The total revenue share represents the

percentage In mathematics, a percentage () is a number or ratio expressed as a fraction (mathematics), fraction of 100. It is often Denotation, denoted using the ''percent sign'' (%), although the abbreviations ''pct.'', ''pct'', and sometimes ''pc'' are ...

revenue In accounting, revenue is the total amount of income generated by the sale of product (business), goods and services related to the primary operations of a business. Commercial revenue may also be referred to as sales or as turnover. Some compan ...

allocated to direct costs. This financial metric combines both product

cost Cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it i ...

s and

marketing Marketing is the act of acquiring, satisfying and retaining customers. It is one of the primary components of Business administration, business management and commerce. Marketing is usually conducted by the seller, typically a retailer or ma ...

costs to provide a comprehensive measure of expenses directly associated with generating revenue.

Calculation

The formula for total revenue share is: Total Revenue Share = (Direct Costs ÷ Revenue) × 100% where Direct Costs = Product Costs + Marketing Costs For example, if a company generates $100,000 in revenue with $40,000 in product costs and $20,000 in marketing costs, the total revenue share equals: Total Revenue Share = ($60,000 ÷ $100,000) × 100% = 60%

Business applications

Companies use total revenue share to evaluate operational efficiency across different product lines, time periods, and market segments. This metric helps businesses determine pricing strategies, identify cost-saving opportunities, and make resource allocation decisions. A declining total revenue share typically indicates improving efficiency, while an increasing share may signal rising costs or pricing pressures. Industry benchmarks vary significantly, with manufacturing businesses typically experiencing higher total revenue shares than service-based companies.

Relationship to gross margin

The total revenue share maintains an inverse relationship with gross margin. The formula relationship is: Gross Margin = 100% - Total Revenue Share In the previous example with a 60% total revenue share, the gross margin equals 40%. This relationship makes total revenue share particularly useful for companies seeking to analyze both cost structures and profit potential simultaneously.⁶ This section should be placed as a standalone section immediately after the introduction of the article, before any subsections that might discuss specific components of revenue or cost structures.

References

Financial ratios {{business-stub