Level 1 · Gross sales, discounts, net sales

Three numbers, one waterfall

Revenue is not one number but a short waterfall. At the top is gross sales: every unit sold at the price on the order line. Coupons come off next, and what is left is net sales. Refunds come off after that (level 5), leaving net revenue. Finance reports the bottom of the waterfall; marketing likes the top. Both are fine as long as each number says which step it is.

quantity * unit_price                          -- line gross
quantity * unit_price * discount_pct / 100     -- line discount
quantity * unit_price * (1 - discount_pct / 100)  -- line net

discount_pct is stored in percentage points (0, 10, 15, 20 or 25), so divide by 100.

Which rows belong

Two filters decide most revenue disagreements.

• Status. A cancelled order was never paid. A pending one may still fail. Harbor & Pine counts completed and refunded orders as booked: the customer paid. Refunded orders are booked and then taken back by the refund, which is the honest way to show a sale that came back.
• Valid lines. 24 order lines have a quantity of zero or less. They are typing errors, not negative sales, so quantity > 0 keeps them out of every total.

On top of that, the date window is half-open: order_date >= '2025-01-01' AND order_date < '2026-01-01'. order_date is a timestamp, so BETWEEN '2025-01-01' AND '2025-12-31' would drop every order placed after midnight on New Year’s Eve.

Why the gap matters

Gross and net are close at Harbor & Pine because only one order in eight uses a coupon. In a business that discounts heavily the gap can be 15 or 20 percent, and a “sales up 10%” headline can hide margin going backwards. Reporting both, with the discount in between, shows where the money went.

Common mistakes

• Counting every status. Revenue on cancelled orders is a wish, not a sale.
• Summing products.unit_price. That is today’s list price. The line’s unit_price is what the customer paid; 30 products changed price in March 2025.
• Rounding each line. Sum first, round once at the end, or cents add up into dollars.

Interview note

“What is the difference between gross and net revenue?” is asked in nearly every analyst screen. Name the steps in order (gross, discounts, net sales, returns, net revenue), say where shipping and tax sit in your company’s definition, and you have answered it better than most.