The two numbers, and why they diverge
Gross revenue is the total value of orders placed. It is what your ad platform reports, what most agencies put in their monthly deck, and what sounds best in a case study.
Net revenue is what stayed with you after refunds, returns, and RTOs came out. It is what reaches your bank account.
In most markets the gap is modest. In India it is not. With RTO rates running 20–30% on D2C orders and higher on COD-heavy categories, a fifth to a third of your reported gross revenue may never have been revenue at all.
What that does to a monthly report
A brand doing ₹10,00,000 in gross orders on ₹2,50,000 of ad spend:
| Metric | Gross view | Net view (25% RTO) |
|---|---|---|
| Revenue | ₹10,00,000 | ₹7,50,000 |
| Ad spend | ₹2,50,000 | ₹2,50,000 |
| ROAS | 4.0x | 3.0x |
Same month. Same account. Same work. One number looks like a strong result; the other might be near break-even depending on your margin.
Neither figure is dishonest. But only one of them describes your business.
Why this is not just an accounting preference
The distinction changes behaviour, and that is the real point.
An agency paid on gross revenue, or on ad spend, or on a flat retainer has no financial reason to care about your RTO rate. Chasing volume in COD-heavy tier-3 geographies will make their reported numbers look excellent. The returns land in your P&L, weeks later, invisible in their dashboard.
An agency paid on net revenue has the opposite incentive. Every parcel that comes back reduces what they invoice. Suddenly address validation, order confirmation, courier selection, and prepaid incentives are not somebody else’s job.
The pricing model is not a billing detail. It determines which problems get attention.
What to ask for in reporting
Ask any agency you are evaluating for the following, and treat reluctance as informative:
- Both numbers, side by side. Gross and net, every month.
- RTO rate as a headline metric, not buried in an appendix.
- ROAS calculated on net, or at minimum both figures shown.
- Return rate by SKU and by region. This is where the actionable detail lives.
- Contribution margin after ad spend, shipping, and returns. The only number that tells you whether the month actually made money.
An agency that only reports gross either has not thought about it or would rather you did not.
A caveat worth stating
Gross revenue is not useless. It is the correct number for judging whether your creative and targeting are generating demand, and it is the number ad platforms optimise against.
The mistake is using it as the business number. Use gross to evaluate the advertising. Use net to evaluate whether the business is working.
How we do it
Orcas Prime charges 3.5% + GST of net sales after returns and RTOs are deducted. When a shipment is refused and comes back, it leaves the base we bill on.
This is the most differentiating fact about how we work, and it exists for exactly the reason described above — the RTO problem should sit on the same side of the table as the people who can do something about it.
Full detail on the pricing page.
Sources
RTO rate ranges from published Indian logistics and D2C analyses, 2026, including GoKwik and Shipmozo. Worked examples are illustrative arithmetic — substitute your own RTO rate and margin.