Revenue Streams Flashcards
What are revenue streams?
- The returns a company generates from each customer segement
- A quantifiable monetary inflow
Broadly, what are the types of revenue streams?
- Transaction revenue resulting from one-off payments
- 2. Recurring revenue resulting from ongoing payment for the core value proposition or post-purchase services
What is true of consumer benefit experienced?
- Willing consumers validate offerings
- Consumers must be an important consideration in strategy formaiton
- Value is created by delivering benefits that induce payment
- Offering isn’t producing value until customer buys it: prior to this, still just a VP
Broadly, how can CBE be increased?
- Growing customers’ knowledge
- Reducing customers costs and effort
- Leveraging Expert Customers
How can leveraging expert customers increase CBE?
- aka lead users
- Many customer segments have multiple members, allowing both specialisation of and synergies among that segment’s knowledge
- Targeting expert customers creates value by enhancing the consumption experiences of other customers
- Customers sharing knowledge creates value by intensifying the consumption experiences of all participating members
Broadly, what are the types of revenue?
- Asset sale
- Usage Fee
- Subscription Fee
- Lending/Renting/Leasing
- Licensing
- Brokerage Fees
- Advertising
What is asset sale revenue?
- The most common type, derived from selling ownership rights to a physical product
- These rights allow the customers to use, resell or even destroy the product
What is usage fee revenue?
Generated by the use of a particular service. The more the service is used the more the customer pays
What is subscription fee revenue?
- Generated by selling continuous access to a service
- Although increasingly available in online or web-based business models, this form of revenue is still prevalent in ‘brick and mortar’ companies
What is lending/renting/leasing revenue?
- Temporarily granting the exclusive right to use an asset
- This provides the business model with recurring revenue, while also allowing customers to incur expenses limited to the time they use the product
What is licensing revenue?
- Providing customers permission to use protected intellectual property in order to generate their own revenue
- Licensing provides the business model with returns without necessarily having to insure in the costs or lead-times associated with manufacturing and distribution
- A common example of licensing is the franchise model, where the franchise purchases the rights to generate revenue from an established brand and/or product
What is brokerage fees revenue?
- Revenue derived from intermediation on behalf of two or more parties
- This revenue stream often takes the form of a commission, expressed as a percentage of each transaction
- e.g. credit cars
What is advertising revenue?
- This revenue results from promoting a third party’s offerings to your established customer segments
- Although predominantly seen in the media industry, it is increasingly used in social media and other internet based businesses
Broadly, what is the Business Model Generation view of pricing strategy options?
- Fixed menu pricing
* Dynamic Pricing
What are the options for dynamic pricing?
- Negotiation (bargaining)
- Price negotiated between two or more partners depending on negotiation power and/or negotiation skills
- Yield management
- Price depends on inventory and time of purchase (normally used for persishible resources such as hotel rooms or airplane seats)
- Real time market
- Price is established dynamically based on S&D
- Auctions
- Price determined by outcome of competitive bidding
