ANCILLARY REVENUE Meaning and
Definition
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Ancillary revenue refers to additional income or profits earned by a company that are outside its core business activities. It is the revenue generated from supplementary goods, services, or operations, which are not the primary focus of the business but serve as supplemental sources of income.
In the business context, ancillary revenue is commonly associated with industries such as travel, hospitality, entertainment, and e-commerce. Specific examples include fees charged by airlines for additional services like baggage fees, seat selection fees, and in-flight entertainment purchases. Similarly, in the hospitality industry, it can include revenue from add-ons such as room service, spa treatments, or minibar consumption.
Ancillary revenue is an important aspect of a company's overall financial performance as it can significantly contribute to profits and offset costs. It allows businesses to diversify their income streams and maximize their revenue potential by leveraging their existing customer base.
Companies often develop strategies to increase ancillary revenue by offering complementary products or services to enhance the customer experience or by creating partnerships and cross-selling opportunities. This form of revenue is highly variable and can be influenced by factors such as consumer behavior, market conditions, and the specific business model.
In summary, ancillary revenue refers to the additional income earned by a company through supplementary activities, products, or services that are not the primary focus of its operations. It is a valuable source of revenue that enhances the financial performance and profitability of businesses in various industries.
Etymology of ANCILLARY REVENUE
The word "ancillary" comes from the Latin word "ancilla", which means "maid" or "female servant". In English, it was used to refer to something that is secondary or subordinate to the main purpose or function.
The word "revenue" comes from the Latin word "revenire", which means "to come back" or "to return". In English, it refers to the income or money that is generated from business activities or investments.
Therefore, the term "ancillary revenue" refers to the additional income or revenue generated from secondary or supplemental sources, separate from the primary source of income. In various industries, ancillary revenue refers to the income generated from products, services, or activities that are not the main focus but provide additional financial benefits.
