The Concept of Sources of Revenue

Revenue streams represent the various sources of income for a company. Sales revenue accounts tend to be more diverse than service revenue accounts. Examples of revenue sources include product sales, subscriptions, advertising, and commissions. Increasing activity in these sources leads to higher revenue levels, such as selling more vegetables in a grocery market.

The Different Sources of Revenue

There are various sources of revenue for a company. The are as follows.

1. Product sales:

This is the main source of operating revenue for businesses, categorized as sales revenue or service revenue. For instance, a stationery shop selling pens or a gardener offering services for a fee.

2. Subscription fees:

Subscription fees are recurring payments made by consumers for a product or service, such as monthly or yearly subscriptions. For instance, a person's payment for an Amazon Prime Video subscription to access its services and watch movies.

3. Interest amount:

This source of revenue records the interest earned on investments such as debt securities. It is a type of non-operating revenue. For example, interest earned by a makeup company from its investments in a perfume company.

4. Usage fees:

This is a source of revenue that refers to the fees paid by a user of a particular product for a specific amount of time to the product owner. For example, the usage fees paid by magazine editors to a photographer for using the photos taken by them in their magazine.

5. Rent, leasing, or lending revenue:

This is a part of non-operating revenue and records the amount earned from renting out buildings or equipment. For example, a jewelry shop rents out a part of its premises to a café.