Capturing Alternative Revenues

Strategic Lessons and Compendium of Tactics for Increasing Nontraditional Operating Revenue

Topics: Administration and Finance, Transportation and Parking, Auxiliary Enterprises, Space Utilization, Facilities and Operations, Revenue Enhancement, Alternative Revenues

The Gatorade Problem

Growing non-tuition revenue is a perennial focus for business leaders. Now, as some colleges and universities face slowing or flattening tuition revenue, and all institutions seek ways to better fund ambitious strategic priorities, capturing nontraditional revenue has become an even greater priority.

Unfortunately, despite increased effort, alternative revenue success remains difficult to generalize or replicate. Top auxiliary revenue institutions more often benefit from single breakthroughs or strokes of good luck than replicable, best-practice strategies. We call this phenomenon the “Gatorade problem.” Shown here, Forbes applied the popular technology metric of research income yield—research expenditure divided by research-related income—to higher education. And in most cases, top performers were significantly buoyed by the gains of a single, smash-hit product, such as Gatorade. Other institutions such as University of Kentucky benefit greatly from natural assets on campus, such as coal.

Of course, colleges and universities cannot replicate either approach. In short, there is no formula for multimillion-dollar ideas.

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No Silver Bullet for Increasing Revenue