Net sales refers to the total amount of money a business earns from product and service sales after deducting any discounts or returns.
Brands and retailers use a number of metrics to assess and understand the financial viability of their businesses. Net sales is a critical metric — often one of business’ key performance indicators (KPIs) — that measures the amount of revenue the business generates, after deducting all discounts and returns.
The net sales metric gives businesses insight into how much money they’re bringing in from sales alone. With this information, they can evaluate the financial health of the business, adjust product pricing to increase net sales, or better understand how much money they might be losing to discounts and returns.
By determining their gross sales — the total amount of revenue generated by all sales in a given period — alongside net sales, the business gains deeper insight into their financial health. Many brands and retailers use analytics software to automate and optimize these metrics, saving them time and money.