Revenue Streams & CostStructure · Every customer segment needs a revenue model ... details...

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RevenueStreams&Cost Structure

David JWhite

KatelynWonsock

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Revenue Streams

RevenueStreams

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Revenue Streams

Howdoyougeneratecashfromeachcustomersegment?• Whatvalue docustomersputonthebenefitsyouprovide?

• Whatvalue arecustomerswillingtopayfor?

• Whatvalue docustomersinferfromyourpricing?

Revenuestreams=whatPricing=howmuchandwhen

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Revenue Streams

PriceonVALUE– notbasedoncost• (butknowyourcost)

Twodifferenttypes:• Transactionrevenues(one-timepayments)• Recurringrevenues(ongoingpaymentsorcust.support)

Everycustomersegmentneedsarevenuemodel• (freeisok,butknowit)

ThisconceptisnotaboutanIS,BS,orCF.Thoseareoperatingdetailsthatarederivedfromaprovenrevenuemodelandpricing.

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Revenue Streams

Waystogeneraterevenue:

• Saleofphysicalassets(Amazon,automobiles)• Usagefees(paybyminutephones,hotels)• Subscription(gym)• Renting/leasing(Zipcar)• Licensing(mediaindustry,IP)• Brokeragefees(RE,consultants,finance)• Advertising(software,media)

Perhapsacombinationofoneormore?

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Revenue Streams

• Revenuestreamisthestrategyusedtogeneratecashfromcustomers

• Pricingisatactic

• Whatkindofpricingmodelwillyouhave?

• Whichdoyouprefer?

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CostStructure

2014Carr,Riggs&IngramLLC- Allrightsreserved.

CostStructure

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• Whatarethecriticalelementsofthecoststructure?– Fixedcosts– Variablecosts– Resource,activity,partnercosts– Infrastructure,operational,costofsales– Payrollcosts,benefits,bonusstructure,taxes– Whatarethecostsofeachelementofthebusinessmodel?

– Wherearetheeconomiesofscale?– Whataretherisks,theunknowns?

CostStructure

2014Carr,Riggs&IngramLLC- Allrightsreserved.

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• Allstagesincurcosts– creatinganddeliveringvalue,customerrelations,andgeneratingrevenue.

• Whataresomestrategiesfordecreasingfront-endfixedcosts?Whatarethepros&consofeach?

• WhatoptionsdoyouhaveifyoucannotBEsoonenough?

CostStructure

2014Carr,Riggs&IngramLLC- Allrightsreserved.

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• Whatarecustomerswillingtopay?• Howwilltheypay?• Whatkindofrevenueareyougenerating?Transactionalorrecurring?

• Sample,testpotentialcustomers&vendors• Onlineandoff• Solicitfeedback

Testingyourhypothesis

2014Carr,Riggs&IngramLLC- Allrightsreserved.

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• Hypothesis: Here’swhatwethought• Experiments: Here’swhatwedid• Results: Here’swhatwefound• Action: Here’swhatwe’regoingtodonext

Testingyourhypothesis

2014Carr,Riggs&IngramLLC- Allrightsreserved.

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• Createarough3yearincomestatementtoshowyouhavearealbusinesswithyourrevenuemodel(s),channels,costs,etc.

• Whatisyourbreakevenpoint?

Breakevenpoint

2014Carr,Riggs&IngramLLC- Allrightsreserved.

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Breakevenpoint

2014Carr,Riggs&IngramLLC- Allrightsreserved.