💲 What is Revenue?
Definition: Revenue (also called turnover or sales revenue) is the total income a business earns from selling its goods or services.
Formula: Revenue = Price per unit × Quantity sold
Example: A shop sells 500 T-shirts at $20 each. Revenue = 500 × $20 = $10,000
Revenue is NOT profit! Revenue is the total money coming in BEFORE any costs are deducted 💡
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🌊 Revenue Streams
Definition: A revenue stream is a distinct source of income for a business. Most businesses earn money in more than one way.
Common revenue streams
- Sales revenue — selling goods or services directly
- Advertising revenue — charging others to advertise (e.g. Google, YouTube)
- Subscription revenue — recurring fees (e.g. Netflix, Spotify)
- Licensing and royalties — allowing others to use your brand or product
- Commission — earning a percentage on transactions (e.g. estate agents)
- Rental income — renting out property or equipment
Example: Apple earns from product sales (iPhones), services (Apple Music subscriptions), app store commissions, and licensing fees — multiple revenue streams! 🍎
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🔑 Why Multiple Revenue Streams Matter
Relying on just one source of income is risky. Diversifying revenue streams helps a business survive downturns.
- Reduces risk — if one stream falls, others can compensate
- Increases total revenue — more ways to earn money
- Stabilises cash flow — subscriptions provide predictable income
- Attracts investors — diverse income is seen as lower risk
Think of revenue streams like legs on a stool — the more legs, the more stable the business! 🪑
🔢 Revenue Calculations
You will be expected to calculate revenue from data provided in exam questions.
Key formulas: Total revenue = Price × Quantity sold
Total revenue (multiple products) = (Price₁ × Qty₁) + (Price₂ × Qty₂) + ...
Example: A café sells 200 coffees at $3.50 and 150 cakes at $4.00. Coffee revenue = 200 × $3.50 = $700 Cake revenue = 150 × $4.00 = $600 Total revenue = $700 + $600 = $1,300
Always show your working in calculations — even if you get the final answer wrong, you can still pick up method marks! ✍️