What is Residual Income?

Residual Income Defined

Definition

“Residual income” is income which one continues to receive in repeated payments, after an initial sale, referral, or other action has been taken.

Examples of How to Make Residual Income

Example: A visitor arrives on your website and clicks a link which leads them to sign up for a subscription to a service or publication. You then receive a percentage of every payment made by that customer, until he cancels his subscription (if he does.)

Example:
In some cases, when you sign a person up to become an affiliate of a particular agency, you receive future commissions on any sale made by that person in the future (in addition to the commissions he earns).

Example:
You set up a website and get traffic to it, with a few hundred visits a day. You place ads on the site so that you earn a commission whenever your site visitors click an ad, make a purchase through one of your links, etc. Or you allow people to run ads on your site for a fixed price per month.  You continue to earn money from this site, even if you go on vacation for three weeks and do little or no work on the site.

Why Residual Income?

Residual income is beneficial as it allows you to step out of the daily grind of being paid for each hour or year that you work. It allows you to continually set up new projects, which then generate revenue, so that you can continually multiply your yearly income.

It also gives you more freedom of movement, where your income does not only occur during times that you are actively working.  You could work hard on a project for a few days, weeks, or months, on a project, to set up an income stream which will continue after you have stopped working on it.  This gives you time to do other things.  Such as, volunteer with the peace corps, attend pilot school, or go camping.

However there is another aspect of residual income.  It doesn’t come instantly.  Some people work for months or even years, with little pay, before they eventually break through to create a steady and stable stream of residual income.  In the long run it is well worth the pain – but it does take work and persistence to build up.  It can also be fun.

Do you want to learn how to create a residual income? For more information, please see my post entitled Getting Started Earning Money Online.

One Response to “What is Residual Income?”

  1. Ruri @ Free online article directory
    December 3, 2009 at 3:06 am #

    Residual income is almost similar with passive income. But passive income is an income that are always come no matter we work on it or not. Residual income can be passive income if already have huge source of residual income.

    I like this kind of income. This is what people said working smarter, not harder.

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