![]() In this last step, you need to simulate the impact of your revenue stream strategy and pricing alternatives on the financial forecast of your startup. In other words, you must be sure that the potential total revenue generated by your revenue stream strategy supports the business in becoming sustainable and scalable. Advertising: when you charge someone for providing visibility of their products or brands to the users of your service.įinally, you must take into account the impact your revenue streams and pricing strategies have on your business financials.Brokerage Fee: when you charge your customers for intermediating a transaction.Licensing: related to the use of some technology or brand.Lending/ renting/ leasing: related to the exclusive use of physical assets for a period of time.Subscription Fee: related to the access your customer has to your solution features.Usage Fee: based on how much the customer uses your product/service.Asset Sales: when you set a price to deliver the asset (physical or digital) to your customer.Now, you must define what will you charge your customers for:Īlexander Osterwalder presents in his book “ Business Model Generation“, the following alternative revenue streams: So, you must define an optimum price-that maximizes your total revenue-or search for different alternatives on how to charge your customers. The more you charge, the smaller the number of people that will be able to pay for it. But, simply charging 10 times more is a bad answer. Of course, there is an important constraint to your pricing definition: people’s ability to pay.įor instance, your app may be 10 times faster than current alternatives in the market. Through this comparison, you’ll have a clearer notion of how much would your customers be willing to pay to have that job done. Duncan – Harvard Business Review – FROM THE SEPTEMBER 2016 ISSUEīased on the jobs your solution is doing for your stakeholders, you will be able to compare it to the alternatives available in the market. Christensen, Taddy Hall, Karen Dillon, and David S. And if it does a crummy job, we “fire” it and look for an alternative. If it does the job well, the next time we’re confronted with the same job, we tend to hire that product again. When we buy a product, we essentially “hire” it to help us do a job. This concept was built by Clayton Christensen, a worldwide-recognized professor at Harvard Business School and author of the best-seller “ The Innovator’s Dilemma“: One useful concept to understand the value of your solution for your customers is to analyze it from the perspective of customers’ jobs to be done. To do that, you’ll need to understand what benefit you’re offering to them and what are the best alternatives they have today to perform a similar job. The second step is to identify how much could you charge the people you’ve mapped on step one. Suppliers (marketplaces): people or organizations that want to connect and transact with buyers through your platform.Buyers (marketplaces): those who want to do transactions with people that sell through your solution.Advertisers: people or organizations that want to make themselves or their products/services visible to the users of your solution.E.g., a company paying for a service used by its employees. Sponsors/Supporters: those who financially support the user.Users: those who interact with your solution to complete a specific task.Start making a list of the people or organizations that might benefit from your solution somehow. But, before thinking about ways to capture the value, you must know who your startup’s stakeholders are (those that are impacted directly or indirectly by your startup). There are many viable revenue streams for your startup. So, you need to design effective ways to capture the value your startup is generating… FINDING THE ANSWER… Second, identifying which are the most effective revenue streams makes a huge difference in your results.įor some businesses, trying to charge directly its users is a big mistake, because the value delivered doesn’t justify them opening their wallets. In other words, without a solid revenue streams strategy, someday -depending on how much cash available you have and how much your net burn rate is-you’ll end up with no money. Without it, your business is not sustainable in the long term. WHY IS THIS A FUNDAMENTAL QUESTION?įirst, revenue is what makes your business valuable. It’s the definition of who will pay for what and how much. Yes, this is the part where you start capturing the value created for your customers.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |