Revenue Streams• How many will
we sell?• Where/Who is the money coming from?• How do we price the product?• Does this add up to a business that’s worth doing?
How Many Will You Sell?•
What was the Market size and estimate of market share?, – Translate into the anticipated number of customers (as in 10% of a million- person market=100,000 customers)• How many can your channel sell?• How much will the channel cost?• How many customer activations? – Revenue? Churn/Attrition rate? customers/?• How much will it cost to acquire a customer? – How many units will they buy from each of these efforts?
How do we price the
product? Pricing Models - Physical• Product-based pricing• Competitive pricing• Volume pricing• Value pricing• Portfolio pricing• The “razor/razor blade” model• Subscription• Time/Hourly Billing• Leasing 9
How do we price the
product? Pricing Models – Web/Mobile/Cloud• Product-based pricing• Subscriptions• Freemium• Pay-per-use• Virtual goods• Advertising sales 10
“Revenue First” Companies• 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?
Start with Key Assumptions• Target
market Sales – USA market – 1.5 M patients Start in EU middle of year 3 – Europe – 2 M patients Start in USA end of year 4• Package Personnel – Reusable wrist watch Average salary $120 K – Disposable sensors / patch Load factor 1.5 – Access to patients data Headcount from 4 to 174 in• Product development year 8 – 4 people in the beginning Financing – $2 million Series A – $3 M – 1.5 years to develop (for BP) Series B – $10 MPrice per package: $150COGS Operating Expenses Profit $60 per unit $90 per unit 19
Does it add up?• Is
the revenue adequate to cover costs in the short term;• Are you confident the revenue will grow materially if not dramatically over time; and• Does the profitability get better as the revenues get bigger? 20
Team Deliverable for Next Week•
What’s your revenue model?• How will you price your products?• Draw the diagram of payment flows• What are your key financial metrics?• Test pricing 100 web customers 10/15 non web?• How do competitors price?• Assemble a rough income statement• Summarized in a 5 Minute PowerPoint Presentation