Incremental revenue is the sales associated with an additional quantity sold. The concept is used in the following situations:
- Incremental pricing. When evaluating whether to accept an offer from a customer to sell more goods or services, usually at a reduced price.
- Marketing campaign. When evaluating the effectiveness of a marketing campaign; an effective campaign should generate a discernible amount of incremental revenue that would not have occurred if the marketing expenditure had not been made.
- New product. When determining the sales associated with an extension of a product line.
The calculation of incremental revenue involves establishing a base line revenue level and then measuring changes from that point.