What is Residual Income All About?

Yesterday, we discussed  “linear income“. We talked about some of the long term disadvantages of relying solely on this type of income.

Today, let’s talk about the type of income that a network marketing or MLM business provides – “residual income”. You’ve heard this term often if you’ve been looking at opportunities, because residual income is one of the big benefits of this business.

Residual income is money you earn over and over from completing one job or task. Here is a contrast between linear income and residual income.

Let’s say I write an ebook called “How to Train Your Cat to Obey Commands”. Yeah right. Anyway, I write the ebook and package it up ready to download.

Scenario #1 – I have been hired to write the ebook by an online publisher. The publisher pays me $1000 when I complete the project. That is linear income. I earn it one time for writing the ebook, and move on to another project.

Scenario #2 – I write the ebook and put up a web page to promote it. I do some advertising and set up some affiliate sellers. Every time someone buys a copy of my ebook, I make a net profit of $20. This happens every time someone purchases my ebook, for as long as I choose to sell it. Once I have written the ebook and set it up for sale, it makes money for me while I move on to other things. This is residual income.

See the difference?

Linear income = one project, task, or block of time for your efforts in exchange for a set amount of pay. You never get paid again for that project, task, or block of your time.

Residual income = one project, task, or block of time for your efforts that pays you over and over.

This is why people are so attracted to network marketing and MLM as a home based business. Activities you do today can pay you continuously into the future. In my network marketing business, I make money every month from the efforts of people I sponsored three or four years ago. It’s a great deal!