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Innovative revenue streams

Tips how to generate revenues

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Successful companies after achieving the product-market fit manage to start growing almost exponentially

▪ Well executed business hacks, tricks and tactics

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One of such business hack is innovative approach to revenue streams

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Revenue streams

Change the way you claim the

value

Introduce new revenue streams

When it comes to revenue streams you can do 2 things. And I will show you both of them

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Introduction to revenue streams

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There are many potential ways in which you can claim your money

1-off / lump sum payment

Instalments

Subscription

Payment / fee per usage

Payment / fee per result

Payment / fee per effort

Free

Freemium

Free Trial

Penalty

Renting

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Revenue streams for milk

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The best way to understand things is to start with an interesting example. Imagine that you want to drink milk. Let’s see how the farmer can get the money back

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Let’s have a look how the customer would have to pay for the milk in the case of different revenue streams models

1-off / lump sum payment

Instalments

Subscription

Payment / fee per usage

Payment / fee per result

▪ Customer pays up-front for all the milk he will drink over the course of his life

▪ Alternatively he buys the cow and can milk the cow as long as the death does not tell them and the cow apart

▪ You can drink milk as much as you want until the cow dies.

▪ Every moth you pay installment which is a fraction of the cow’s value.

▪ After you pay off the whole value (last instalment) you drink for free

▪ You pay every month a set fee.

▪ Within this fee you can drink as much as you want milk

▪ You can get out of the agreement anytime you want

▪ You pay for the glass of milk you have drunk. You can go to the farmer anytime you want and rink milk.

▪ If you don’t drink you don’t have to pay

▪ You pay for the glass of milk only if your thirst was quenched

▪ If this did not happen you do not pay for this glass of milk

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Let’s have a look how the customer would have to pay for the milk in the case of different revenue streams models

▪ You have an agreement with the farmer that he gives you max 2 glass as he believes that this should quench you thirst. Usually, it is the case

▪ You pay him fixed amount for that

▪ You drink for free as much as you want. You can even bath in the milk

▪ The farmer is secretly making photos of you drinking milk and using it to promote his YouTube, Facebook and Instagram account

▪ You can have for free 1/3 of the glass of milk

▪ Everything above that you have to pay

▪ For 1 week you can drink the milk for free but afterwards you have to start paying

▪ If you don’t drink at least 7 glasses a milk a week you will have to pay a penalty

Payment / fee per effort

Free

Freemium

Free Trial

Penalty

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When to use specific revenue streams?

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Let’s have a look under what conditions and in what industries you should use the specific revenue stream model

1-off / lump sum payment

▪ The most often used model, especially when the price is low, customer like to change the supplier a lot

▪ This is similar to one-night stand so strength of the brand is crucial

▪ If you go have a strong brand that matters a lot for your customer this model is for you

▪ Mainly used in FMCG, some SMCG, small services

When to use Examples

Instalments

▪ This model is often used with expensive items

▪ Going from lump sump to installments usually drastically change the customer base size

▪ Mentally much easier to swallow than 1-off payments

▪ Great model for SMCG: TV sets, computers, furniture, houses

Subscription

▪ Holly Grail of startups

▪ It is often used for services that you will repetitively use over long period of time: mobile phone, health insurance, SaaS, Video on-demand

▪ Gives you huge predictability of revenues and you concentrate on value and content and less on marketing

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Let’s have a look under what conditions and in what industries you should use the specific revenue stream model

Payment / fee per usage

▪ This model is used when you are not able to predict the usage

▪ You set the price per unit of usage (i.e. time, natural unit, number of uses etc.) in a contract and then the payment is based on usage

▪ Widely used i.e. for electricity, water etc.

When to use Examples

Payment / fee per result

▪ Here as a customer you want to buy the specific result. You are not interested in the effort

▪ Widely used in B2B especially in the services

▪ In advertisement the result can be view (CPM), clicks (CPC), lead (CPL), sale (CPS)

Free

▪ Very often used in 2-sided markets and UGC when 1-side has a free access and the other one covers all costs

▪ Usually requires great number of users

▪ Still you collect money somehow to support you: fees for advertisement, fees for access, donations etc.

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Let’s have a look under what conditions and in what industries you should use the specific revenue stream model

Freemium

▪ This model goes usually hand in hand payment per usage or subscription

▪ Can be treated as a selling tactic

▪ Often used for digital goods especially software (SaaS)

▪ Very popular with the mobile apps especially games where you create virtual economy

When to use Examples

Free trial

▪ This model goes usually hand in hand with payment per usage or subscription

▪ Can be treated as a selling tactic

▪ Often used for digital goods especially for B2C market i.e. video on demand

Penalty

▪ Penalty are used heavily as a part of other contracts

▪ Can be used also in cases when you want to motivate people to obey certain rules based on behavior contracts

▪ Heavily used by the government, education and in many apps

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Case studies of creative revenue generation

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Ryanair

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Raynair is an example of very creative company when it comes to revenue side

Dynamic pricing and no so low prices

Unbundling

Charge for everything

Alternative revenue stream

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Ryanair has multitude of revenue streams. Surprising the most money comes from selling the planes

Unbundled services i.e. fee for additional luggage, food

bought at the airplane

Additional products and services connected with the travelling (hotels, renting a

car)Marketing fees from local

airports

Ads in the planes / webpage

Money made on selling the planes

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Legimi

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Legimi is similar to Kindle. It has managed to capture more of e-book market by innovative approach to revenue especially by selling you subscription plans. Below example of 4 plans

They keep traditional sales per piece

Subscription models with limits to consumption

Free trial

E-book reader – like Kindle

Source: Legimi

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Dollar Shave Club

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DollarShaveClub disrupted the whole industry by introducing subscription instead of irregular purchases

From lump sump to subscription

From retail chain sales to direct-to-consumer distribution

3 subscription plans

Free handle (no entry barriers)

You can manage the plan (frequency, when to receive}

Source: DollarShaveClub.com

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Canva

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Canva contrary to majority SaaS in this space is shying away from subscription and you can buy specific elements. So they went from subscription model to pay per usage (low fee – 1 USD for basic usage rights)

Freemium

Payment / fee per usage

Fixed fee per element

SaaS

Source: Canva.com

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Sandwich Video

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Sandwich Video has been making video ads for startups and corporations. With startup they have been very innovative in charging them

They main fee is in equity or revenue sharing

Corporations are charged in traditional model

They take small fee per video from startups

Source: Sandwich Video

They create viral content that boosts brands (startup & their)

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For more business hacks check my on-line course. Below specially for you a big discount. You will find there a lot of additional resources

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Business hacks, tactics and tricks -practical guide

$90$15

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