As you can see, the principles involved in doing a revenue analysis are not hard. The challenge occurs when dealing larger amounts of revenue, because there is only a finite amount of hours that we can work. This prompts some creating thinking on our part to compensate for that. Let's review a few examples.
A tennis instructor could not raise his prices and there are not enough hours in the day to add enough individual clients to increase his income by $416 a day. So he decided to hold 2 hour group clinics on evenings and weekends at reduced rates. If he held five clinics a week charging $60 for a two hour session, he would only need 8 people per clinic for a total goal of $480. The extra $64 could go to the cost of renting the court. He was able to advertise at a few of the sports clubs and gyms in the area and soon had enough people to fill up three weeknights and two clinics on Saturday.
- Goal: $416 a day
- Rate: $60 a group session
- Hours: 10 Hours a week
- Clients: 8 per session x 5 sessions
Mary loved to make dry flower arrangements and each weekend set up a booth at the local flea market to sell her creations. She made $40 profit on each arrangement and sold 40 arrangements a week. While $1600 a week was not bad, she wanted to increase her income to $2,080 a week/$100,000 a year. She would need to sell 12 more arrangements a week to meet her goal. But she didn?t have time to both make the additional 12 arrangement and spend more time marketing them, so she looked around for a different solution. She was talking to a friend to had just bought a house and what a nice gift the realtor had given them. This gave Mary a great idea. She showed her unique arrangement to a few realtors in town and soon had enough realtors buying her arrangements for housewarming presents that she met her goals.
- Goal: $2,080 per week
- Rate: $40 per arrangement
- Sales per week: 52 arrangements
- Actual Profit: $2,080