Revenue models in 15 minutes


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Speed date your revenue models!

Come Saturday 2 June 2012, Futurebooks will review revenue models from 15 finalists, from the Ideas Inc Business Challenge.

Each team will have 5 minutes to pitch the revenue model they love most, and show us the money. Put aside your product and focus on how your business makes #cash.

Excite us by matching the revenue model and numbers.

Published in: Business, Technology

Revenue models in 15 minutes

  1. 1. Prepared for Ideas Inc,Nanyang TechnologicalUniversity.As of June 2012.REVENUE IN15 MINUTES
  2. 2. STAY INTOUCH Email us at or visit
  5. 5. POSSIBLE REVENUEMODELS Advertising SMS sent to twitter
  7. 7. ANSWER THEFUNDAMENTALS Pain point Value proposition Revenue model
  8. 8. REVENUE MODELINNOVATION T diti l t ti h Traditional segmentation has historically relied on geography or broad demographic traits to segment Saul Berman, Not for Free: Revenue Strategies customers. for a New World Behavioral segmentation looks to the custo e customer to see how t ey use the o they t e product, on what platforms or through what channels, how are they paying for it etc.
  9. 9. SOLVE SIGNIFICANTPAIN POINTS Create pain killers, not
  10. 10. WHO WILLPAY FOR IT? End users / buyers Sellers Advertisers or sponsors The end user doesn’t always pick up the bill. Govt subsidies (medical reliefs etc)
  11. 11. WHAT EFFECTDOES PRICE HAVE? Inelastic Elastic demand demand $ $ demand demand P2 P2 P1 P1 Q2 Q1 Qty Q2 Q1
  12. 12. WHEN DO WE MAKE REVENUE? Follow on product, existing market New product, new market Revenue Revenue lag lagRevenue Revenue Time Time Rate of revenue Rate of revenue making (cash) making (accrual)
  14. 14. ANTICIPATE NOTMAKING REVENUE Change product Change revenue model Change sales
  15. 15. DEFINE NEW ANDEXISTING CUSTOMERS Customer acquisition Customer retention q g Cost of acquiring g Cost of maintaining Cost of conversion Life-time value from free to paid Upsell An existing customer is 3 times more
  17. 17. PRODUCT SALESREVENUE MODELS Model Description Example Clicks and bricks Traditional location-based retail, combined with Wal-Mart (eg) internet + mobile. After-sales Profit from recurring servicing, post sale. Mercedes service Franchise Franchise fees and sometimes product sales. Subway License Leverage existing sales channel to sell products. Adobe Group-buying Improve purchase power of consumers Groupon Rental / leasing Differentiate through service Hertz Govt subsidy Product is made free, or subsidised by Govt. Pharma Consulting Design specialised products for other manufacturers
  18. 18. INTERNET REVENUEMODELS Model Description Example Advertising Cost-per-click, Cost-per-impression, cost-per- Google AdSense acquisition, affiliate marketing E-commerce Compete with traditional retails using range and price Transaction fee Utilities which facilitate commerce and take a PayPal commission. It is pay-per-use. Software-as-a- Subscription model with recurring billing service Third party Service is free to the direct user, paid for by a third sponsorship party sponsorship Donation Users decide what the product or service is worth
  19. 19. GAME REVENUEMODELS Model Description Example Virtual goods Buy functional, decorative, in-game items Nexon Subscription S b i i Basic product i f i d is free, b add-ons are additional but dd ddi i l Zynga tiers Advertising Serving contextual ads to gamers Electronic Arts Land use fees Virtual land is sold leased to individuals Second Life Merchandise Purchase physical goods to activate a online Webkinz toys membership Event fees Differentiated experience Netamin s
  21. 21. PRODUCTSALES Total revenue Sale price Sales p per month $250,000 $100 2,500 units Total expense COGS Distribution R+D per month $187,500 $187 500 $30 $20 $
  22. 22. ADVERTISINGFEES / MNTH Total revenue RPM* Page visits Pages** p per month $250,000 $2 175,000 30,000 Total expense Editors Cost per editor Pages each per month $ , $75,000 100 2,500 , 30 *Revenue per thousand visits including CPC, CPM and CPA ** Singapore’s top sites receive XYZ per month (Source: Alexa)
  23. 23. FREEMIUM +PREMIUM Total revenue Premium Premium fee / p per month customers mnth $250,000 20,000 $25 Total expense Marketing to Other costs per month get customer $75,000 50,000 25,
  24. 24. WHAT VCsWANT
  25. 25. CLEAR FINANCIALASSUMPTIONS Clearly state on page on of the business plan 4 key financial assumptions which underpin the entire business plan. d i th ti b i
  26. 26. SCALABILITY Calculate the cost and revenue of adding one addition customer. Rethink products and services if necessary. d
  27. 27. TRUE PICTURE Plan for victory, but prepare for setbacks. Underestimate revenue, and overestimate costs.
  28. 28. different-revenue-models-presentationCREDITS in-a-world-of-free in a world of free
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