Revenue Model Start-Up

Revenue model start-up
A revenue model is a component of a company’s business planning that describes the way it

intends to make money. Basically, the revenue model details on what the business will
offer and how it will charge customers: What product or service it will offer, what it will
charge for the product or service and the method it will use to generate revenue.
 A revenue stream is a company’s single source of revenue. A company can have zero
or many revenue streams, depending on its size.
 A revenue model is the strategy of managing a company’s revenue streams and the
resources required for each revenue stream.
 A business model is the structure comprised of all aspects of a company, including
revenue model and revenue streams, and describes how they all work together.
Profit doesn’t keep the business alive, revenue does. Besides a simple transactional logic,
there are many ways we can generate revenue, cover our own expenses, distribute
products, and so on.
A revenue model is a part of the business model that explains different mechanisms of
income generation and its sources. This is a high-level answer to the question that asks how
we will generate revenue from the value we bring to a certain customer group. A revenue
model is used to manage a company’s revenue streams, predict income, and modify revenue
strategy. The revenue itself is one of the main KPIs for a business. Measuring it annually or
quarterly, we are able to understand how our business operates in general, and whether we
should change the way we sell the products or charge for them.
A single source of revenue a business generates is called a revenue stream. These are often
divided by customer segments that bring revenue via a given method. The two terms
– revenue stream and revenue model – are often used interchangeably, since from the
business perspective, the subscription revenue model will have a revenue stream coming
from subscriptions. However, models can name multiple streams divided into customer
segments, while the principle of revenue generation (subscription) will remain the same
For instance:
- Advertising (ad-based): A website or app owner can contract with marketers to
place advertisements on their content.
- Manufacturing: Manufacturers create products and sell the finished goods.
- The subscription revenue model entails offering your customers a product or service that
customers can pay for over a longer period of time, usually month to month, or even year
to year.
- There are two types of direct sales: inside sales, in which someone calls in to place an
order or sales agents calling prospects; and outside sales, which is a face to face sales
transaction
- More examples: https://fi.co/insight/the-10-most-popular-startup-revenue-models
How to choose a revenue model for our Start- up
- Define your value proposition: Define what your product is and what value it brings
to the customer
- Explore the market state and customer groups. This step is to define your user
persona and understand how they usually buy things. Some markets are inclined to
purchase just one product, some are inclined to ignore upgrades, or in app
purchases.
- Analyze competitors and their products. You’ll need to learn what mechanisms and
revenue streams your competitors use and how they manage their costs. This
information will probably show you the market’s pitfalls and dead ends.
- value proposition on the market, so we are in charge of choosing what we want to
get back based on the market factors, target audience, etc.
- Paid value proposition: In most cases, your value proposition costs money to use.
Whether it’s a service or a software product, a customer will need to pay in some
form to gain access to your value. Our revenue model in this case will be based
around transactions. So, develop pricing tactics that will depend on the nature of the
product, and the type of audience you’re trying to reach, type of deployment,
specifics of product usage, etc.
- Free-to-use value proposition: If the value proposition doesn’t require money to use
or we choose it to be free, then we need a third-party to generate revenue for us.
This could be anything based on the previously mentioned types, whether it’s ad
space, donations, affiliate programs, or reselling.
https://whatis.techtarget.com/definition/revenue-model
https://fi.co/insight/the-10-most-popular-startup-revenue-models
https://www.altexsoft.com/blog/revenue-model-types/

Revenue Model Start-Up

Uploaded by

Copyright:

Available Formats

Revenue Model Start-Up

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Revenue Model Start-Up

Uploaded by

Copyright:

Available Formats

Revenue model start-up

A revenue model is a component of a company’s business planning that describes the way it

You might also like