IB Business Management HLTopic 3 — Costs and RevenuesPaper 1, 2 & 3Core skill~9 min read
Revenue and Revenue Streams
Revenue is the money coming in. The calculation itself is one line of maths, so the marks sit elsewhere: getting the price and quantity the right way round, handling more than one product, and knowing that plenty of businesses earn money from things other than selling their main product.
📚 What you need to know
Sales revenue = price per unit × quantity sold.
Revenue is the money coming in. It is not profit, because no costs have been taken off yet.
Where a firm sells several products, work out the revenue for each one and then add them up.
Revenue streams are the different sources of income a business has.
Common streams include dividends, donations, interest, subscriptions, merchandise, sponsorship and advertising.
Having several streams spreads risk. Relying on one stream is risky if that market turns.
The calculation
Sales revenue is the value of everything a business sold over a period of time. For a single product, multiply the price by the number sold.
Learn this exactly
Sales revenue = selling price per unit × quantity sold
Keep price and quantity in the same units. If the price is per tonne, the quantity must be in tonnes, not in bags.
WORKED EXAMPLE
Revenue from two products
Hillside Bakery sold 12,400 loaves at $3.50 each last year. It also sold 2,800 celebration cakes at $18.25 each. Calculate its total sales revenue for the year.
Step 1: Revenue from loaves12,400 × $3.50 = $43,400Step 2: Revenue from cakes2,800 × $18.25 = $51,100Step 3: Add the two together$43,400 + $51,100 = $94,500Total sales revenue = $94,500the cakes bring in more money from far fewer sales — worth a comment if the question asks for one
Notice the bakery sells four times as many loaves as cakes, but earns more from the cakes. Volume and value are different things, and a question that gives you two products is usually inviting you to say so.
Revenue streams
Not all money comes from selling the main product. A revenue stream is any source of income a business has. Football clubs are the classic example: they sell tickets, but they earn far more from television deals.
The width of each block is drawn to scale, so you can see at a glance which stream the club really depends on.
WORKED EXAMPLE
How dependent is the club?
Using the figures above, calculate the club’s total revenue and the percentage that comes from broadcasting. Comment on what this means for the club.
Step 1: Add all four streams$6.5m + $4.2m + $2.8m + $1.35m = $14.85mStep 2: Broadcasting as a share of the total(6.5 ÷ 14.85) × 100 = 43.77%Total $14.85m, broadcasting 43.8%almost half the income depends on one contract — a real risk if it is not renewed
The main revenue streams
Stream
What it is
Who relies on it
Sales of goods and services
The core trading income of the business
Almost every business
Subscription fees
A regular ongoing payment for access to a product or service
Streaming services, software firms, gyms
Advertising revenue
Payment from firms wanting to reach the audience
Social media platforms, newspapers, radio
Sponsorship
Payment from firms wanting their name linked to the brand
Sports teams, events, festivals
Merchandise
Extra income from branded goods sold alongside the main product
Clubs, musicians, film studios
Interest
Earnings on cash held on deposit at a bank
Any firm holding large cash balances
Dividends
Income from shares the business holds in other companies
Holding companies and large investors
Donations
Money given freely, plus legacies left in wills
Charities and not-for-profit organisations
Why streams matter. Several streams spread risk, so a bad year in one market does not sink the business. But every extra stream takes management time and money to run, and a firm that chases too many can lose focus on the one that actually pays the bills.
🧩 Answering a revenue calculation question
Write the formula first. Revenue = price × quantity.
Do each product separately and label each line clearly.
Check the units match before multiplying — per tonne, per pack, per month.
Add the lines up and state the total with a currency symbol.
If asked to comment, mention which stream dominates and what risk that creates.
💡 Exam tip
Show every line of working. In a 3-mark calculation the marks are usually one per stage, not three for the final number.
Copy figures from the case study carefully. Reading 4,275 as 4,725 costs the accuracy mark even when the method is perfect.
Revenue is sometimes called sales turnover or just turnover. Same thing.
If the question says “comment” or “analyse”, the number alone is not the answer. Say what it shows.
Learn one real example for two or three streams. Concrete examples lift analysis marks.
⚠ Common mix-up
Calling revenue profit. Revenue is money in; profit is what is left after costs.
Taking costs off inside a revenue calculation. If the question asks for revenue, do not subtract anything.
Forgetting the second product. Multi-product questions are designed to catch people who stop after one line.
Mixing up units, such as multiplying a price per tonne by a number of packs.
Assuming more revenue always means a better year. If costs rose faster, the firm is worse off.
Listing streams without saying who uses them. The example is what earns the mark.
Up next: Reading a Statement of Profit or Loss — where revenue and costs are finally put side by side to work out how much profit was actually made.
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