Net revenue is what you actually kept of what you sold. Gross revenue is what your invoices and order confirmations said; net revenue is what survived after returns, refunds, and discounts. For a subscription merchant on Shopify, the gap between the two is a fast diagnostic — wide gap means promo or refund problems; narrow gap means clean order flow.
The formula
Net Revenue = Gross Revenue − Returns − Refunds − Discounts
Some accounting policies also subtract early-payment discounts and chargebacks. The general principle is the same: net revenue is what you'd be left with if every sales adjustment in the period had already happened.
What net revenue excludes
- Sales tax — collected on behalf of tax authorities, never your revenue.
- Shipping cost passthrough — if you charge shipping at cost, some businesses net this out; others include it in net revenue and put the cost in COGS.
- Cost of goods sold — comes out below net revenue, in calculating gross profit.
Why net revenue matters more than gross for subscription businesses
Subscription merchants live with high promo activity, especially at acquisition. A subscriber on a 50%-off first month does not represent a $40 revenue customer if you priced at $40 — they represent a $20 net revenue customer. Modeling acquisition CAC against gross revenue inflates the apparent unit economics; modeling against net revenue gives you the truth.
How to track net revenue in Shopify
Shopify Analytics reports both gross and net sales. For subscription operators, the most useful breakdowns are:
- Net subscription revenue vs. net one-time revenue — splits recurring base from opportunistic.
- Net revenue by cohort — same-cohort retention is best measured on net revenue, not gross.
- Net revenue by channel — reveals which acquisition channels deliver real dollars, not just gross transactions.
For the gross side see gross revenue; for the bottom line, see net income.