In business, income (revenue) is an important indicator of a company’s success and sustainability. In general, revenue is the amount of money a company earns from selling products or services in a certain period.
The importance of income in business can be seen from various points of view. First, revenue is the main source to cover a company’s operational costs, including employee salaries, operational expenses, and investments for future growth. Then, stable income can increase investor confidence, which will help the company access external sources of funds for business expansion or development.
Regarding this, crypto investment is an innovative way to increase company income. With their high volatility, cryptocurrencies offer attractive investment opportunities for companies investing in digital assets.
Now, read the following review to understand revenue better, the factors influencing it, how it differs from income, how to calculate it, and smart tips for increasing it!
What is Revenue?
Revenue or income is the result of the core operational activities of a business or company. In another sense, revenue is the income that the company can obtain through the main activities or activities carried out. Revenue can also be interpreted as the result of all business activities recorded in the financial statements during a certain period. This note is still the gross total before deducting production costs and other elements.
The value revenue is included in the investments that investors must make, which the total value of the return or discount obtained will then reduce. On the other hand, revenue can also be understood as the net profit generated from business activities during a certain period.
Factors Impacting Revenue
Revenue is often considered a measure of a company’s success. Several factors can influence a company’s revenue, including product prices, yield management, and product marketing. The following is an explanation of each, namely:
1. Product Price
The first factor influencing revenue is determining the selling price of goods and services. When setting prices, companies should consider carefully. This decision directly impacts consumers’ purchasing power and the profits that companies can earn.
2. Yield Management
Yield Management includes pricing strategies. For example, offering discounts or cashback when consumers buy goods in certain quantities. By managing output effectively, companies can stimulate demand and increase sales volume.
3. Product Marketing
The third factor is product marketing. If the product is not marketed well, it will be difficult for consumers to know about its existence. As a result, the company’s revenue value could decrease due to the lack of an effective sales process.
What Are the Sources of Revenue?
The source of revenue is an element that needs special attention. Mistakes in determining the wrong source of income can affect the amount of income that will be obtained and are closely related to measurement issues of revenue. According to the Indonesian Accountants Association (IAI), revenue can arise from the following transactions and events, including:
1. Sales of goods
Includes goods the entity produces for sale and goods resold, such as merchandise purchased by retailers or land held for resale.
2. Sales of services
Related to implementing the entity’s tasks that have been contractually agreed to be carried out during one period. These services can be provided in one period or more than one period.
3. Use of entity assets by other parties
The use of this asset produces revenue in the form of the following, among others:
- Interest, namely fees for using cash or cash equivalents or amounts owed to the entity.
- Royalties, namely fees for the use of the entity’s long-term assets.
- Dividends, refer to the distribution of profits to equity investment holders by their portion of ownership in a certain capital group.
Types of Revenue in General
In general, revenue can be divided into several categories based on the source of income. The two main categories are operating revenue and non-operating revenue. The following is an explanation of each, namely:
1. Operating Revenue
Operating revenue is revenue obtained directly from the company’s core business. Revenue is related to the company’s main activities, such as selling goods/products and providing services.
2. Non-operating Revenue
Non-operating revenue is a type of revenue that comes from additional sources of income. This includes profits from stock investments, interest from bank deposits, and other business activities carried out by the company but not directly related to core business activities.
Types of Revenue in the Crypto World
As for the crypto world, individuals or companies can obtain several types of revenue. Some are from crypto activity, such as yield farming, trading, and staking. Here is an explanation related to each type of revenue in the crypto world:
1. Yield Farming
Yield farming is an activity of storing and locking crypto assets carried out by crypto asset owners in a decentralized finance (DeFi) protocol to obtain yield. Usually, these returns come from interest, new token rewards, or other profits from the protocol. Yield farming often uses high amounts of liquidity to achieve maximum returns.
2. Crypto Trading
Crypto trading is the activity of buying and selling crypto assets to profit from price changes. Crypto traders can use market fluctuations to carry out short-term (day trading) or long-term transactions. Profit will be obtained from the difference between the purchase and selling prices. Apart from that, traders can also take advantage of leverage to increase potential profits.
3. Crypto Staking
Staking crypto is the activity of storing crypto assets in a wallet/smart contract to support blockchain network operations. In this case, the staker (the party carrying out the staking) will receive a reward in the form of additional crypto tokens. The goal of staking crypto is to help maintain network security and provide incentives to asset holders to store them and use them to support network consensus.
