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Xmba 296 t lecture 5   revenue

Xmba 296 t lecture 5 revenue






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    Xmba 296 t lecture 5   revenue Xmba 296 t lecture 5 revenue Presentation Transcript

    • The Lean LaunchPad Session 5: Revenue Model and Pricing Professors Steve Blank,Jon Feiber, Jim Hornthal, Oren Jacob https://sites.google.com/site/xmba296t / XMBA296T
    • images by JAM customer segments key partners cost structure revenue streams channels customer relationships key activities key resources value proposition
    • REVENUE STREAMS what are customers really willing to pay for? how? are you generating transactional or recurring revenues?
      • Test Hypotheses:
      • Problem
      • Customer
      • User
      • Payer
      • Test Hypotheses:
      • Demand Creation
      • Test Hypotheses:
      • Channel
      • Test Hypotheses:
      • Product
      • Market Type
      • Competitive
      • Test Hypotheses:
      • Pricing Model / Pricing
      • Test Hypotheses:
      • Size of Opportunity/Market
      • Validate Business Model
      • Test Hypotheses:
      • Channel
      • (Customer)
      • (Problem)
      Customer Development Team Agile Development
    • Two types of companies
      • Single-sided markets that care about revenues
      • Multi-sided markets that care about users first, revenues second
    • “ 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?
    • “ Users First” Companies
      • 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?
    • The Two Key Questions
      • What’s my revenue model ?
      • Within the revenue model – how do I price the product?
    • Revenue Model = the strategy the company uses to generate cash from each customer segment
    • Pricing Model = the tactics you use to set the price in each customer segment
    • buzz group
    • Web/Mobile Revenue Models
    • “Direct” revenue models
      • Sales: Product, app, or service sales
      • Subscriptions : SAAS, games, monthly subscription
      • Freemium: use the product for free: upsell/conversion
      • Pay-per-use : revenue on a “per use” basis
      • Virtual goods : selling virtual goods
      • Advertising sales : unique and/or large audience
    • “Ancillary” revenue models
      • Referral revenue : pay for referring traffic/customers to other web or mobile sites or products.
      • Affiliate revenue : finder’s fees/commissions from other sites for directing customers to make purchases at the affiliated site
      • E-mail list rentals : rent your customer email lists to advertiser partners
      • Back-end offers : add-on sales items from other companies as part of their registration or purchase confirmation processes, or “sell” their existing traffic to a company that strives to monetize it and share the resulting revenu3
    • Physical Revenue Models
    • Asset Sale
      • Sale of ownership right to a physical product
    • Usage Fee
      • Usage of service. Fee is proportional to the usage of the service.
    • Subscription Fee
      • Fee for continuous access to a service
    • Renting
      • Fee for temporary access to a good or service
    • Licensing
      • Fee for use of some IP (including software)
    • Intermediation Fee
      • Often found in marketplaces of various types, a fee for bringing together two or more parties involved in a transaction
    • Advertising
      • Fee paid by brands and companies to get in front of potential customers
    • Pricing
    • Other words we use in the place of price
      • Fee
      • Commission
      • Subscription
      • Toll
      • Interest
      • Rent
      • Tax
      • Shipping
    • Common approaches to pricing
      • Cost + markup
      • Typically not a strategic way to price
      • Driven by internal economics and not customer insight
      Cost based Value 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
    • Pricing Choices (1)
      • Cost-based pricing : based on a multiple of actual product cost. Typically priced for maximum revenue/profit versus volume
      • Value pricing : based on the value delivered by the product rather than the cost itself
      • Competitive pricing : positions the product vs. others in its competitive set, typically in existing markets
      • Volume pricing : designed to encourage multiple purchases or users
    • Pricing Choices (2)
      • Portfolio pricing . Mix of high markups and some with low, depending on competition, lock-in, value delivered, and loyal customers
      • “ Razor/razor blade” model : part of the product is free or inexpensive; yet it pulls through repeat, highly profitable purchases on an ongoing basis
      • Subscription : while now thought of a software strategy, the “Book of the Month Club” pioneered this for physical products
      • Leasing: lowers the entry cost for customers. Provides constant earnings over a period of years
    • 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?
    • Competition as an influence
      • Pure competition
      • Oligopoloy
      • Monopoloy
      Nature of Market How they will react?
      • What is their product?
      • What are their costs and prices?
      • “ What pricing will make them feel the worst?”
    • Other Revenue Issues
      • Channel issues
        • Return rights?
        • Channel discounts? SPIFs?
      • Market Type?
    • New Market Revenue Forecast New Market Sales Curve
    • Existing Market Revenue Forecast Existing Market
    • Resegmented Market Revenue Forecast
    • Other 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?
    • buzz group