Income: Definition, Types, and How to increase them. When it comes to money, people with businesses must master a wide variety of concepts that allow them to develop in the best way. For this reason, in today’s article, we teach you everything about income.
What is income?
Income is the increase in economic resources. We understand by all the profits that are added to the total set of the budget of an entity, whether public or private, individual or group. Income is both the monetary and non-monetary elements that accumulate and that consequently generate a consumption-profit circle.
Increase your income: Types of income depending on their periodicity
From the point of view of the frequency with which they take place, the types of income can be classified as follows:
Periodic or ordinary income
Referred to earnings received regularly and periodically. Figures that do not vary usually establish them. Examples of these can be retirement pensions, standard payrolls, or the amounts of membership fees for a specific group.
Non-periodic or extraordinary or variable income
This income occurs without forecast and usually independently. They would cover cases such as lottery prizes or the receipt of inheritances because of the death of a relative.
Increase your income: Types of income according to their nature
Depending on the source or origin from which an income comes, it is possible to make a classification of the different types of income:
It responds to income obtained as consideration for a service performed or goods offered. That is, they derive from performing economic activity. A simple example of this would be a working wage.
This is various income from property elements that do not imply active dedication as in the previous point. A sample is a rental charge by a landlord who makes a property available to others. This is also the case with intellectual or industrial property rights.
Income derived from a portfolio
Sometimes individuals and companies have a source of profit by owning financial instruments or securities that report income.
Increase your income: Types of income according to the ownership of the organization
Within the economic and financial spectrum, the types of income have a greater number of subdivisions. Hence, it is possible to distinguish between different types of income.
Proof of this is the marginal income and the total income of a commercial company or an institution, which are usually found in its annual accounts and financial statements.
Alternatively, another element of distinction is that of the economic field in which the company or institution operates. There are private income and public income:
Income in the private sphere
It would cover all that profit obtained by private individuals and by operating companies in the private sector.
Income in the public sphere
Concentrates the resources available to a public company or an Administration. It ranges from the usual income of a company that has state participation to the established taxes. Income also derives from issuing public debt.
How to increase your income?
There are some strategies to increase your income that can be of great help. Some of the most useful are:
1. Increase traffic, increase your income
Imagine the impact of having 3,000 monthly visits to your e-com on your sales to having 10,000. With the same conversion rate, your sales and income would increase substantially.
If you have a website or a storefront without people going through it regularly to see your value proposition (your product or service), forget about making a sale. One of the main tasks you should focus on when increasing your income is to generate traffic to your business.
The more attention your product or service receives, the more potential sales you can make.
How to increase your traffic?
Here you can read many tips to increase your money with this strategy:
- Create a blog and start generating quality content. The blog is one of the most powerful tools when it comes to generating traffic to your website.
- Take advantage of social networks. Twitter, Facebook, Google+, or LinkedIn can be good channels to generate traffic to your business. We advise you to define an action plan before being on any of these social networks so that your presence on these channels is positive for your company.
- Give a bonus to the organic traffic you receive by taking care of the SEO of your website. If you do not understand SEO, we recommend you hire the services of a professional or a marketing agency. Trust us that in the medium/long term, you will win.
- Spice up networking. Get in touch with other professionals in your sector and start building relationships of trust and friendship. Many times your contacts can recommend you and thus direct new qualified traffic to your business.
- Make use of paid advertising. Google AdWords, Facebook, or Twitter Ads can be a source of qualified traffic to your unique website, and most times at a very good price. Don’t be afraid to invest in paid advertising because that’s what it is, after all: an investment.
As you can see, you can take many actions to increase your traffic and increase your income.
2. Increase conversion
Conversion is getting a person who stops by your business to translate into a sale.
If a product or service you sell has a conversion rate of 1%, and you get it to increase to 1.5%, the difference is more money in the medium and long term.
Regardless of whether you have a critical mass of people who visit your business daily, it would help if you focused on increasing conversion, as it will mean a succulent increase in profits.
A traditional way to increase the conversion rate is to perform an A/B Test, testing each time different small combinations of elements (design, prices, etc.), to see which combination is the one that gives you the best results.
Another tip you can follow is that one of the best ways to increase your conversion rate is to get to know your customer. If you know your client well, you will know more exactly how they think, and you will know how to better attend to their problems and needs by adapting your value proposition.
When you do not know where to increase conversion, start with your customer.
3. Try to raise the sale price, increase your income
If you can increase the average selling price per order, it will increase your monthly balance so that it would increase if you increase your traffic or your conversion rate.
As entrepreneurs, we leave money along the way, and we do not realize it.
Do not sell based on the cost of the product, but the value it brings to your potential customer. Perhaps the buyer will pay more for your product or service because it contributes a value above what you think.
Take A/B Test and check which prices are the ones that generate the most income. You will see how you get a big surprise. You will increase your income!
4. Sell more to those who already bought you, increase your income
Isn’t it easier to sell something to someone who has already placed some trust in you?
One of the most effective tips you can take to increase your monthly income is to focus on selling more to those who have already bought you on some occasion. If your product or service is good, I’m sure your client wants to hear from you again.
Why don’t you offer him a new selling proposition? You can offer a complimentary product, an exclusive discount on X service for having been a previous customer, a promotion in which the customer saves 20% … The options are endless!
But beware! Do not overwhelm your client because otherwise, he will end up running away. Remember that in the middle is a virtue. Your customers give you money in exchange for giving them a product or service that adds value to them.
The key is to make it easy for the customer to do it repeatedly
5. Conduct an expense audit, increase your income
In simple terminology, profit results from subtracting expenses from income. With this, if you reduce the expenses you make, you will increase your profit.
Now… How can you reduce your expenses? We explain it to you step by step:
- Step 1. Present all of your expenses separately in excel, showing the concept and the amount.
- Step 2. Once you have listed all the expenses that you make monthly, you must classify them so that you identify which expenses are immovable and which expenses you can cut without reducing the quality of your product or service.
- Step 3. Present an action plan to determine what actions you should take to reduce or limit certain expenses that you have identified.
By going through this process, you will realize that many expenses that you were born in do not affect your product or service quality.
6. Focus your attention on the best customers, increase your income
The best clients are those who, ultimately, make you earn more money (and also don’t cause you problems). In this sense, we advise you to follow Pareto’s Law to the letter, which states that 80% of the results we get come from 20% of our effort.
And it is that in a business it happens the same: 20% of our clients do not give 80% of the benefits. Why not stop wasting your time and focus on that 20% of customers who bring you your highest percentage of profits?
7. Look for new markets, increase your income
Another way to increase your monthly income is to identify new potential customer segments. What if you sold the same as up to now but focusing on other groups of people?
This may be the most complicated technique to carry out since it requires an in-depth study of the opportunities and threats in different markets, but it is a possibility… And we should not rule it out because it can be very beneficial!
Make a hypothesis and check with the minimum expense if it is true or not.
Do you already know how to increase your monthly income?
There are many ways to increase your monthly income when you think you can’t do it anymore. Our advice is that you never stop trying to find the formula to increase your profits that best suit your business.
We hope that the strategies to increase your income in this post will be of great help. From now on, you will get some extra income that you are going to know gloriously.