Types of Service Revenue
There are various types of service revenues. They are:
Recurring revenue
Recurring revenue refers to the regular and predictable cash flow generated from ongoing service subscriptions or payments, such as subscriptions, licenses, or rent. It can be used to forecast future sales due to its reliable and consistent nature.
Service revenue
Service revenue is the income earned from a specific service, whether it is based on a fixed number of hours or spread over a period of time. It can be recurring or non-recurring, depending on the nature of the service. For example, a real estate broker earning commissions from house sales is one example.
Transaction-based service
This type of service revenue includes one-time payments. It could be a one-time consultation or a one-time service delivered by a company to a customer. Transaction-based revenue, for the most part, is not recurring.
It can occur in several ways.
I. Licensing: In this type of service, customers have to make payments only once. Microsoft Windows is an example of this kind of service.
II. Pay-per-use: In this kind of service, customers pay for the services based on memory, resource, or time consumed. It is often used by cloud companies such as Google Cloud Platform.
III. Freemium: In this kind of service, a customer can avail of the primary services for free but will have to pay for unlocking and using the additional features. For example, Zoom and YouTube are examples of this.
Project revenue
it is the income earned for a specific project, often predicted in advance and can extend over multiple accounting periods. It can be divided into quarters to track the progress of the project. Examples include construction of roads, bridges, and metro systems.