Incremental Revenue...aka "vacation money"
by Reed Sawyer
+1 Demo: Async load
I hated it. I hated looking out my window and seeing people staring in at me. I kept the curtains shut, and I complained to my Aunt Betty about it. (She was one of the partners in the RV park business). "Why do we have to have those stupid campers outside of my windows? I hate it."
My Aunt Betty was wise, and she said, "Reed, you're looking at it all wrong. All of the fixed costs of the park have already been paid for, we didn't have to spend any more money developing those lots. The ONLY cost that we have is for water and electricity, and those are minimal. This is VACATION MONEY."
Once she articulated it like that, I loved it. I wanted us to get more campers around our houses.
Let's examine what incremental revenue is: Incremental revenue is revenue that comes in addition to your regular revenue, but without additional variable costs (or very minimal costs). The fixed costs have already been paid, your variable costs are low, and the incremental revenue is almost pure profit. It is "VACATION MONEY".
Is there any way that your business can develop additional incremental revenue? What processes, space, advantages does your business have that it isn't using all the time that people need? Can you create some incremental revenue streams from unused capacity?
If you are a bar/restaurant owner: Do you have a slow night of the week that is underutilized? Can you contact insurance companies, car dealerships, any sales organization and offer to let them use a meeting room, FOR FREE, on that night? (What will they do? They will probably all eat a meal, have a few drinks, and you might even have them start thinking of the restaurant as "their place" and start coming back more frequently.) What is your cost? Nothing. You already had that room available. What is your possible incremental revenue? Possibly an average of $10 per head, minimum. If you have 20 extra customers per week, on your slowest night, will that give you more "heat" and bring in more customers?
Can you sell advertising space on your menu? Can you talk to every business in a one mile radius and see if you can deliver sandwiches daily? Weekly? Can you give the business owners a 20% discount on their morning coffee and pastry? Can you arrange with the business owners to have celebratory dinners at your restaurant, on slow nights, at a discount?
If you are a commercial dry cleaner: Do you have large washers and dryers? Can you do napkins and tablecloths for restaurants? Can you do shirt laundry for a car dealership/body shop? If you have excess time in the day where your machines are not running, can you find a company that needs to have their uniforms washed daily? What should you charge? Whatever you can get, but your fixed costs and variable costs are already paid, this is pure profit.
Can you offer an expedited service, for a premium? If someone wants a garment cleaned in an hour, can you do it? (If your boilers are still on and you have your crew available?) Can you offer premium service, for a little bit extra?
Can you wash welcome mats for businesses? (Most welcome mats are too big for a normal washing machine, you have a unique advantage over the small machines.) What is your cost of doing them? (Remember that you don't have to press or dry the mats.) Can you use that as an intro to doing uniform laundry?
If you have public restrooms with lots of traffic: Can you do advertisements in your bathroom over the urinals? (What is your cost for a small advertising display case? If you charged $20 a month, would you recoup your costs in the first month?)
If you have lots of foot traffic, and excess space: Can you offer storage lockers? How quickly would you recoup your money? When the people come back to your store, can you upsell them into another purchase?
Can you have a soda cooler next to the cash registers? People will pay premium for convenience items made on impulse. Can you have high impulse items there as well?
If you have a service business: Can you offer seasonal checkups (air conditioners, water heaters, appliances, etc...) for a nominal fee? (If they need repairs, you are almost guaranteed to get the work.)
If you have enough "incremental revenue" sources, would that help your business? Would that "vacation money" make your business more profitable, and make it easier to sell when you are ready to sell?
Can you brainstorm and find a dozen different incremental revenue sources that are untapped, and make those available? When you let your customers know that you have "off the menu" choices and services available, and let them know that you are there to help them with ANY of their needs, you might just pick up additional ideas, and additional revenue.
Keep your core business healthy, but utilize excess capacity, space, resources for incremental revenue, and watch your profits soar.
by Reed Sawyer
I hated it. I hated looking out my window and seeing people staring in at me. I kept the curtains shut, and I complained to my Aunt Betty about it. (She was one of the partners in the RV park business). "Why do we have to have those stupid campers outside of my windows? I hate it."
My Aunt Betty was wise, and she said, "Reed, you're looking at it all wrong. All of the fixed costs of the park have already been paid for, we didn't have to spend any more money developing those lots. The ONLY cost that we have is for water and electricity, and those are minimal. This is VACATION MONEY."
Once she articulated it like that, I loved it. I wanted us to get more campers around our houses.
Let's examine what incremental revenue is: Incremental revenue is revenue that comes in addition to your regular revenue, but without additional variable costs (or very minimal costs). The fixed costs have already been paid, your variable costs are low, and the incremental revenue is almost pure profit. It is "VACATION MONEY".
Is there any way that your business can develop additional incremental revenue? What processes, space, advantages does your business have that it isn't using all the time that people need? Can you create some incremental revenue streams from unused capacity?
If you are a bar/restaurant owner: Do you have a slow night of the week that is underutilized? Can you contact insurance companies, car dealerships, any sales organization and offer to let them use a meeting room, FOR FREE, on that night? (What will they do? They will probably all eat a meal, have a few drinks, and you might even have them start thinking of the restaurant as "their place" and start coming back more frequently.) What is your cost? Nothing. You already had that room available. What is your possible incremental revenue? Possibly an average of $10 per head, minimum. If you have 20 extra customers per week, on your slowest night, will that give you more "heat" and bring in more customers?
Can you sell advertising space on your menu? Can you talk to every business in a one mile radius and see if you can deliver sandwiches daily? Weekly? Can you give the business owners a 20% discount on their morning coffee and pastry? Can you arrange with the business owners to have celebratory dinners at your restaurant, on slow nights, at a discount?
If you are a commercial dry cleaner: Do you have large washers and dryers? Can you do napkins and tablecloths for restaurants? Can you do shirt laundry for a car dealership/body shop? If you have excess time in the day where your machines are not running, can you find a company that needs to have their uniforms washed daily? What should you charge? Whatever you can get, but your fixed costs and variable costs are already paid, this is pure profit.
Can you offer an expedited service, for a premium? If someone wants a garment cleaned in an hour, can you do it? (If your boilers are still on and you have your crew available?) Can you offer premium service, for a little bit extra?
Can you wash welcome mats for businesses? (Most welcome mats are too big for a normal washing machine, you have a unique advantage over the small machines.) What is your cost of doing them? (Remember that you don't have to press or dry the mats.) Can you use that as an intro to doing uniform laundry?
If you have public restrooms with lots of traffic: Can you do advertisements in your bathroom over the urinals? (What is your cost for a small advertising display case? If you charged $20 a month, would you recoup your costs in the first month?)
If you have lots of foot traffic, and excess space: Can you offer storage lockers? How quickly would you recoup your money? When the people come back to your store, can you upsell them into another purchase?
Can you have a soda cooler next to the cash registers? People will pay premium for convenience items made on impulse. Can you have high impulse items there as well?
If you have a service business: Can you offer seasonal checkups (air conditioners, water heaters, appliances, etc...) for a nominal fee? (If they need repairs, you are almost guaranteed to get the work.)
If you have enough "incremental revenue" sources, would that help your business? Would that "vacation money" make your business more profitable, and make it easier to sell when you are ready to sell?
Can you brainstorm and find a dozen different incremental revenue sources that are untapped, and make those available? When you let your customers know that you have "off the menu" choices and services available, and let them know that you are there to help them with ANY of their needs, you might just pick up additional ideas, and additional revenue.
Keep your core business healthy, but utilize excess capacity, space, resources for incremental revenue, and watch your profits soar.
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