Net revenue

In plain words

Net revenue is what you keep of your sales once refunds are taken out. An order booked at $40 with $10 refunded has a net revenue of $30.

It is the right starting point for profit, because refunded money was never really earned. And it has to be worked out per order: the refund belongs to the order it was given on, however much later it was issued. A month's sales less that month's refunds mixes one month's orders with another's returns.

Formula

• Net revenue = gross revenue − refunded revenue
• Realized profit = net revenue − realized cost

Worked example

The $40.00 bag's order books $40.00 of revenue. A $10.00 refund leaves $30.00 of net revenue.

The order's cost is still $22.64, because the bag shipped. The engine puts its realized profit at $7.36, where the same order without a refund realizes $17.36.

Computed by the margin engine in Offer Suite's own code, in whole cents, from a $40.00 bag of coffee with a $12.00 unit cost.

Net revenue is not net of costs

It is revenue after refunds and discounts, before any cost is subtracted. Net revenue less the product cost is gross profit, and less every cost of the order is contribution margin. The word net has a different meaning at each line of the statement.

Using it

Tie each refund back to its order, and to the offer and option that sold it. Then you can see net revenue per offer and notice the one that sells well and refunds badly. Keep discounts out of it: a discount was never revenue, while a refund was revenue that came back.

In Offer Suite

Offer Suite nets each refund against the order it was given on, read after discounts and before tax. Realized profit is net revenue less realized cost, and cost is not reduced by a refund.

Source: Offer Suite's money definitions, checked against real Shopify orders.