What is the Difference Between Revenue and Income?
Revenue is often equated with production (income), although both have fundamental differences. Here is an explanation of the difference between revenue and income among which:
1. Based on Source of Income
Revenue is a term that refers to a company’s gross income, while income is defined as the net profit the company produces. Revenue includes the company’s total income, while income can only be calculated after all costs related to business activities are deducted from total revenue. Thus, income can be considered as part of revenue. On the other hand, revenue can come from product sales, deposit interest, and investments, while income only comes from the company’s operational activities.
2. Based on Calculations
Revenue is calculated by adding up the cost components, including cost of goods sold, business operational costs, and tax burden. On the other hand, income can be calculated using two methods, namely net profit and gross profit. In calculating gross profit, the company subtracts the revenue value from the cost of goods sold (COGS). Meanwhile, in calculating net profit, gross profit minus other costs related to the production process.
How to Calculate Revenue?
For beginners starting a business, the initial stage in estimating revenue is calculating the total funds obtained from company activities. The following are several methods for calculating revenue with three different types of methods, namely:
1. Total Revenue (TR)
This method is the most basic revenue calculation. Total revenue for this type is the basis for calculating revenue for other types of money. The formula that can be used to obtain information about the company’s total revenue is:
Total Revenue (TR) = Selling Price x Total Production
2. Average Revenue (AR)
The second method is to find out the company’s average revenue. The calculation is done by dividing total revenue by the value of the number of products sold or using the following formula:
Average Revenue (AR) = Total Revenue: Number of Products Sold
3. Marginal Revenue (MR)
The last method is to calculate marginal revenue (MR). MR is the additional revenue obtained from each additional unit of goods sold. The formula to calculate it is:
Marginal Revenue (MR) = Additional TR: Additional Number of Items Sold
Smart Tips to Increase Revenue
To increase revenue, several smart tips can be applied. However, it should be noted that implementing all of the following tips does not always work in every business because business risks and challenges can vary. Here are some smart tips to increase revenue, including:
1. Offer a discount
According to FreshBooks, giving discounts can make your product or service more attractive. If your product is in demand by many people, then automatically, revenue can increase. However, it would be best to be careful not to suffer losses because product sales are too cheap.
2. Use a bundling strategy
Glenn Smith Executive Coaching states that strategy bundling can improve revenue. Apart from that, it also helps customers by offering packages of goods they need. For example, if you sell a cellphone for IDR 5 million without a headset and charger, you can also sell headsets and chargers separately. However, by offering bundling packages, customers can buy everything at a more affordable price.
3. Offer a subscription system
The final tip for increasing revenue is to implement a subscription system. Indeed, such systems not only apply to software or media companies but can also be designed by sellers of goods. For example, The Body Shop has implemented a refill system, and in this case, customers can buy one bottle of the product and refill it when sold out at The Body Shop store.
Conclusion
In conclusion, there are various ways to use crypto investment to increase company revenue, including yield farming, crypto trading, and crypto staking. Yield farming is storing and locking crypto assets carried out by crypto asset owners in decentralized finance (DeFi) protocols to obtain yield.
Meanwhile, crypto trading is the activity of buying and selling crypto assets to make a profit from price changes. On the other hand, staking stores crypto assets in a special wallet/smart contract to support blockchain network operations. Furthermore, it needs to be understood that each strategy must be adjusted to the company’s long-term goals and predetermined risk profile. Therefore, it is important to understand that crypto investments involve high volatility, and decisions must be taken carefully.
Crypto Staking on INDODAX
So, now you understand what revenue is, the factors that influence it, what the sources are, the types in general and in the crypto world, the difference with income, how to calculate it, and smart tips for increasing it.
As additional information, as explained above, one way to increase revenue is to try staking crypto (Earn) on INDODAX. Please note that INDODAX Earn or crypto staking is one of the newest features from INDODAX, allowing crypto asset owners to lock their assets. The crypto assets locked in INDODAX Earn are like saving money in a deposit, which will provide rewards. The concept is similar to the interest earned from saving.
The INDODAX Earn/crypto staking feature can also be accessed anytime and anywhere easily via the INDODAX Mobile App. This feature can also be accessed via desktop on the INDODAX website on the INDODAX Earn page.
Are you interested in starting crypto staking on INDODAX? Start staking now!
