Ancillary revenue comes from products or services that aren’t core to a business. This revenue can grow into something substantial: a margin booster, a retention play, or a cushion when core revenue decreases. When done right, ancillary revenue makes businesses more profitable and more useful.

Below, we’ll explore how ancillary revenue works, where it comes from, and how to use it wisely without losing focus on what you do best.

What’s in this article?

• What is ancillary revenue?
  
• What are common sources of ancillary revenue?
  
• What are the risks of relying on ancillary revenue?
  
• Best practices for managing ancillary revenue
  

What is ancillary revenue?

Ancillary revenue is income from products or services that aren’t your business’s main offering. That revenue includes money generated from things that support or complement your core business but aren’t the centerpiece. For example, a software business that earns most of its revenue from subscriptions might run paid training workshops for ancillary revenue.

Ancillary revenue spreads out your risk; having multiple streams of income helps if one slows. Ancillary offerings can also make the core product better or more appealing. Airlines have built an entire business model around this: your plane ticket gets you from point A to point B, but everything else, including checked bags and in-flight Wi-Fi, is sold on top.

What are common sources of ancillary revenue?

Ancillary revenue can take several forms depending on your business model. Typically, the sources build on assets you already have—customer relationships, a physical space, a software platform, and a checkout flow—and turn those touchpoints into incremental income.

Here are examples of ancillary revenue:

Product add-ons and accessories

These are tangible items that complement the core product, such as:

• Bottle openers and cocktail kits sold by a liquor store

• Ink and toner refills sold by a printer business

• T-shirts and nachos sold by a concert venue

These simple extensions can meet obvious customer needs.

Upgrades and premium services

Customers are often willing to pay for “better.” That’s where upgrades come in, including:

• Seats with more legroom, early boarding, and in-flight Wi-Fi sold by an airline

• Room upgrades, spa access, and minibar items sold by a hotel

• Faster response times, expanded support hours, and concierge onboarding sold by a software-as-a-service (SaaS) business

These extras let customers customize their experiences and can increase profit margins.

Commissions and partnerships

Sometimes, you don’t have to sell something yourself to make money from it. Here are examples:

• An airline earns a cut when you book a hotel, a car rental, or travel insurance through its site.

• A SaaS platform integrates with a third-party tool and takes a share of the revenue when a customer activates the tool.

• A content site links to a partner product and earns affiliate commission.

These partnerships work because they’re additive. They improve the customer experience and generate revenue without adding operational burden.

Advertising and data monetization

If you have attention or usage data, there are ways to monetize it directly. Here are examples:

• An ecommerce site sells ad space on its website.

• An independent publisher sells ad space in its newsletter.

• A software business sells anonymized, aggregated usage insight to partners or researchers.

This category is more complex, but when handled ethically and transparently, it can be a powerful tool.

Businesses often have multiple forms of ancillary offerings. For example, a direct-to-consumer (D2C) brand might provide gift wrap or premium packaging, an accessory to its main product, and affiliate links to curated partner products.

What are the risks of relying on ancillary revenue?

Ancillary revenue can be powerful when it complements your core business, but it’s not risk-free. If implemented poorly or relied on too heavily, it can weaken the foundation it’s supposed to support. Here are risks associated with expanding into ancillary revenue:

Customer backlash and brand erosion

If customers start to feel as though they’re being charged for everything, that can strain relationships. Consider the frustration many customers feel about airlines’ separate fees for bags, seat selection, early boarding, and boarding pass options. This can occur in other industries. Whether it’s a bank charging extra service fees or a SaaS business putting features behind paywalls, customers notice. And if the extras don’t feel optional or valuable, they might feel like taxes.

Make ancillary offerings transparent, clearly optional, and genuinely additive so customers don’t feel as though they were tricked into paying for things they thought were included.

Dilution of your core value proposition

It’s easy to get distracted by new revenue streams and forget about your main business function. A SaaS business might spend so much time on partnerships and monetized integrations that it slows improvement on its core product. An ecommerce retailer might prioritize selling ad space on its website to the point where employees focus more on that than on helping customers find the right primary product.

When the core offering suffers, ancillary revenue can’t compensate. And when add-ons stray too far from the business’s mission, customers can get confused. Every ancillary idea needs to pass a relevance test: does it reinforce what your business stands for, or does it dilute it?

