Increasing Your Business Revenue

While there are nearly limitless ways of creating a revenue when you start a business, once you have the momentum and the business is running, there are only four ways to increase that revenue and growth:

-Increase the number of customers.
-Increase the amount spent per transaction.
-Increase the frequency of transactions per customer.
-Increase the price of your product.

There are also cost-cutting methods that may add a more appealing profit margin to your company, but this will not grow your business or increase your revenue. Depending on your industry, your clientele, and your production capabilities, there are pros and cons to each method.

Increasing the number of customers, while the idea method of growth in a company, presents a couple of issues. It usually means advertising, free samples, more output, or more services to attract the new customers, all of which will cost you money. You also have to be aware of the kinds of customers you are attracting. If you consistently have growth in customers, but those customers complain about pricing, are a drain on your support, or constantly requiring free products or services or refunds in order to walk away happy aren’t going to build your revenue stream. Make sure that bringing in more customers is also focused on bringing in the right customers for your business. Word-of-mouth from happy customers will always be the ideal way to attract new customers, regardless of product or the size of your business, so make sure that you don’t lose focus on the customers you already have.

Increasing the amount spent per transaction can be achieved with techniques like bundling products together, or up-selling to premium support options instead of basic ones. For a company that sells products, incentives (like free shipping, a small gift, or a case of a related product) or volume discounts for reaching a higher price point transaction can be beneficial. For a tech company, this can also be something like charging a small amount for the app, with more options that can be unlocked for a certain price within the app.

Increasing frequency of transactions can use strategies like adding subscription-based sales of content, services, or products. That is such an excellent way to make sure that your customer doesn’t just purchase from you once, that many startups are only using subscription-service for their products. Frequency discounts, like sandwich-shop punch cards, can help encourage someone to come back more often. You can also vary your offerings to encourage people to purchase the new thing, like restaurants with seasonal menus. Be wary of techniques that encourage more frequent buying by decreasing pack size, or encouraging more use. Like the old wive’s tale of “making the hole in the toothpaste tube wider, so users unwittingly squeezed more toothpaste with every use and making them consume more toothpaste.” If you have a customer base established, these practices may be noticed and lead to feelings of disenfranchisement or disillusionment with your product.
Raising your prices is the simplest method, but also the most likely to upset customers. Assuming that your transaction volume, size, and frequency stays the same, raising prices will bring in a larger amount of revenue for the same amount of company effort. Most people understand the costs associated with business, and inflation is a given, so you will get some leeway in the minds of your customers, but it is very easy to cross over into a price point that your competitors can undercut or that your customers are unwilling to pay.