Earned Income

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Earned Income is defined as payments received for services or privileges, and does not include Contributed Income (gifts/grants) loans, other repayable assets, or investor proceeds. Earned income of particular interest to investigators includes transaction fees and membership/subscription fees, representing volume-based pricing and flat pricing, respectively. The 2007 survey indicated that transaction fees made up only 8% of total income in production RHIOs, while membership fees accounted for 28% of total income (see a summary of findings). The data suggest that RHIOs may be "leabing money on the table" in this way also, because a volume-based revenue model is scalable to actual value creation; i.e., as membership grows, each new member increases the value of the overall network by greater than one. In fact, as membership grows, value grows exponentially (see Metcalf's Law or The Network Effect).

Variations in the way income is classified for a particular RHIO may depend on legal and accountancy advice, local and state statutes and regulations, form of incorporation and IRS determination. In general, information in this section relate to RHIOs organized under section 501(c)3.

--Michael 15:35, 17 April 2006 (CDT)