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Royal Bank Business Builder
Revenue models
Ad-based revenue model
Make revenue from selling advertising space to other businesses. It is common amongst digital platforms because it requires high traffic volume to generate meaningful revenue.
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Added services model
Value-added service (VAS) is a term for non-core services, such as services available at little or no cost, to promote your primary business.
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Affiliate revenue model
It works by promoting referral links to relevant products and collecting commission on any subsequent sales of those products.
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Channel or indirect sales
A B2B sales model where a company sells its product through partners. These partners come in all kinds of forms, from alliances to resellers to brokers.
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Freemium model
A combination of the words “free” and “premium”. It offers basic features of a product or service to users at no cost and charges a premium for supplemental or advanced features.
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Retail sales
Revenue generation is created by buying a product and then increasing or marking up the price before selling it to customers.
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Subscription model
Businesses charge a customer every month or year for use of a product or service. All revenue is deferred and then fulfilled in installments.
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Transactional model
Generate revenue from the individual transactions of goods or services, charging a fee or commission every time a customer uses your service or buys your product.
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Web or direct sales
Payment for goods or services through a digital medium. Web sales involve a customer finding your product via outbound marketing. Direct sales revolve around inbound marketing.
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Revenue model
Now take some time to reflect on your own revenue model. Ask yourself the following questions to understand the needs and behaviours of your customers and how this aligns with your current revenue model.
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01
What value is each customer segment willing to pay for?
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How much are your customers willing to pay?
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03
What are they already paying for?
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04
How do they do pay?
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How do you think they would prefer to pay?
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How does this align with your current revenue model and existing revenue streams?
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What testing and validation have you done with your customers to understand if this is the best revenue model?
Revenue streams
Now over to you, take some time to think about and clearly define each revenue stream within your business, considering:
- From which customer segment is the revenue generated?
- How are they currently paying, and are they satisfied doing so?
- How much revenue do you generate from each revenue stream?
- Is each revenue stream transactional (one-off), recurring (repeating) or both?
- How much does each revenue stream contribute to overall revenues and profits?
- How much does a customer typically spend per transaction/throughout their time with you?
- How often does a customer purchase from you?
