Glossary
Total Product Revenue
Tags: Glossary
The total value of sales made to external customers, plus the transfer price valuation of intra-company shipments, net of all discounts, coupons, allowances, and rebates, includes only the intra-company revenue for products transferring out of an entity. It also includes installation services if these services are sold bundled with end products. It recognizes leases to customers initiated during the same period as revenue shipments, with revenue credited at the average selling price. Note: Total Product Revenue excludes post-delivery revenues (maintenance and repair of equipment, system integration), royalties, sales of other services, spare parts revenue, and rental/lease revenues.
What is Total Product Revenue?
Total Product Revenue
Total Product Revenue refers to the overall value of sales generated by a company from its products and services. It encompasses the sales made to external customers as well as the transfer price valuation of intra-company shipments. This revenue figure is calculated by deducting all discounts, coupons, allowances, and rebates from the total sales value.
In addition to the sales made to external customers, Total Product Revenue also includes the revenue generated from intra-company transfers of products. This means that if one entity within a company transfers products to another entity within the same company, the value of these transfers is included in the Total Product Revenue.
However, it is important to note that Total Product Revenue only includes the intra-company revenue for products transferring out of an entity. It does not include post-delivery revenues such as maintenance and repair of equipment, system integration, royalties, sales of other services, spare parts revenue, and rental/lease revenues.
Furthermore, if installation services are sold bundled with the end products, the revenue generated from these services is also included in the Total Product Revenue. This means that if a company sells a product and also provides installation services for that product, the revenue from both the product sale and the installation service is considered in the Total Product Revenue calculation.
Leases to customers initiated during the same period as revenue shipments are also recognized in the Total Product Revenue. In this case, the revenue is credited at the average selling price. This means that if a company leases a product to a customer and also sells other products during the same period, the revenue from both the lease and the product sales are included in the Total Product Revenue calculation.
It is important to understand that Total Product Revenue provides a comprehensive view of the revenue generated by a company from its products and services. By including both external sales and intra-company transfers, as well as installation services and lease revenues, it gives a holistic understanding of the company's revenue streams. However, it excludes certain types of revenue such as post-delivery revenues, royalties, sales of other services, spare parts revenue, and rental/lease revenues.
In conclusion, Total Product Revenue is a key metric used to measure the overall sales performance of a company. It takes into account the sales made to external customers, intra-company transfers, installation services, and lease revenues. By understanding and analyzing this metric, companies can gain valuable insights into their revenue streams and make informed decisions to drive growth and profitability.