This revision video considers some of the ways businesses can increase their total revenues.

Factors influencing business revenues

In some industries & markets, revenues are highly cyclical - i.e. exposed to changes in the macroeconomic cycle (link to products having a high, positive income elasticity of demand).

For some goods and services, demand is “counter-cyclical” i.e. may rise during a recession / slowdown.

Other businesses might be exposed to external economic shocks e.g. those sensitive to changes in global trade / public health crises.

There are two main approaches to increasing total revenue:

1. Increasing the quantity (amount, volume) sold over time
2. Achieve a higher selling price per unit (average revenue)

Increasing the volume of sales:

• Enter new markets with existing products incl. targeting overseas markets
• Broaden the product range to widen the revenue base
• Extend the product life cycle for existing goods and services
• Engage in price discrimination strategies

Achieve a higher selling price per unit:

• Premium pricing for higher quality goods and services
• Targeting sales in countries where customers have a higher per capita incomes
• Create artificial scarcity of supply to drive average selling price upwards
• Use product bundling to increase the average order value