5. Review prices on your best sellers

If a product sells steadily without promotion, it may be underpriced. A small, tested price rise on proven products goes straight into net sales.

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How to Track Net Sales

Chartsy for Ecommerce connects to your BigCommerce store with read-only access and syncs orders, products and customers every hour. It calculates net sales from your synced orders automatically, and you can break it down by month, product or category.

Gross sales, discounts, refunds, shipping and tax are reported separately, so you can see exactly what sits between gross and net. With ChartsyAI you can also ask for a chart directly:

• "Show net sales by month for the last 12 months"
• "Compare gross sales and net sales by month this year"
• "Which product categories had the most refunds last quarter?"

Try Chartsy for Ecommerce free for 14 days →

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