Main Types of Revenue
It’s entirely possible that there are income streams you’re not currently delving into but could. Following we explore the main types of revenue that could very well assist you.
1. Selling Assets
The most common methods for generating income is to sell assets. This involves the customer buying a product and using it as they please.
However, it’s possible to diversify your categories or partner with other companies to sell their products. Just like Amazon who no longer just sells books.
If your business is primarily a service provider, you might be able to increase your income by offering products associated with your services. For instance, hairdressers often sell hair products to their customers to use at home. If you’re a fitness gym you could sell training equipment, or a landscaping company might sell materials to do-it-yourselfers.
In this way businesses can leverage additional avenues to increase sales revenue and expand their market share.
2. Usage Fees
Usage fees are revenue streams where businesses charge based on how often, or the period of time, customers use their products or services. The more a customer uses a product or service, the more they pay.
This can apply in industries such as telecommunications, where companies charge a monthly set bill but charge extra if usage goes over a certain amount. Then there are hotels who charge customers for the number of nights rooms are used, however may offer a lower daily rate as a reward for booking more nights. While package delivery services charge customers for the delivery of parcels from one location to another and may increase their fee during peak delivery periods.
3. Subscription Fees
Businesses that offer customers continued access to their products or services can leverage subscription fees to generate a predictable and steady income stream.
Netflix and gym memberships are popular examples of this type of income stream aimed at individual consumers, while there are plenty of digital providers that offer subscriptions to businesses. If your business offers educational content, you might offer subscriptions for access to it. Or if you are a business with one-time entrance fees, consider offering a subscription as well eg. museum memberships, season passes.
Subscriptions offer reliable revenue sources because they require low incremental automated payments, making it easier for businesses to sell and customers to purchase.
4. Renting, Leasing and Lending
With this type of revenue stream businesses temporarily allow customers to use an asset for a fixed period. AirBnB and car rental companies fall into this category.
For instance, restaurants and hotels that lease out function rooms could also provide additional equipment for hire, while businesses that have assets that are not always in use can lease them out during dormant periods.
5. Licensing to Third Parties
You can take advantage of licensing assets to third parties to use for a fee while retaining the copyright. This revenue stream is common in industries such as photography or stock photos and music.
6. Brokerage Fees
If your business is in a position to be a matchmaker (to pair people with other people or companies with other companies), consider opening up a brokerage fee revenue stream.
Real estate agents and mortgage brokers base their income on this arrangement. Get creative when you think about how you become an intermediate on behalf of other parties. For example, credit card providers earn revenue by taking a percentage of each sales transaction executed between customers and merchants. Could you perform a similar service?
7. Advertising Fees
With an advertising revenue stream, you make money by taking payments for showcasing a product, service or brand on your online or offline property. If you’ve already built a high-visibility asset, advertising could be a powerful way to make money.
Some businesses get creative with this income method. For instance, one grocery store chain started selling advertising space on its shopping trolleys. Local businesses saw an opportunity: this advertising space would be in the line of sight of consumers who shop for local households each week.
Offering advertising on your digital assets might also be a lucrative income stream. If you receive high traffic or have a large subscription base there’s the option to receive income straight up for a business to advertise with you. Alternatively there’s the popular option of affiliate marketing where you earn money when a customer makes a purchase using a special code you’ve mentioned, or Google display ads where you earn money when someone clicks on the ad.
Does your business have a successful podcast? Read advertisements during your productions. Do you have a growing YouTube subscriber base? Offer promotions for complementary products and services.
Choosing your Additional Revenue Streams
With so many revenue opportunities out there, how will you decide which to pursue?
Analyzing your customer segments is crucial. Most businesses cater to multiple target audiences, each with different goals and objectives. Understanding the needs of each customer segment can help identify additional ways to capture them through revenue streams.
For example an events planning company might cater to both conference planners and local business owners. Conference planners want to sell tickets and get more sponsorships, while local business owners want to raise brand awareness and make sure consumers know how to find them. If you can help them with selling tickets and raising brand awareness, you could use a usage fee stream of income to augment your current income.
For the conference planners, a partnership with you could potentially lead to an ongoing relationship. With the business owners, on the other hand, you may be looking at a one-time project until they gain footing and have more cash to spend on marketing.
In many cases, diverse revenue streams behave synergistically, helping you to capture a larger market share and spreading your influence far and wide. So working out exactly who your customer segments are will allow you to determine any additional ways your business can capture them that you aren’t currently providing.
Assistance with Harnessing Different Revenue Streams
When you’re entrenched in your current business operations, it’s not easy to envision alternative revenue streams or know how to implement them into your current operations. This is where discussing your options with an external business expert can help.
Our team have assisted businesses with taking advantage of new revenue opportunities that allow them to remain strong during unpredictable times and better manage cash flow. Read about our client Susan Cooper, the Co-Founder and CEO of Bright Star Kids, and how their hugely successful business used revenue streams to become even stronger with support and advice from BLG.
Our team are Wollongong Accountants who service right around Australia, so if you are investigating revenue streams or would like to discuss other business scenarios, make sure you organise a chat with one of our Directors. They can set you on your way to achieving the best possible outcomes for your business and securing your future.
Whatever you decide we wish you and your business every success!