One night at Mill Lane: At 2 a.m. Priti and her bakers start the night shift at the Mill Lane bakehouse. By the time the vans leave at 5 a.m., about 1,200 loaves are on their way to the three shops.
Every loaf sells for $3. How much money do those loaves bring in?
Multiply what one loaf sells for by how many are sold. The money a business takes from selling its products is its total revenue (also called sales revenue, or turnover).
Total revenue = price × quantity sold
One night's bread, worked out
The price: $3 a loaf
What a customer pays for one loaf at the counter, in any of the three shops.
The quantity: 1,200 loaves
How many are sold, not how many are baked. A loaf still on the shelf at closing time brings in nothing.
Total revenue: $3,600
$3 × 1,200 = $3,600 from one night's bread.
Revenue is not what the bakery keeps: The $3,600 is money coming in before anything is paid out. The flour from Valley Grain, the bakers' wages and the rent on the shops, the costs from 3.3.1, all come out of it.
What is left once the costs are paid is the profit (1.3.2). A business can take a lot of revenue and still make very little profit.
Most shops sell more than one thing. Work out the revenue from each product with the same formula, then add them up. Here is one Tuesday at Aisha's High Street shop.
| Product | Price | Quantity sold | Revenue |
|---|---|---|---|
| Loaves | $3 | 420 | $3 × 420 = $1,260 |
| Cakes | $4 | 150 | $4 × 150 = $600 |
| Lunches | $6 | 80 | $6 × 80 = $480 |
| Total revenue for the day | $1,260 + $600 + $480 = $2,340 |
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Where the $1,600,000 came from: In 2025 Lena's Bakery Ltd took $1,600,000 in sales. Not all of it came from bread on the counter.
Cakes and pastries, the lunches, and the bread and cakes delivered to cafés and hotels each brought in their own share.
Each separate source of a business's revenue is a revenue stream. Total revenue is all the streams added together, so the bakery's $1,600,000 is four streams.
| Lena's Bakery Ltd, 2025 | Revenue | Share of the total |
|---|---|---|
| Bread in the three shops | $960,000 | 60% |
| Cakes and pastries | $240,000 | 15% |
| Lunches | $160,000 | 10% |
| Wholesale to cafés and hotels | $240,000 | 15% |
| Total revenue | $1,600,000 | 100% |
Selling what you make is only one kind of stream. A business can also charge people regularly, let others use what it owns, or earn a cut of someone else's sale. These are the common ones, with an example of each.
Selling (sales revenue)
- Goods or services sold to customers
- Lena's loaves, cakes and lunches over the counter
- Wholesale: bread sold in bulk to cafés and hotels
Regular payments
- Subscriptions: a fixed fee every month, as a music streaming service charges
- Membership fees, as a gym or a museum charges
- Rental income: charging others to use a building or equipment
Using a name or an idea
- Royalties: paid each time someone uses your song, book or patented design
- Licensing fees: paid to use a brand name, for example on a range of toiletries
- Franchise fees: paid by a franchisee to trade under a well-known name
Other streams
- Advertising: selling space to other businesses, as a free app or a magazine does
- Commission: a percentage of each sale made for someone else, as an estate agent takes
- Donations: gifts from the public, a stream for an NGO such as Second Helpings
Finance is not revenue: A bank loan, new shares, crowdfunding, a grant or a subsidy also bring money in, and so does using the profit a business has kept. All of them are finance (3.2.1, 3.2.2): money raised to pay for the business, not earned by selling to customers. None of them is a revenue stream.
Second Helpings: Second Helpings sells lunches in its café and is given donations: two revenue streams. The grant from the foundation that supports it is finance.
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The bakehouse is empty all day: The night shift at Mill Lane ends when the vans leave at 5 a.m. From then until 2 a.m. the next night, the bakehouse and its ovens, $620,000 of them, stand idle.
Lena and Marco look for new revenue streams that use what the bakery already has.
Three new streams Lena is weighing
Rent the ovens by day (rental income)
A wedding caterer, Delia's Kitchen, would pay $150 a day to bake at Mill Lane from 9 until 5. The ovens are there anyway.
A bread club (a subscription)
Members pay $20 at the start of each month and collect two loaves a week from their nearest shop. The money arrives before the bread is baked.
