What Is Operating Revenue? How Does It Work?

Operating revenue describes the regular funds your company's core activities generate. Explore the benefits of getting to know this number as a business owner.

Operating revenue consists of all the money your small business brings in with its main streams of income. Simply put, it's the same as your sales. Understanding the ins and outs of your company's operating revenue can help you take the right steps to improve this key metric of success. 


What Is Operating Revenue?

All revenue your business brings in from its regular money-making activities is considered operating revenue. This category does not include revenue sources that occur sporadically outside the scope of your core product or service lines.

How Do You Calculate Operating Revenue?

Follow these steps to calculate your company's operating revenue:

  • Determine gross sales for the period in question, including all credit card and cash transactions. Do not include promotional or complementary products in this revenue calculation.
  • Find the amount of revenue generated by allowed sales. Divide your allowed sales by total sales to find out how much you earned from returned items.
  • Decrease the calculation by the variable cost of goods sold. This describes the changes in the cost of goods sold based on business volume.

What's the Difference Between Operating Revenue and Non-Operating Revenue?

Operating revenue comes from your company's primary business activities. If you have an ecommerce company, selling products and services online generates this type of revenue.

On the other hand, your business derives non-operating revenue from one-time or uncommon events. For example, a cash infusion from an investor provides valuable funds but it's considered non-operating revenue since it's not a regular income source. Other types of non-operating revenue may include:

  • Money the company gets from a legal settlement
  • Income that comes from business investments
  • Income derived from interest received
  • The sale of business asset like real estate, vehicles, or equipment

Why Is It Important to Understand Operating Revenue?

You can look at your operating revenue to see how your business has increased from one quarter or year to the next. This provides a reliable measure of the health of your business. 

If you've run into difficult times, you can review operating revenue to see whether your business suffers from decreased sales, reduced profit margins, or both. Having enough operating revenue to cover your business expenses ensures you don't have to seek outside funding sources like loans. 

If you begin to sell stock in your company to generate income, the business's operating revenue is used to derive the expected earnings per share (EPS). This important metric reflects the amount investors will likely earn from putting money into a specific company.

Operating Revenue Examples

Examples of operating revenue include:

  • Merchandise sales for a brick-and-mortar or ecommerce retail business
  • Revenue from provision of services
  • Subscription sales for a software-as-a-service business
  • Donor contributions for a nonprofit organization
  • Operating grants for government agencies and nonprofit organizations

While each of these groups may bring in other sources of revenue, these non-regular sources fall outside the category of regular business activities and do not constitute operating revenue. For example, if a nonprofit organization sells tote bags and stickers to support its cause, they're making extra money but it's not operating revenue.

The Benefits of Using Pay.com as Your Payment Service Provider 

When you need a way to accept payments, Pay.com provides an affordable full-service infrastructure so you can accept your customers' preferred ways to pay. 

Selecting us as your payment service provider lets you create a streamlined checkout process that matches your business branding, improving conversions and increasing operational revenue. 

You'll also be able to accept many different ways to pay, another factor that encourages customer loyalty.

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The Bottom Line 

Operating revenue includes all the funds your company counts on for regular income. If an influx of money comes from an activity that doesn't occur regularly and/or falls outside your main business activities, it's considered non-operating revenue. 

Understanding your company's operating revenue can guide smart financial decisions and illuminate the overall health of your business.

When you're looking for the best way to accept customer payments, Pay.com makes it affordable and simple to get started. More importantly, you won't sacrifice the seamless buying experience your audience expects, from high-level security compliance to branded checkout pages they can trust.

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How can my business accept multiple payment methods?

Pay.com lets your business accept multiple methods of payment, such as debit cards, credit cards, digital wallets, electronic transfers, and many other options. You simply select the ones you'd like to offer during our easy onboarding process. Providing several payment methods can encourage customers to buy from your ecommerce shop.

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Is operating revenue the same as revenue?

Operating revenue isn't exactly the same as revenue. Revenue includes all sources of income, whether or not they occur regularly. Operating revenue includes only regular income that comes from your company's primary business activity. It's a limited subset of the broader revenue category.

What is operating revenue on a balance sheet?

Operating revenue, which appears in the Revenues column on a balance sheet, represents your company's total sales during the analysis period, minus any one-time revenue sources such as the sale of a business asset or a contribution from a donor or investor. You can subtract direct and indirect operating costs from operating revenue to calculate operating profit.

What is a good operating revenue?

A good operating revenue margin for your business is around 10 to 15%. That means you keep 10 to 15 cents for every dollar of goods sold, while operating expenses absorb the rest. To find this number, divide your operating revenue by your total revenue and multiply the resulting decimal by 100 to get a percentage.

Meet the author
Andrea Miller
Andrea Miller has been a writer and editor for more than two decades. Specializing in business and finance, she has written for some of the major websites in the financial sector. Outside of work, she spends most of her time with her family and enjoys hiking, yoga, and reading.
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