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eCommerce An Expert Overview of Bottom-Line Revenue December 21, 2022 | 4 min read What Is Bottom-Line Revenue? Bottom-line revenue is the profits of a company, or the net income. It’s what a company earns from doing business. Actions that might increase or decrease a company’s profits is commonly referred to as the “bottom line.” A company can improve its bottom line in two ways: Increase revenue Cut down costs Calculating Bottom-Line Revenue The bottom line is the net income of the company. But how you can calculate the bottom-line revenue?of a company? The bottom-line revenue formula consists of two parts: expenses and gross revenue. If you want to calculate the bottom-line revenue of a company, simply deduct expenses from gross revenue (which includes sales income, investment income, and other revenue sources). If you’re filling out an income statement, you’d calculate the bottom line within a particular timeline called the accounting period (the time between one income statement and the next). For example, let’s say a start-up eCommerce business makes $100,000 from sales, and they have another $20,000 from investments. Then, they have $70,000 in expenses, from paying employees, ordering products, compensating a web hosting provider, marketing activities, and paying for shipping expenses. Subtract $70,000 (expenses) from $120,000 (gross revenues), and you get $50,000 in bottom-line revenue for the accounting period. How to Increase the Bottom Line With the example above it’s easier to see how decreasing expenses and/or increasing sales revenue increases the bottom line. Decreasing expenses often includes becoming more efficient or automating certain tasks, finding better deals, and getting better tools and software that support better efficiency and cost less in the long run. Increasing revenue often includes increasing production rates, improving products to reduce returns, increasing product prices, expanding product lines, and improving marketing efforts. The better the bottom line is for a company, the more successful the company. Top Line vs Bottom Line The bottom line revenue is the net profit of a company, and it’s referred to as the “bottom line” because it’s located at the bottom of a company’s income report. The bottom line indicates the success of a company by how profitable it is and how efficiently it manages expenses. Top-line revenue is located at the top of a company’s income statement and refers to a company’s net income within the accounting period. Remember the example from before, with the start-up eCommerce business? The top-line revenue in that example would be the $120,000 from sales and investment income. When there’s an increase in the top-line revenue, that means there’s an improvement in sales or other revenues. When there’s an increase in bottom-line revenue, that means there’s an increase in the top line and/or a decrease in expenses. Improve Your Bottom Line Revenue At Clarity, we develop custom eCommerce solutions that allow you to automate business processes to increase efficiency and decrease overhead costs. We can also help you improve your marketing efforts. These are just two of the many things that Clarity’s expert team can do for you to increase your bottom line. Learn More About Clarity eCommerce Framework™ Discover Your Business Solution We’re offering a free discovery session where you’ll talk to our business analysts about your business’s needs, and we’ll help you discover what solution best fits those needs. After the session, you can take the information you’ve gained with you, no strings attached. Get A Free Discovery Session Related Posts How to Build a Peer-to-Peer Marketplace in 2023 Advantages of Multi-Store and Multi-Vendor Platforms How Multistore Platforms Support Global Marketplace Written by Autumn Spriggle Autumn Spriggle is a Content Writer at Clarity Ventures with experience in research and content design. She stays up to date with the latest trends in the eCommerce and software development industries so she can write content to help people like you realize the full potential for their business.
Bottom-line revenue is the profits of a company, or the net income. It’s what a company earns from doing business. Actions that might increase or decrease a company’s profits is commonly referred to as the “bottom line.” A company can improve its bottom line in two ways:
The bottom line is the net income of the company. But how you can calculate the bottom-line revenue?of a company? The bottom-line revenue formula consists of two parts: expenses and gross revenue.
If you want to calculate the bottom-line revenue of a company, simply deduct expenses from gross revenue (which includes sales income, investment income, and other revenue sources).
If you’re filling out an income statement, you’d calculate the bottom line within a particular timeline called the accounting period (the time between one income statement and the next).
For example, let’s say a start-up eCommerce business makes $100,000 from sales, and they have another $20,000 from investments. Then, they have $70,000 in expenses, from paying employees, ordering products, compensating a web hosting provider, marketing activities, and paying for shipping expenses.
Subtract $70,000 (expenses) from $120,000 (gross revenues), and you get $50,000 in bottom-line revenue for the accounting period.
With the example above it’s easier to see how decreasing expenses and/or increasing sales revenue increases the bottom line.
Decreasing expenses often includes becoming more efficient or automating certain tasks, finding better deals, and getting better tools and software that support better efficiency and cost less in the long run.
Increasing revenue often includes increasing production rates, improving products to reduce returns, increasing product prices, expanding product lines, and improving marketing efforts.
The better the bottom line is for a company, the more successful the company.
The bottom line revenue is the net profit of a company, and it’s referred to as the “bottom line” because it’s located at the bottom of a company’s income report. The bottom line indicates the success of a company by how profitable it is and how efficiently it manages expenses.
Top-line revenue is located at the top of a company’s income statement and refers to a company’s net income within the accounting period.
Remember the example from before, with the start-up eCommerce business? The top-line revenue in that example would be the $120,000 from sales and investment income.
When there’s an increase in the top-line revenue, that means there’s an improvement in sales or other revenues. When there’s an increase in bottom-line revenue, that means there’s an increase in the top line and/or a decrease in expenses.
At Clarity, we develop custom eCommerce solutions that allow you to automate business processes to increase efficiency and decrease overhead costs. We can also help you improve your marketing efforts. These are just two of the many things that Clarity’s expert team can do for you to increase your bottom line.
Learn More About Clarity eCommerce Framework™
We’re offering a free discovery session where you’ll talk to our business analysts about your business’s needs, and we’ll help you discover what solution best fits those needs. After the session, you can take the information you’ve gained with you, no strings attached.