Volatility and overreliance

Typically, ancillary revenue streams aren’t guaranteed. Many are discretionary: in a downturn, customers often cut unnecessary spending. If those streams make up too much of your income, you’ll feel the decline fast. Other streams rely on third parties. If you’re earning a cut from a partner’s product, any change to their pricing, commission structure, or terms can reduce your revenue. Ad-based models are particularly exposed: traffic patterns shift, ad markets fluctuate, and regulatory changes can affect what kind of targeting is allowed.

These streams are worth building, but they shouldn’t become the safety net for an underperforming core business.

Regulatory and ethical concerns

Some forms of ancillary revenue blur the line between acceptable and exploitative, and regulators are paying attention. Here are tactics that can lead to regulatory scrutiny or reputational damage:

• So-called “junk fees” in banking, travel, and ticketing that aren’t properly communicated to the customer

• Hidden fees in the checkout process, automatically included add-ons, or dark patterns designed around upsells

• Selling user data to third parties without clear customer consent

Ancillary revenue streams need to be vetted for regulatory and reputational risk. It’s important to involve legal and product teams early in sectors where compliance boundaries are tight, such as fintech, insurtech, and healthcare.

Administrative challenges

Every new revenue stream adds complexity to your business—and not always in ways that scale cleanly. Selling a branded product alongside your main services means managing new manufacturing and shipping processes. Introducing financial services to your app means handling complicated financial compliance and updated user interfaces. Each of these additions introduces new workflows, new dependencies, and new costs. If those aren’t carefully managed, the complexity can eat into your margins and distract your team.

Best practices for managing ancillary revenue

Ancillary revenue can be a potent tool. But to make it work in the long term, you need to build it around value, not opportunism. That means getting the mechanics and the mindset right.

Here are best practices to make ancillary revenue profitable and sustainable:

Anchor it in real customer value

The strongest ancillary offerings solve a problem or improve the product in a meaningful way. For example, a SaaS business might add a reporting module to help users extract insight faster, or a retailer might incorporate personalized packaging. If the offering helps the customer do what they came to you for or makes your core offering more useful, sticky, or satisfying, you’re on the right track.

Clearly communicate, and keep it optional

Extra fees or add-ons should be clearly presented, optional, and obviously beneficial. Hidden fees, automatically preselected extras, or fine print that appears only at checkout will erode long-term loyalty and could expose you to regulatory scrutiny.

One tactic is to bundle add-ons into higher-value tiers. A single “pro” package that includes premium features, faster support, and a few services often feels cleaner than five scattered upsells. It helps customers evaluate your products and improves transparency.

Meet customers where they are

Ancillary offerings are most effective when they show up at the right moment. For example, airlines prompt you to pay for bags and seats during booking, and ecommerce sites recommend related items after something is added to cart. The goal is to show relevant upgrades or add-ons when they’ll feel most useful and when it’s easiest for the customer to act.

Train your team to explain your offerings

If your sales, support, or customer success teams introduce ancillary offerings, they need to understand them deeply and believe in their value. That means knowing how each add-on fits into specific customer workflows, recommending them only when they’re a good fit, and framing them around outcomes, not just features.

Measure impact as you would with your core product

You need to track, test, and refine ancillary revenue. You should still scrutinize it, even if it’s not the core business. Track the following:

• Attach rate: What percentage of customers opt in?

• Conversion timing: When are customers most likely to accept the offer?

• Retention and satisfaction: Do customers who purchase these products or services stick around longer? Do they open more tickets?

If you see signs an offering is confusing, underperforming, or driving churn, you might need to reposition, bundle, or remove it. Feedback loops are important; sometimes it’s the framing or timing that’s off. Improve the offering accordingly.

Don’t let ancillary revenue threaten your core products

There’s a fine line between smart monetization and creating friction within your product or pricing model. If you sell every feature separately, customers might feel as though they’re being sold a product piecemeal—or never upgrade. If you split too much value across partnerships or referrals, you might weaken your core identity. If your internal road map starts tilting toward add-ons and away from product improvements, that might signal a deeper issue.

Use ancillary revenue to amplify the core business. If you are relying on add-ons to compensate for stagnant growth, that’s usually a sign it’s time to reinvest in product development. The goal is to better align what your customers want with what your business can sustainably provide.