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Revenue Streams
Lean Launchpad: Digital Health
UCSF Entrepreneurship Center
October 29, 2013

Abhas Gupta, MD
Mohr Davidow...
Revenue and Costs

In 2 Weeks

This Week

With product/market fit and customer growth established,
how does your company m...
Recommended Reading
“Pricing Strategies - Wikipedia”
http://bit.ly/18ujldx
“E-Commerce is a Bear”
http://bit.ly/1eZLMpk
“P...
BIG IDEA:
Strategy + Tactics
Revenue Strategy

Pricing Tactics

Each is distinct, and only together do
they make a coheren...
Revenue Strategy
Considerations
What value is the
customer paying for?

What aligns with your
long-term success?

What fit...
Common Revenue Strategies
Advertising

Intermediation Fee

Licensing

Subscriptions

Usage

Physical asset sales tend to b...
Pricing Considerations
Market Type
Affects Pricing

Ability to Pay

Monopoly vs.

Reimbursed

Oligopoly vs.

vs.

Pure Com...
Common Pricing Tactics
Fixed

Cost-plus pricing, value-based pricing,
volume-based/step-pricing, market-oriented
pricing, ...
BIG IDEA:
Value-based > Cost-based

Value-based
Pricing

Cost-based
Pricing

Most common pricing mistake for startups!
Projecting Revenue

Key Considerations: Market type, competitor
entrenchment/feasible growth rates, % share, sales spend,
...
Cash Management Implications

Ca

ure
pt

are
Sh

Hoard Cash
Key Milestones
Product: Alpha? Beta? Upsell features?
Customers: First customer in segment? First 100 customers?
10M MUVs ...
For Next Week
Revenue Model
and Pricing

Diagram of
Payment Flows

3-Year Income
Statement
Revenue Streams
Lean Launchpad: Digital Health
UCSF Entrepreneurship Center
October 29, 2013

Abhas Gupta, MD
Mohr Davidow...
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UCSF Life Sciences Week 5 digital health: Revenue streams

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UCSF Life Sciences Week 5 digital health: Revenue streams

  1. Revenue Streams Lean Launchpad: Digital Health UCSF Entrepreneurship Center October 29, 2013 Abhas Gupta, MD Mohr Davidow Ventures @abhasguptamd v2
  2. Revenue and Costs In 2 Weeks This Week With product/market fit and customer growth established, how does your company make money from each customer segment?
  3. Recommended Reading “Pricing Strategies - Wikipedia” http://bit.ly/18ujldx “E-Commerce is a Bear” http://bit.ly/1eZLMpk “Pricing Experiments You Might Know, But Can Learn From” http://bit.ly/1eZLVt4
  4. BIG IDEA: Strategy + Tactics Revenue Strategy Pricing Tactics Each is distinct, and only together do they make a coherent revenue model
  5. Revenue Strategy Considerations What value is the customer paying for? What aligns with your long-term success? What fits with customers’ habits? When is it the right time to monetize? “Innovative” revenue models are not easy!
  6. Common Revenue Strategies Advertising Intermediation Fee Licensing Subscriptions Usage Physical asset sales tend to be less relevant (obviously), and shared savings are rare!
  7. Pricing Considerations Market Type Affects Pricing Ability to Pay Monopoly vs. Reimbursed Oligopoly vs. vs. Pure Competition Out-of-pocket Know Your Competition Pricing should be explored in the context of a specific revenue strategy
  8. Common Pricing Tactics Fixed Cost-plus pricing, value-based pricing, volume-based/step-pricing, market-oriented pricing, premium decoy pricing, freemium Less common in digital health: target pricing, loss leader pricing Dynamic Negotiated (often dictated by enterprise need, size, and degree of support) Less common in digital health: yield management, real-time markets, auctions Though not a tactic, PMPM (Per Member Per Month) is an important pricing unit used frequently by payers & employers
  9. BIG IDEA: Value-based > Cost-based Value-based Pricing Cost-based Pricing Most common pricing mistake for startups!
  10. Projecting Revenue Key Considerations: Market type, competitor entrenchment/feasible growth rates, % share, sales spend, channel mix, cohort LTVs
  11. Cash Management Implications Ca ure pt are Sh Hoard Cash
  12. Key Milestones Product: Alpha? Beta? Upsell features? Customers: First customer in segment? First 100 customers? 10M MUVs threshold? 100K DAUs? Revenue: $100K? $1MM? Revenue growth rate? % one-time vs. recurring? Margin: 20% aggregate/per segment? 50%? Time to breakeven? Fundraising Considerations
  13. For Next Week Revenue Model and Pricing Diagram of Payment Flows 3-Year Income Statement
  14. Revenue Streams Lean Launchpad: Digital Health UCSF Entrepreneurship Center October 29, 2013 Abhas Gupta, MD Mohr Davidow Ventures @abhasguptamd

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