Sunday baking classes (a new service)
Priti teaches twelve people at a time to bake sourdough, at $45 a place, on the afternoon the bakehouse is quiet.
Why bother, when bread already brings in two-thirds of the money? Because a business that earns in several ways is not at the mercy of one. If a supermarket opens next to the High Street shop and bread sales fall, the bread club, the caterer's rent and the classes keep money coming in.
What they give (advantages)
- Less risk: if one stream falls, the others keep revenue coming in
- Steadier revenue through the year: the bread club pays every month, even in a quiet January
- Assets that stood idle, such as ovens used only at night, start earning
- New customers, who may then buy the bread too
What they cost (drawbacks)
- Each stream takes time and attention away from running the shops
- A stream that goes wrong can harm the main business: a poor class is a poor review for the bakery
- New streams bring new costs, such as staff, insurance and cleaning
- Some depend on a partner: if Delia's Kitchen leaves, the rent stops
Streams with a pattern of their own
- Subscription. It is paid again and again, so the revenue is regular and known in advance (predictable), which makes planning easier.
- Advertising and commission. They grow with the number of users or sales, with little extra work for each one.
- Licensing a brand. It earns a fee without making anything, but the owner loses some control over how its name is used: a poor product under the brand damages its reputation.
2024 against 2025: Lena puts last year's streams next to this year's to see where the bakery grew, and where it did not.
| Revenue stream | 2024 | 2025 | Change |
|---|---|---|---|
| Bread in the three shops | $890,000 | $960,000 | +$70,000 (+7.9%) |
| Cakes and pastries | $225,000 | $240,000 | +$15,000 (+6.7%) |
| Lunches | $100,000 | $160,000 | +$60,000 (+60%) |
| Wholesale to cafés and hotels | $215,000 | $240,000 | +$25,000 (+11.6%) |
| Total revenue | $1,430,000 | $1,600,000 | +$170,000 (+11.9%) |
The last column uses a formula worth knowing by heart. A change in dollars says how much; a change in per cent says how much compared with where it started (the percentage change).
Percentage change = (new figure − old figure) ÷ old figure × 100
Lunches: ($160,000 − $100,000) ÷ $100,000 × 100 = 60%.
Forecasting revenue after a percentage rise
Start from the latest figure
Total revenue in 2025: $1,600,000. With the Station Road shop open, Lena expects a 15% rise in 2026.
Turn the rise into a multiplier
A 15% rise means the old figure plus 15% of it: 115%, so multiply by 1.15. A 15% fall would be × 0.85.
The forecast
$1,600,000 × 1.15 = $1,840,000 of revenue forecast for 2026.
Comment means read the numbers, with figures: A comment on revenue data says what the numbers show and proves it with figures: total revenue rose by $170,000, about 12%; lunches grew fastest, by 60%; cakes and pastries was the only stream to fall, by 4%.
A start, but not a comment: 'Revenue went up' is a start, but it uses no figure. Why revenue rose is a different question: a comment on the change is about the change itself.
Look at the shares as well as the totals. Bread in the shops is still more than half of everything the bakery sells, 60%, so a bad month for bread is still a bad month for the whole bakery, however well the lunches do.
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How this comes up: Revenue comes up as a short question first, then with a table or a chart of revenue.
The usual questions
- State two types of revenue stream for a business, for two marks. A list of the right kind of item is enough, with no description.
- Calculate the revenue after a percentage rise, for one mark.
- Comment on the revenue figures over several years, or on how the revenue from each product changed, for two.
The two-mark comment
- Say what happened. The overall picture: revenue rose every year, or one product grew while another fell.
- Prove it with the data. Quote the figures: the change in dollars, a percentage change, or the year the pattern turned.
- Look at the pattern, not just the two ends. Did the rise speed up or slow down? Did revenue rise even though the price fell?
- Stop there. A comment on the change does not need the reason for it.
Two traps: No figures, no full comment. 'Revenue increased' describes the table without using it. 'Revenue rose by $41 million in 2025, four times the $10 million rise of 2024' reads it.
A revenue stream is not a source of finance. Loans, new shares, crowdfunding, grants, subsidies and retained profit raise money for the business; none of them is earned from customers.
Using the table, comment on Goldcrust plc's sales revenue for 2023 to 2025.
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See the answer broken into clear points, with guidance on how each point earns marks.