Revenue Structure

and
Pricing Strategy

Prepared by: Rachel Capacite

 Intended Learning
Outcomes
At the end of the week, students are expected to be able to:

1. Define the revenue model that aids the entrepreneur in achieving long-term profitability.
2. Identify various revenue generation strategies for business sustainability.
3. Examine existing revenue models utilized by various businesses and determine how they
contribute to their success or failure.
4. Design revenue models tailored to specific businesses or projects.
 Lean
Canvas
Model

Source: https://www.slideshare.net/sblank/lecture-6-revenue-model-120411?from_action=save
 Revenu
e
Streams
Source: https://www.slideshare.net/sblank/lecture-6-revenue-model-120411?from_action=save
 Intended Learning Outcome No. 1

Revenue Model
the strategy the company uses to
generate cash from each
customer segment

Source: https://www.slideshare.net/sblank/lecture-6-revenue-model-120411?from_action=save
 Revenue Model

Source: https://www.altexsoft.com/blog/revenue-model-types/
 Revenue Model

Source: https://www.tias.edu/en/item/revenue-model-typology-revenue-model-framework
 Intended Learning Outcome No. 2

Where is the money coming from?

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 Web
or Mobile
Revenue
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Models
 “Direct” Revenue Models
Sales Subscriptions
the income received by a a system where customers pay
company from its sales of goods recurring fees to access a
or the provision of services. business's products or services
over time.

Source: https://www.slideshare.net/sblank/lecture-6-revenue-model-120411?from_action=save; https://gocardless.com/guides/posts/subscription-revenue-model-explained/#:~:text=The

%20subscription%20revenue%20model%20definition,grocery%20delivery%20box%20each%20week.; https://corporatefinanceinstitute.com/resources/accounting/sales-revenue/
 “Direct” Revenue Models
Freemium Pay-per-use
a business model in which a Use of a product or service is
company offers basic or limited metered, and customers are
features to users at no cost and charged each time they use the
then charges a premium for service.
supplemental or advanced
features.
Source: https://www.slideshare.net/sblank/lecture-6-revenue-model-120411?from_action=save; https://www.investopedia.com/terms/f/freemium.asp#:~:text=Freemium%20is%20a
%20business%20model,term%20was%20coined%20in%202006.; https://reasonstreet.co/business-model-pay-per-use-2/#:~:text=Pay%2DPer%2DUse%3A%20Use,time%20they
 “Direct” Revenue Models
Virtual Goods Advertising Sales
A virtual good is an intangible asset that is is a monetary income that individuals and
traded in a virtual economy, such as in online businesses earn from displaying paid
games. Virtual goods are by definition advertisements on their websites, social
nonphysical; their value is determined solely media channels, or other platforms
by what users are willing to pay for them. surrounding their internet-based content.

Source: https://www.slideshare.net/sblank/lecture-6-revenue-model-120411?from_action=save; https://www.indeed.com/career-advice/career-development/what-is-ad-

sales#:~:text=Updated%20September%2030%2C%202022,including%20digital%20and%20physical%20platforms.; https://reasonstreet.co/business-model-pay-per-use-2/#:~:text=Pay
%2DPer%2DUse%3A%20Use,time%20they%20use%20the%20service
 “Ancillary” Revenue Models
Referral revenue Affiliate revenue
pay for referring traffic/customers finder’s fees/commissions from
to other web or mobile sites or other sites for directing customers
products. to make purchases at the
affiliated site
 “Ancillary” Revenue Models
E-mail list rentals
rent your customer email lists to
advertiser partners
Back-end offers
add-on sales items from other
companies as part of their registration
or purchase confirmation processes, or
“sell” their existing traffic to a
company that strives to monetize it and
share the resulting revenue
 Physical
Revenue
Models
Source: https://www.slideshare.net/sblank/lecture-6-revenue-model-120411?from_action=save
 Physical Revenue Models
Asset Sale
Sale of ownership right to a
physical product
 Physical Revenue Models
Usage Fee
Usage of service. Fee is
proportional to the usage of the
service.
 Physical Revenue Models
Subscription Fee
Fee for continuous access to a
service
 Physical Revenue Models
Renting
Fee for temporary access to a
good or service
 Physical Revenue Models
Licensing
Fee for use of some IP(including software)

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 Physical Revenue Models
Intermediation Fee
Often found in market places of various types, a fee for bringing
together two or more parties involved in a transaction
 Pricing Strategy

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 PRICING STRATEGY
the process and methodologies business
use to set the price for their products and
service.

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 How do we price the product?

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 How do we price the product?
Pricing Strategy - Physical

• Cost-based pricing
• Competitive pricing
• Volume pricing
• Value pricing
• Portfolio pricing
• The “razor/razor blade”
• Subscription
• Time/Hourly Billing
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 How do we price the product?
Pricing Strategy – Web/Mobile/Cloud

• Subscriptions
• Freemium
• Pay-per-use

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 Pricing Choices
Cost-based Pricing Value-based Pricing

• Cost + markup • Based on buyer’s perception of

• Based on a multiple of actual value (e.g. time saved, new
product cost. Typically priced for efficiency created, etc.)
maximum revenue/profit versus • based on the value delivered by the
volume product rather than the cost itself

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 Pricing Choices
Competitive pricing Volume pricing

• is the process of strategically selecting • customers get a different price per

price points for your goods or services unit as the quantity of the units
based on competitor pricing in your
they purchase increases or
market or niche, rather than basing
decreases.
prices solely on business costs or target
profit margins.

Source: https://www.slideshare.net/sblank/lecture-6-revenue-model-120411?from_action=save; https://pros.com/learn/b2b-blog/competitive-pricing-

 Pricing Choices
Portfolio pricing Razor/razor blade pricing

• involves setting different prices for • a pricing strategy in which one

different products or services based good is sold at a discount or loss
on their unique features, benefits, and a companion consumable good
and customer segments. at a premium to generate profits.

Source: https://www.slideshare.net/sblank/lecture-6-revenue-model-120411?from_action=save;
https://pros.com/learn/b2b-blog/competitive-pricing-strategy; https://www.masterclass.com/articles/volume-pricing;
 Pricing Choices
Subscription Pricing Lease Pricing

• a pricing model that allows • allows a company to generate

customers to subscribe to services revenue through periodic lease
or purchase products for a specific payments rather than from a single,
amount of time on a recurring up-front purchase.
basis at a set price point

Source: https://www.slideshare.net/sblank/lecture-6-revenue-model-120411?from_action=save; https://blog.hubspot.com/sales/subscription-

pricing#:~:text=Subscription%20pricing%20is%20a%20pricing,in%20monthly %20or%20annual%20intervals.;
https://innovolo-group.com/innovation-en/innovation-terminology-en/what-is-the-leasing-pricing-tactic/#:~:text=The%20Leasing%20Pricing%20Tactic
Thank You!