How to Calculate Incremental Revenue for Marketing

by M. Scilly, studioD

Small business owners should always be on the lookout for ways to increase their revenues. One way of increasing revenues is through marketing. Although a marketing campaign can increase revenues, it also can be expensive. Calculate the incremental revenues from a marketing campaign to see whether it is a good investment. The incremental revenues need to be greater than your marketing costs or you will lose money.

Step 1

Add up your total revenues for a period, such as a financial quarter or a year. This figure will serve as the base revenue for your calculations. For example, assume that you had total revenues of $50,000 in the previous year -- write that down as the base figure.

Step 2

Calculate the total revenues after introducing the new marketing campaign. For example, if your revenues were $60,000 for the year following the campaign, then you would write down that figure. Be sure to use a comparable time period. If you used the annual revenues for the base year, use annual revenues; if you used the quarterly revenues for the base year, use quarterly revenues.

Step 3

Subtract the base revenue from the new revenue to calculate the incremental revenue. For example, if the revenues in the base year are $50,000 and they increase to $60,000 following the marketing campaign, then you have an incremental revenue of $10,000. This increase in revenue may be due to an increase in the number of sales, an increase in the average value of sales or from an increase to the number and value of the sales.


  • In general, you will want incremental revenues to be greater than your marketing costs. It can be worthwhile to lose money early on, however, if those losses help create long-term brand recognition.


  • If you get a negative number when you subtract the base revenue from the latest revenues, then you actually have a decrease in revenues rather than an increase, which may indicate that your marketing campaign has had an adverse effect on customers, actually causing you to lose business.
  • Remember that other factors, such as changes to your products, changes in the economy and actions by your competitors, may also cause changes in revenues; marketing is just one possible cause.

References (2)

  • "Management Accounting"; Pauline Weetman; 2010
  • "Strategic Management Accounting: Concepts, Processes and Issues"; Zahirul Hoque; 2006

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