Engr 245 Session 06  revenues
 

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Engr 245 Session 06 revenues Presentation Transcript

  • 1. E245 Revenue Model
    Ann Miura-Ko
    February 2011
  • 2. value proposition
    customer relationships
    key activities
    customer segments
    key partners
    cost structure
    revenue streams
    key
    resources
    channels
    2
    images by JAM
  • 3. Test Hypotheses:
    • Demand Creation
    Test Hypotheses:
    • Problem
    • 4. Customer
    • 5. User
    • 6. Payer
    Agile Development
    Test Hypotheses:
    • Product
    • 7. Market Type
    • 8. Competitive
    Test Hypotheses:
    • Channel
    • 9. (Customer)
    • 10. (Problem)
    Customer Development Team
    Test Hypotheses:
    • Channel
    Test Hypotheses:
    • Pricing Model / Pricing
    Test Hypotheses:
    • Size of Opportunity/Market
    • 11. Validate Business Model
  • REVENUE STREAMS
    what are customers really willing to pay for? how?
    are you generating transactional or recurring revenues?
  • 12. Two types of companies
    Companies that care about revenues
    Companies that don’t
  • 13. Companies that care about revenues
    Time to doublings for monthly revenues
    Key questions:
    When will I get to $100k/month in revenues?
    When will I get to $1M/month in revenues?
    What assumptions about my business am I making when I reach these milestones?
  • 14. Companies that don’t care
    If you say your business is advertising based:
    How do you get to 10M monthly users
    How do you become one of the top 5 websites visited?
  • 15. This lecture is for those that care about REVENUES…
  • 16. Key Questions
    What are my customers paying for?
    What capacity do my customers have to pay?
    How will you package your product ?
    How will you price the offerings?
    What constitutes cost for the company?
    What are the key financials metrics for your business model?
    What are the risks involved?
  • 17. Other words we use in the place of price
    Fee
    Commission
    Subscription
    Toll
    Interest
    Rent
    Tax
    Shipping
    Tiotopm
  • 18. Common categories of pricing
  • 19. Asset Sale
    Sale of ownership right to a physical product
  • 20. Usage Fee
    Usage of service. Fee is proportional to the usage of the service.
  • 21. Subscription Fee
    Fee for continuous access to a service
  • 22. Renting
    Fee for temporary access to a good or service
  • 23. Licensing
    Fee for use of some IP (including software)
  • 24. Intermediation Fee
    Often found in marketplaces of various types, a fee for bringing together two or more parties involved in a transaction
  • 25. Advertising
    Fee paid by brands and companies to get in front of potential customers
  • 26. Additional components of pricing
    Exclusive vs. non-exclusive
    What do you price? What do you give away for free?
    How does cost vary at different production levels?
  • 27. Common approaches to pricing
    Cost + markup
    Typically not a strategic way to price
    Driven by internal economics and not customer insight
    Cost based
    Based on buyer’s perception of value (e.g. time saved, new efficiency created,etc.)
    Customers don’t necessarily feel that they want to pay this way
    Value based
  • 28. Pricing is strategic
    $50k lighthouse program
    Freemium
  • 29. Competition as an influence
    Pure competition
    Oligopoloy
    Monopoloy
    Nature of Market
    What is their product?
    What are their costs and prices?
    “What pricing will make them feel the worst?”
    How they will react?
  • 30. Customer Archetypes
    Buyer’s name
    Position / title
    Discretionary budget (name of budget and amount)
    How this person is evaluated / promoted / compensated
    What motivates them?
  • 31. Example Customer Archetype
  • 32. Next Week Deliverables
    Identify your core customer archetypes
    Submit interview notes, present results in class.
    Identify what it takes to get to $100k/month in revenues within 12 months and $1M/month in revenues within 24 months
    Did anything change about Value Proposition or Customers/Users, Channel, Demand Creation, Revenue Model?