Consultancy Program and Project Management New Business
Circular Revenue Models
Making money as a manufacturer in the Circ...
Revenue models – circular economy © 2014 Mare2
Profile of Mare Advies
Consultancy
Program and Project
Management
New Busin...
Revenue models – circular economy © 2014 Mare3
Wat is er aan
de hand?
Strong growth of the
world population
…who also want...
Revenue models – circular economy © 2014 Mare4
Cost structure of Dutch industry sectors indicates a
high sensitivity to co...
Revenue models – circular economy © 2014 Mare5
What are the building blocks of the Circular
Economy?
I. Circular product
d...
Revenue models – circular economy © 2014 Mare6
Business model and revenue model
Framework
Source: A. Osterwalder
Revenue models – circular economy © 2014 Mare7
DBFMO and ESCo, ‘new’ ways of contracting
D
D Design
B Build
F Finance
M Ma...
Revenue models – circular economy © 2014 Mare8
Leasing of clothing
Circular Business Models
Source:www.dutchspirit.com
Revenue models – circular economy © 2014 Mare9
Pay-per-Lux, a whole new way to deliver light
“I told Philips, ‘Listen, I n...
Revenue models – circular economy © 2014 Mare10
Green wheels, only pay for use
Circular Business Models
Source:www.greensh...
Revenue models – circular economy © 2014 Mare11
Overall conclusion: 3 generic revenue models
Ownership
Price of purchase
U...
Revenue models – circular economy © 2014 Mare12
Model I: pay for ownership
Cost structure
Interest (over purchase)
Depreci...
Revenue models – circular economy © 2014 Mare13
Model II: pay for use
Cost structure
Costs of usage
Revenue Streams
(- Cos...
Revenue models – circular economy © 2014 Mare14
Model III: pay for results
Cost structure
Revenue Streams
(- Cost streams)...
Revenue models – circular economy © 2014 Mare15
Both user and manufacturer profit from new
business models
ManufacturerUse...
Revenue models – circular economy © 2014 Mare16
Project ‘Eigen Haard’: earning the usage of high-
end white goods back wit...
Revenue models – circular economy © 2014 Mare17
Circular Economy demands more than a change of
processes: a change of the ...
Revenue models – circular economy © 2014 Mare18 Source: The Lean Startup
How to start as an organization?
Test
Ideas
Adjus...
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Circular revenue models

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Circular Revenue Models: making money as a manufacturer in the Circular Economy

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Circular revenue models

  1. 1. Consultancy Program and Project Management New Business Circular Revenue Models Making money as a manufacturer in the Circular Economy
  2. 2. Revenue models – circular economy © 2014 Mare2 Profile of Mare Advies Consultancy Program and Project Management New Business • Founded in 2011 by 2 experienced consultants • 300+ projects • Business model innovation and strategy execution • Multiple industry sectors www.mare-advies.nl
  3. 3. Revenue models – circular economy © 2014 Mare3 Wat is er aan de hand? Strong growth of the world population …who also want to consume… …leading to shortages in abundance and depletion of the planet… …in short, a new (industrial) model is inevitable …and rising / highly volatile raw material prices…
  4. 4. Revenue models – circular economy © 2014 Mare4 Cost structure of Dutch industry sectors indicates a high sensitivity to commodity prices 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Other Labor Energy Material Source: CBS, 2011
  5. 5. Revenue models – circular economy © 2014 Mare5 What are the building blocks of the Circular Economy? I. Circular product design & production II. New Business Models III. Cascades & reverse cycles IV. Accelerators
  6. 6. Revenue models – circular economy © 2014 Mare6 Business model and revenue model Framework Source: A. Osterwalder
  7. 7. Revenue models – circular economy © 2014 Mare7 DBFMO and ESCo, ‘new’ ways of contracting D D Design B Build F Finance M Maintain O Operate Circular Business Models E Energy S Service Co Company
  8. 8. Revenue models – circular economy © 2014 Mare8 Leasing of clothing Circular Business Models Source:www.dutchspirit.com
  9. 9. Revenue models – circular economy © 2014 Mare9 Pay-per-Lux, a whole new way to deliver light “I told Philips, ‘Listen, I need so many hours of light in my premises every year. If you think you need a lamp, or electricity, or whatever – that’s fine. But I want nothing to do with it. I’m not interested in the product, just the performance. I want to buy light, and nothing else.” Thomas Rau Circular Business Models Source:www…..
  10. 10. Revenue models – circular economy © 2014 Mare10 Green wheels, only pay for use Circular Business Models Source:www.greensheels.com
  11. 11. Revenue models – circular economy © 2014 Mare11 Overall conclusion: 3 generic revenue models Ownership Price of purchase Usage Price per period of use Usage Price per result Joint interests Customer-supplier Usage optimization Pay for use Pay for results Circular Business Models II I III
  12. 12. Revenue models – circular economy © 2014 Mare12 Model I: pay for ownership Cost structure Interest (over purchase) Depreciation Costs of usage Maintenance & repair Installation & de- installation Insurance UserManufacturer Revenue stream Service Financial services Installation & de- installation Consumables Sales price
  13. 13. Revenue models – circular economy © 2014 Mare13 Model II: pay for use Cost structure Costs of usage Revenue Streams (- Cost streams) Payment for usage (periodically) Consumables UserManufacturer Interest (over purchase) Insurance Maintenance & repair Installation & de- installation Depreciation
  14. 14. Revenue models – circular economy © 2014 Mare14 Model III: pay for results Cost structure Revenue Streams (- Cost streams) Payment for results UserManufacturer Interest (over purchase) Insurance Maintenance & repair Installation & de- installation Depreciation Costs of usage
  15. 15. Revenue models – circular economy © 2014 Mare15 Both user and manufacturer profit from new business models ManufacturerUser + savings per machine: material (about 108 kg. steel & energy (2,5 ton CO2) + high-end machines are well suited for refurbishment and remanufacturing Small fact: more households own a washing machine than a car Source: Ellen MacArthur Foundation
  16. 16. Revenue models – circular economy © 2014 Mare16 Project ‘Eigen Haard’: earning the usage of high- end white goods back with energy savings Circular Business Models
  17. 17. Revenue models – circular economy © 2014 Mare17 Circular Economy demands more than a change of processes: a change of the system Barriers • Ownership • Legal framework • Costs of transaction Legal • (Book) value • Financial framework • Funding Financial • Second hand • TCO vs. purchase • Transparency Societal • Dependency • Shared risk model • Complexity Operational Accelerators • ‘Rules of the game’ • ‘Taxation system’ • New laws Legal • Accounting rules • Investment funds • Risk mgt., tools Financial • Awareness • Impulses • Education Societal • Cooperation • Processes & systems • Standards & norms Operational
  18. 18. Revenue models – circular economy © 2014 Mare18 Source: The Lean Startup How to start as an organization? Test Ideas Adjust Knowledge Develop Concepts www.mare-advies.nl Consider new 'circular' ways and business models Detail using the business model framework (see slide 6): what are the principles? Determine how the key principles can be verified: cheap, fast & with little risks Test in the market with selected customers and collect the data. The aim is to learn, immediate success is just luck Learn of the test: identify what is working and what not. Draw conclusions Adjust the business model or, when testing successfully, roll out in the whole market start small test roll out after success

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