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21 Types of Revenue

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50 views23 pages

21 Types of Revenue

Uploaded by

zyrospek
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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21 Types of Revenue

Explained with Real-World examples

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Recurring revenue from customers subscribed
to your service.

Example
offers monthly and annual
subscriptions for discounts and offers on dining out.

Pros Cons

Predictable, steady cash High churn risk if value isn't


flow. consistently delivered.
Strong customer retention Initial customer acquisition
and loyalty. can be costly.
Revenue from product sales.

Example
Lifestyle generates significant revenue through the sale
of earphones, headphones, and other audio devices.

Pros Cons

Direct link between sales Revenue can be inconsistent.


and revenue. High competition may
Easier to scale with require price reductions.
marketing efforts.
Revenue from special projects related to
onboarding, usually in the first few months.

Example
Tata Consultancy Services often charges clients
for implementation and setup fees during the initial phase
of a software deployment.

Pros Cons

Immediate revenue boost Not recurring; one-time


from new clients. revenue only.
Helps cover initial service Can be resource-intensive.
delivery costs.
Revenue from affiliates who promote your
products/services.

Example
generates revenue through its affiliate program, where
bloggers and websites earn commissions by promoting products.

Pros Cons

Low upfront cost; pay-per- Requires careful tracking and


performance. management.
Expands reach through Dependence on affiliates'
affiliates. performance.
Revenue from sponsors, often used with
events or conferences.

Example
RCB earns sponsorship revenue through the brands
displayed on their jersey

Pros Cons

Can be substantial, Revenue may be irregular or


especially for high-visibility seasonal.
events. High dependency on event
Enhances brand association. success.
Revenue before discounts, refunds,
or revenue-sharing agreements.

Example
reports gross revenue from all sales across its
retail chains before any adjustments.

Pros Cons

Shows the maximum Doesn’t reflect the actual


potential revenue. profit.
Useful for initial assessments. Misleading if not understood
in context.
Revenue after adjustments like discounts,
refunds, and revenue-sharing.

Example
reports net revenue after accounting for
discounts during events like Big Billion Days.

Pros Cons

Reflects the actual earned May obscure overall market


revenue. size or demand.
Better for profitability Requires more detailed
analysis. accounting.
Added recurring revenue from existing
customers.

Example
Freshworks increases expansion revenue when customers
upgrade their subscriptions or add new features.

Pros Cons

Higher customer lifetime Dependent on continuous


value. product/service
Lower acquisition costs improvement.
compared to new Risk of overcomplicating
customers. offerings.
A reduction in recurring revenue from existing
customers.

Example
may experience contraction revenue when users
cancel their Swiggy One subscription.

Pros Cons

Identifies at-risk customers Negative impact on overall


early. revenue growth.
Can prompt proactive May indicate deeper issues
customer retention efforts. with product/service.
Gross revenue prior to any marketplace
adjustments.

Example
calculates its GMV from all items sold on its
platform before taking out returns or discounts.

Pros Cons

Measures total sales activity Overstates actual revenue if


on the platform. adjustments are significant.
Useful for growth and scale Doesn’t reflect the
assessments. company’s net take-home.
Revenue from Software as a Service (often
recurring).

Example
Zoho generates recurring revenue through its suite
of SaaS products like CRM, Mail, and Books.

Pros Cons

High margins with recurring Initial development costs can


revenue. be high.
Strong customer retention Churn can quickly erode
with the right product. revenue base.
Revenue customers have committed to on a
monthly recurring basis.

Example
India earns MRR from users subscribing to their
streaming services.

Pros Cons

Provides consistent monthly Prone to higher churn


cash flow. compared to annual plans.
Easier to track growth and Requires constant value
predict revenue. delivery to retain customers.
Revenue customers have committed to on an
annual recurring basis.

Example
Adobe Creative Cloud earns ARR from customers
who subscribe to its services annually.

Pros Cons

Higher upfront cash flow. Harder to convince


Lower churn rates customers to commit
compared to monthly upfront.
subscriptions. Renewal periods can cause
revenue fluctuations.
Revenue based on actual usage
of a service.

Example
India charges clients based on the actual usage of
their cloud computing services.

Pros Cons

Scales with customer needs Revenue can be


and usage. unpredictable.
Attractive to cost-conscious May require complex billing
customers. systems.
Revenue from licensing an asset.

Example
earns licensing revenue from its software products
used by various companies worldwide.

Pros Cons

High margins with low Requires strong intellectual


ongoing costs. property.
Can generate passive Vulnerable to legal disputes
income. over rights.
Revenue from interest earned on loans or
investments.

Example
State Bank of India generates interest revenue from loans
provided to customers.

Pros Cons

Predictable and consistent Dependent on economic


income stream. conditions and interest rates.
Enhances overall Risk of non-payment or
profitability. default.
Revenue from grants, often provided by the
government.

Example
received grant revenue from the
Indian government for COVID-19 vaccine development.

Pros Cons

Doesn’t require repayment. Often comes with strict


Supports R&D and guidelines and usage
innovation restrictions.
Non-recurring and
competitive to obtain.
Catchall for revenue that isn’t core to the
business.

Example
Reliance may classify revenue from selling JioPhones
or accessories as 'other revenue.’

Pros Cons

Captures miscellaneous Doesn’t contribute


income streams. significantly to core business.
Can provide additional Difficult to predict and may
revenue sources. fluctuate.
Revenue from a deal committed to over
multiple years.

Example
secures multi-year contracts with global companies,
ensuring steady revenue streams.

Pros Cons

Provides long-term revenue Ties up resources for


stability. extended periods.
Builds stronger client Risk of overcommitting or
relationships. underdelivering.
Revenue from charged premiums, typically in
insurance.

Example
Life Insurance Corporation earns premium revenue
from various insurance policies.

Pros Cons

Consistent revenue stream. Highly regulated and


Predictable cash flow in the competitive industry.
insurance industry. Requires significant actuarial
expertise.
Revenue from partnerships, like referral fees or
revenue shares.

Example
earns partnership revenue through collaborations
with financial institutions for UPI transactions.

Pros Cons

Expands reach through Dependent on the partner’s


strategic partnerships. performance.
Often involves minimal Revenue may be shared,
upfront costs. reducing margins.
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