Differential Revenue
What is Differential Revenue?
Differential revenue is the difference in potential revenue generated between two courses of action.
![dr 1](https://seeaccountingnow.online/wp-content/uploads/2021/08/dr-1.jpg)
How it Works
A company may be evaluating whether it should invest money to increase the development of an existing product line.
![dr 2.5](https://seeaccountingnow.online/wp-content/uploads/2021/08/dr-2.5.jpg)
Or if it should invest money in a new product line, altogether.
![dr 3.5](https://seeaccountingnow.online/wp-content/uploads/2021/08/dr-3.5.jpg)
Projected sales for each product will differ.
![dr 4](https://seeaccountingnow.online/wp-content/uploads/2021/08/dr-4.jpg)
This difference is known as differential revenue.
![dr 5](https://seeaccountingnow.online/wp-content/uploads/2021/08/dr-5.jpg)
© R.J. Hickman 2020