7 SaaS Revenue Streams
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7 SaaS Revenue Streams

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Learn to make money, or not to leave money on the table, with SaaS! This is an overview of the seven SaaS Revenue Streams created by Lincoln Murphy of Sixteen Ventures. The seven streams used in......

Learn to make money, or not to leave money on the table, with SaaS! This is an overview of the seven SaaS Revenue Streams created by Lincoln Murphy of Sixteen Ventures. The seven streams used in SaaS Revenue Modeling are: Recurring, Ecosystem, Ancillary, Network Effect, Products, Services, and Advertising.

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  • 1. Draft 11/09 SaaS Revenue Modeling: Introducing the 7 Revenue Streams http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 2. Alternate Title Don’t Leave Money on the Table: Take Advantage of Being a SaaS Vendor http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 3. The goals for a SaaS vendor should be different than a Legacy Software vendor Producers Scalable Revenue Streams Consumers Understanding why* allows for proper Revenue Modeling *business scalability, increased CLV, leveraging multi-tenancy, etc. http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 4. Legacy Software Customers Developers Channels Three basic elements http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 5. Software-as-a-Service (SaaS) Customers Developers Channels Same elements http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 6. Software-as-a-Service (SaaS) Producers Consumers Ecosystem Different approach http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 7. Software-as-a-Service (SaaS) Producers Consumers Network Effect Ecosystem Very different approach http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 8. Software-as-a-Service (SaaS) Producers Consumers Network Effect Key differentiators Ecosystem http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 9. Legacy Software Business Structure Intellectual Marketing Property Revenue Technology Model Loosely-coupled, at best http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 10. SaaS Business Architecture Intellectual Marketing Property Network Centricity Technology Revenue Model All aspects are tightly coupled http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 11. Revenue Model Intellectual Products Marketing Property Subscriptions Ecosystem Network Network Centricity Effect Services Advertising Revenue Technology Model Ancillary Revenue Model consists of Revenue Streams http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 12. SaaS is not a Revenue Model or Pricing Strategy! Monthly SaaS Subscriptions If you only leverage “subscriptions” you are leaving money on the table http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 13. Architecture Marketing Revenue Model separate Pricing Strategy Understand where each piece fits into the overall SaaS Business Architecture http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 14. Pricing Strategy must be separated from Revenue Streams Revenue Model separate Pricing Strategy Pricing Strategy is applied to Revenue Model http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 15. How can you apply Pricing Strategy without knowing what Revenue Streams you’ll leverage? Revenue Model separate Pricing Strategy Use Pricing Strategy to drive users to Scalable Revenue Streams http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 16. Agile Revenue Generation is key... Architecture Marketing Revenue Model separate Pricing Strategy Revenue Model + Vertical Specific Pricing = Agility http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 17. Agile Revenue Generation... Adjacent Vertical Ancillary Market Ancillary Market Subscriptions Network Effect Ecosystem Ancillary Products Services Ads applies to Subscriptions & the other 6 Revenue Streams http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 18. 7 SaaS Revenue Streams Products Subscriptions Ecosystem Network Effect Services Advertising Ancillary http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 19. Less Scalable Revenue Streams Products Subscriptions Ecosystem Network Effect Services Advertising Ancillary http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 20. Scalable Revenue Streams Products Subscriptions Ecosystem Network Effect Services Advertising Ancillary http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 21. Revenue Metrics Modules Users Storage CPU Units Reports Products Transactions Files etc. Metrics Subscriptions Ecosystem Network Effect Metrics are built into the application Services Advertising Ancillary Each revenue stream contains metrics http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 22. Revenue Metrics Metrics Pricing Bundle #1 Pricing Bundle #2 Pricing Bundle #3 Modules Users Storage Modules Users Storage Modules Users Storage CPU Units Reports CPU Units Reports CPU Units Reports Transactions Files etc. Transactions Files etc. Transactions Files etc. Metrics from any or all revenue streams that are represented in the application are bundled, along with timeframes (monthly, annual, etc.), during Pricing Strategy based on marketing goals http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 23. Revenue Metrics Metrics Different bundles for different markets Pricing Bundle #1 Pricing Bundle #2 Pricing Bundle #3 Modules Users Storage Modules Users Storage Modules Users Storage CPU Units Reports CPU Units Reports CPU Units Reports Transactions Files etc. Transactions Files etc. Transactions Files etc. Separating Revenue Model & Pricing Strategy improves agility and allows pricing to be aligned with market requirements; critical when entering adjacent markets http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 24. Revenue Metrics Metrics Different bundles for different markets Pricing Bundle #1 Pricing Bundle #2 Pricing Bundle #3 Modules Users Storage Modules Users Storage Modules Users Storage CPU Units Reports CPU Units Reports CPU Units Reports Transactions Files etc. Transactions Files etc. Transactions Files etc. But what are these metrics? How are the pricing bundles determined? These are tied to your company and your market! http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved
  • 25. Get the detailed guide to the 7 SaaS Revenue Streams with examples: http://saasrevenue.com/7streams.html If this is a SaaS Revenue Model emergency put down the mouse and call us: (972) 200-9317 http://saasrevenue.com