Revenue Streams

Revenue streams really explain how you will capture value for yourself. You have delivered your service and now you need to understand what your preferred way for customers to pay is.


Some different payment methods are:

  • pay per service

  • charging consulting fees

  • retainer fees

  • paying monthly

  • a recurring fee.


Ask yourself, how you will generate the cash from your customer segments to fund your venture. Below are some ideas of how to create revenue:

  • Product/Asset Sales

  • Usage Fees

  • Subscriptions

  • Licensing

  • Brokerage Fee

  • Advertising Spots


Usage Fees

Usage fees increase with the number of times a customer uses your product. A typical example of usage fees is in the telecommunications industry.

Although ISPs (Internet Service Providers) have moved away from this and offered their services for a flat rate per month, some Telco providers still charge based on the minutes of calls you have on a monthly basis. The more you call, the higher your fee.


Subscriptions

One of the most common payment forms these days is that of a subscription fee.

Gyms, online services and applications all run on a subscription-based model which means that rather than paying a one-off fee, the cost is spread over the term of your contract or the length of your contract.

Typical everyday examples of this are your local gym, Spotify and often business software that you might use to start your own company.


Licensing

Licensing is another way you can increase your revenue. If you have some kind of intellectual property that you have created or perhaps if you work in the media industry, licensing is a great way for you to maintain your copyright, and still, get access to revenue.

A typical example would be photographers or design companies that license out their products and use a pay per use license fee model.


Brokerage Fee

Multi-sided platforms such as Amazon, Ali Baba and Trade Me all charge a fee based on the sale transaction value.

Real estate agents also charge a commission based on the sale of the house. Their main activity will be to find the buyer and match the buyer with the seller.


Advertising

Companies with large followings or large communities often use advertising as a way to compensate for revenue. You may see that in some of your favourite apps such as Spotify, Facebook or even YouTube. Although their content and usage are free, the companies will generate some of their revenues from their advertising.


Learning

To get started in thinking about your revenue streams, have a think about how your customers would want to pay. A good way is to think about what competitors are doing and consider what is currently working and not working. Lastly, you want to think about how much people are willing to pay for your service.


How could you capture value for your company?