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Main Types of Revenue
If you sense that you’re leaving money on the table, explore possible income streams you’re not currently tapping. In other words, ask yourself, “how else can we make money?”
1. Selling Assets
The most common method for generating income is to sell something. Your customer buys the product, and they do with it what they please.
If your business primarily offers services, you might be able to increase your income by offering products associated with your services. For example, a tutoring company could start selling educational materials, or a landscaping business could start selling landscaping materials to do-it-yourselfers.
2. Usage Fees
With a usage fees revenue stream, a company makes money based on the frequency or period of time customers use their service. The more a service is used, the more the customer pays.
A telecommunications operator may charge customers for the number of minutes spent on the phone. A hotel charges customers for the number of nights rooms are used. A package delivery service charges customers for the delivery of a parcel from one location to another.
3. Subscription Fees
Businesses generate subscription fee revenue when customers pay for ongoing access to their products or services.
Netflix, Spotify and gym memberships are good examples of this type of income stream. If your company produces helpful content, you might offer subscriptions for access to it. In addition to charging one-time entrance fees to your business, consider offering a subscription as well (think museum memberships, season passes, etc.).
Subscriptions are reliable revenue sources, and can be reasonably easy to sell due to the low incremental automated payments required.
4. Renting, Leasing and Lending
With this type of revenue stream, you temporarily allow customers to use an asset for a fixed time. Airbnb and CarNextDoor fall into this category.
If your business has assets that aren’t always in use, you might consider leasing them out during their dormant periods.
5. Licensing to Third Parties
You can take advantage of licensing to third parties when you retain an asset’s copyright but allow third parties to use it for a fee. We often see this type of revenue stream used for photography 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 insurance brokers base their income on this arrangement. Get creative when you think about how you might intermediate on behalf of other parties. For example, credit card providers earn revenues 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 with affiliate marketing. Does your business have a podcast? Read advertisements during your productions. YouTube videos? 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?
Analyse your Customer Segments
Most businesses have more than one target audience. For instance, an events planning company caters to both conference planners and local business owners.
Each customer segment has different goals and objectives. The conference planners want to sell tickets and get more sponsorships. The local business owners want to raise brand awareness and make sure local consumers can find them in community searches. 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 will (hopefully) be 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. Discussing your options with an outside business expert can help.
We’ve assisted businesses with doubling and even tripling their revenue through innovative planning and management. Read about our clients Homa and Lilly Alenaddaf, owners of the international sports equipment manufacturer SMAI, and how they tripled their revenue by partnering with us at BLG.
Discover the different types of revenue streams that will benefit you, alongside other business scenarios, and organise a chat with one of our Directors. We look forward to helping you achieve your business goals!
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