Draft
11/09
SaaS Revenue Modeling:
Introducing the 7 Revenue Streams
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Alternate
Title
Don’t Leave Money on the Table:
Take Advantage of Being a SaaS Vendor
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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.
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Legacy Software
Customers Developers
Channels
Three basic elements
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Software-as-a-Service (SaaS)
Customers Developers
Channels
Same elements
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Software-as-a-Service (SaaS)
Producers Consumers
Ecosystem
Different approach
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Software-as-a-Service (SaaS)
Producers Consumers
Network
Effect
Ecosystem
Very different approach
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Software-as-a-Service (SaaS)
Producers Consumers
Network
Effect
Key
differentiators Ecosystem
http://saasrevenue.com Copyright© 2009 Sixteen Ventures / Lincoln Murphy. All Rights Reserved

Legacy Software Business
Structure
Intellectual
Marketing
Property
Revenue
Technology
Model
Loosely-coupled, at best
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SaaS Business Architecture
Intellectual
Marketing
Property
Network
Centricity
Technology Revenue Model
All aspects are tightly coupled
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Revenue Model
Intellectual Products
Marketing
Property Subscriptions Ecosystem
Network Network
Centricity Effect
Services Advertising
Revenue
Technology
Model Ancillary
Revenue Model consists of Revenue Streams
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SaaS is not a Revenue Model or Pricing Strategy!
Monthly
SaaS Subscriptions
If you only leverage “subscriptions” you
are leaving money on the table
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Architecture Marketing
Revenue Model separate Pricing Strategy
Understand where each piece fits into
the overall SaaS Business Architecture
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Pricing Strategy must be
separated from Revenue Streams
Revenue Model separate Pricing Strategy
Pricing Strategy is applied to Revenue Model
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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
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Agile Revenue Generation is key...
Architecture Marketing
Revenue Model separate Pricing Strategy
Revenue Model + Vertical Specific Pricing = Agility
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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
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7 SaaS Revenue
Streams
Products
Subscriptions Ecosystem
Network
Effect
Services Advertising
Ancillary
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Less Scalable Revenue
Streams
Products
Subscriptions Ecosystem
Network
Effect
Services Advertising
Ancillary
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Scalable Revenue
Streams
Products
Subscriptions Ecosystem
Network
Effect
Services Advertising
Ancillary
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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

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

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

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

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