What is Percentage of Revenue?
Percentage of revenue calculates how much a specific source, product, or segment contributes to total business revenue. This metric is essential for business analysis and strategic planning.
How to Calculate Revenue Percentage
The formula is:
[\text{Revenue Percentage} = \frac{\text{Revenue from Source}}{\text{Total Revenue}} \times 100]
Calculation Example
If a product generates $150,000 from total company revenue of $500,000:
[\text{Percentage} = \frac{150{,}000}{500{,}000} \times 100 = 30%]
This product contributes 30% of total revenue.
Applications
Product Portfolio Analysis
Identify which products drive revenue and deserve more resources or marketing investment.
Customer Concentration
Determine if too much revenue comes from a single customer, creating business risk.
Channel Analysis
Compare revenue from different sales channels (online, retail, wholesale).
Geographic Analysis
Understand revenue distribution across different markets or regions.
Strategic Insights
- High Percentage Sources: Focus on protecting and growing these
- Low Percentage Sources: Evaluate for improvement or discontinuation
- Concentration Risk: Diversify if any source exceeds 30% of revenue
- Growth Opportunities: Identify underperforming areas with potential