Understanding passive residual income is important if you want to increase your business profits. It’s not about potential, it’s about generating real profit, just by doing something that is already an integral part of your job. By changing some aspects of your products and offering new ones, you can enjoy a steady source of income for a long period of time.
However, not all businesses can make use of passive residual income. If you are involved in the retail sale of single-use items, such as consumer perishables, for example, you may not have the opportunity to enjoy the benefits of residual income. To use it to your advantage, learn what it is and how it works.
What is passive residual income?
Passive residual income refers to the type of income you can generate from a completed task, project, or product. It is called a liability because the business owner does not have to do additional or sustained work to maintain income. This, regardless of the initial amount of work he put into the project.
A traditional form of income, on the other hand, will only pay you in proportion to the amount of work you have done. If you’re paid $50 an hour to provide IT maintenance and tech support, for example, that’s all you get for working 60 straight minutes. With residual income, you can invest 10 hours of your time to produce a product and then enjoy much more income than you normally would for the same number of hours you put in.
Types of passive residual income
There are several ways to generate passive residual income through your business or simply through your creativity. The types of residual income you can produce include:
Fee
Commissions refer to revenue earned as a percentage of the total amount of a sale, either directly or from referral sales. This is the type of income that salespeople, network marketers, and insurance agents generate.
However, as a result of direct sales, commissions may be limited by the amount you sell. While your income will increase from your referral commissions, it will also be affected by how quickly and effectively your referrals can generate sales.
Copyright and royalties
A copyright fee refers to payment for the right to use and reproduce an original work, whether it be a document, software, image, electronic data, music, or video. If your work is copyrighted, you have legal control over its use.
Royalty refers to income earned from the sale of books, music, or an invention. This comes in the form of a percentage of the income or the total amount.
Subscription
You can create passive residual income by offering subscriptions for your articles, newsletters, or premium content on your blog or website. Even if you’ve completed the task of writing your article, you’ll still be able to get paid long after you’ve published it.
Rentals and leases
If you have assets that you can offer people to use or rent out, you could earn passive residual income on a regular basis. An example of this is land, a natural resource that you can offer for others to use, for a fee.
interest
If you put your money in investments or a savings account, you can earn interest after a set period of time. This type of passive residual income pays well as long as you know where to invest your money. Although regular investments and savings are usually enough to earn a decent amount, you could put your money into high-yield investments to earn more.