Revenue Streams

Revenue Streams

Revenue Streams

 

Revenue– The total amount of money a company generates before removing any expenses.

 

Profit–The amount of money you have after all expenses are paid.  

 

●      Any enterprise that does not generate enough revenues to exceed its costs and expenses will eventually fail.  In developing your plan, one of the first things you must do is find an appropriate and realistic revenue model that can generate enough revenue to make your entrepreneurial venture a success.

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 Types of Revenue Streams

 Transaction Revenue –Proceeds from sales of goods (products) that are usually one-time customer payments. (Asset sale–Canvas Model language)

Examples:

●      Amazon

●      Walmart

●      Grocery Store

Service Revenue –Earnings from ongoing payments for continuing access to services.

Examples:

●      Dog Walking

●      Consulting –engineer, architect, environmental writer

●      Car repair

●      Hotel stays.

Recurring Revenue–Earnings from ongoing payments for continuing access to services.

●      The recurring revenue model is the model most used by businesses because it is predictable, and it assures the company’s source of revenue as ongoing. Possible recurring revenue streams include:

 

1.              Subscription–Fees charged for use of a product or service.

 Examples:

●      Netflix, Hulu

●      Cell phone plan

●      Magazine, Newspaper

●      Online music

 

2.              Renting/Leasing

 Examples:

●      Renting a home or office space

●      Leasing a car for a 2-year term

 

3.              Licensing–Fees charged  to another business that wants to use the content for its own needs. Licensing allows rights holders to generate revenues from their property without having to manufacture a product or commercialize a service.
 
Examples:
●      Technology sector patent holders grant other companies the right to use a patented technology in return for a license fee like Microsoft Office.

 

4.              Brokerage fees–Fees charged for pairing people and companies together and facilitating the start of a deal between the two parties.
 

Example:
●      Credit card providers earn revenues by taking a percentage of the value of each sales transaction executed between credit card merchants and customers.
●      Brokers and real estate agents earn a commission each time they successfully match a buyer and seller.

 5.              Advertising–This Revenue Stream results from fees charged for advertising a particular product or service.

 Examples:

●      Advertising on a private website.

●      Advertising on Facebook or Instagram

●      Advertising in the newspaper.

 
Sources:
https://www.strategyzer.com/business-model-canvas/revenue-streams

 

https://corporatefinanceinstitute.com/resources/knowledge/accounting/revenue-streams/

https://corporatefinanceinstitute.com/resources/knowledge/accounting/revenue-streams/



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