TESTING THE REVENUE MODEL

Session 12
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A revenue model is how a business makes money.

Business

Revenue
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Customers pay for a solution to a problem.

Solution

Business Customer

Revenue
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A revenue model is an exchange of value.

Solution

Business Customer

VALUE

Revenue
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Thereare different types of revenue

Recurring revenue - ex. Apple Music

Transactional revenue - ex. Zara

Project revenue - ex. Construction

Service revenue - ex. Haircut

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Thereare different types of revenue models

• Physical goods • Rental

• Digital products • Brokerage

• Service sold per unit • Platform/marketplace

• Service sold fixed price • Freemium

• License • Affiliate marketing

• Auctions • Subscription

• Advertisements • Usage fees

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There are key points to remember

• Your customer may not be your consumer

• Revenue model does not equal business model

• Revenue model impacts all areas of business

(brand, sales, operations, finance)

• Each model has advantages and disadvantages

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You will develop a revenue model

• Identify target customer

• Determine value proposition

• Evaluate revenue model options

• Select revenue model

• Adapt and adjust the selected revenue model

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Selecting a revenue model

Apple Music

e Bay
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The revenue model and startup financials

Income statement

Revenue Model

Cash flows
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Finance underpins your goals and strategies

https://www.entrepreneurship.org/learning-paths/the-art-of-startup-finance/the-startup-finance-pyramid
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Financial Processes: Your Income Statement

https://www.entrepreneurship.org/learning-paths/the-art-of-startup-finance/financial-processes-your-income-statement
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Financial Processes: Your Cash Flow

https://www.entrepreneurship.org/learning-paths/the-art-of-startup-finance/financial-processes-your-cash-flow