Revenue appreciation: Introduction to finding a revenue model
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On April 24, we conducted a two hour exploration of revenue and what it takes to make a 1 dollar. The session was designed to open thinking to possibilities of making revenue in a start-up, and pitfalls chasing particular models.
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Revenue appreciation: Introduction to finding a revenue model
- 1. Prepared for directors of Hong Kong companies As of April 2014 REVENUE APPRECIATION: INTRODUCTION
- 8. www.futurebooks.com HELP MICRO BRANDS Zelos fully funded via Kickstarter
- 10. ABOUT REVENUE
- 11. www.futurebooks.com ANSWER THE FUNDAMENTALS Pain point Value proposition Revenue model http://futurebooks.com.sg/blog/writing-business-plans-that-speak-to-investors/2308
- 12. www.futurebooks.com OVERVIEW 1. Market size 2. Who should pay? 3. Build revenue into tech 4. Price perception 5. Competitors
- 13. www.futurebooks.com ENTREPRENEURS HATE BOOKKEEPING I have no time for it. I don’t understand it. It adds no value. I hate it. It’s for bean counters Whatever
- 14. www.futurebooks.com CFO IS A POWERFUL + CREATIVE CHARACTER I love non- GAAP metrics
- 15. www.futurebooks.com CFO IS A POWERFUL + CREATIVE CHARACTER How should we account for revenue?
- 21. www.futurebooks.com 3,000 BLOG STORES IN SINGAPORE Only 10 are addressable
- 22. www.futurebooks.com 3D PRINTER FOR DENTISTS Capital expenditure by a dentists
- 24. WHO PAYS?
- 25. www.futurebooks.com WHO WILL PAY FOR IT? End users / buyers Sellers Advertisers or sponsors Govt subsidies (medical reliefs etc) The end user doesn’t always pick up the bill.
- 26. www.futurebooks.com BEHAVIOURAL SEGMENTATION Traditional segmentation has historically relied on geography or demographic traits. Behavioral segmentation looks to the customer to see how they use the product, on what platforms or through what channels. Saul Berman, Not for Free: Revenue Strategies for a New World
- 27. www.futurebooks.com Validate your customer’s spend per annum
- 28. www.futurebooks.com HYPOTHETICAL F+B SPEND PER ANNUM USD Revenue 2,000,000 Annual expenditure COGS 500,000 Equipment and maintenance 50,000 Salary 500,000 Rent 250,000 Public relations 20,000 Utilities 30,000 You are here
- 30. www.futurebooks.com MORE TRANSACTIONAL THE REVENUE MODEL, THE LESS EXPOSURE
- 31. www.futurebooks.com PEOPLE CHANGE THE DYNAMICS OF A SALE
- 33. www.futurebooks.com INTERMEDIARIES Entire business built on intermediary called recruiters
- 34. www.futurebooks.com HYPOTHETICAL RECRUITER SPEND PER ANNUM USD Revenue 5,000,000 Annual expenditure Salary 750,000 Rent 150,000 Recruitment ads 75,000 Utilities 25,000 You are here
- 36. www.futurebooks.com VALUE CHAIN Translate a menu Menulance Embed menu Menu Modo Host a menu Let’s Eat Hottest part of the value chain is here.
- 38. www.futurebooks.com UNDERSTAND Revenue Line item spend Trends and behaviour http://futurebooks.com.sg/blog/writing-business-plans-that-speak-to-investors/2308
- 40. www.futurebooks.com LAST MINUTE BUSINESS PLAN The product Revenue model Sales projections
- 41. www.futurebooks.com INTEGRATED BUSINESS PLAN Revenue, product and sales integrated in one story
- 42. www.futurebooks.com THEY HAD NO REVENUE* TWITTER A SPECIAL CASE
- 43. www.futurebooks.com POSSIBLE REVENUE MODELS Advertising SMS sent to twitter Pay-per-tweet
- 48. www.futurebooks.com Why are dishes priced the same?
- 50. www.futurebooks.com.sg SHOULD WE MAKE IT FREE? Free now. Upsell later.
- 51. www.futurebooks.com.sg SHOULD WE MAKE IT FREE? Nightclubs replaced alcohol with water and energy drinks.
- 52. www.futurebooks.com HONDA MSX125 Saul Berman, Not for Free: Revenue Strategies for a New World Price rose in 2014
- 53. www.futurebooks.com WHAT EFFECT DOES PRICE HAVE? Qty $ Inelastic demand P2 P1 Q2 Q1 Qty $ P2 P1 Q2 Q1 Elastic demand demand demand
- 54. www.futurebooks.com GOOGLE DON’T MAKE FREE PRODUCTS Intermediary market of sellers Mums and pop shops
- 56. www.futurebooks.com UNDERSTAND Effects of free Effects of a discount When price can rise http://futurebooks.com.sg/blog/writing-business-plans-that-speak-to-investors/2308
- 57. COMPETITORS
- 60. www.futurebooks.com WRONG ASSUMPTIONS $600 price point $100 to acquire a customer Marketing-focus http://futurebooks.com.sg/blog/writing-business-plans-that-speak-to-investors/2308
- 61. www.futurebooks.com MAKE MISTAKES AT THE LOWEST COST. Use an eye dropper, not a bucket
- 62. www.futurebooks.com IDENTIFY REVENUE DRIVERS Director drawings Travel allowance iPad purchase http://futurebooks.com.sg/blog/writing-business-plans-that-speak-to-investors/2308
- 63. www.futurebooks.com.sg DO YOU REALLY NEED TO BUY IT? Buy items which contribute directly to revenue Think twice.
- 64. www.futurebooks.com WHICH CUSTOMER TO SPEND ON? Customer acquisition Cost of acquiring Cost of conversion from free to paid Customer retention Cost of maintaining Life-time value Upsell An existing customer is 3 times more profitable
- 65. www.futurebooks.com WHEN DO WE MAKE REVENUE? New product, new marketFollow on product, existing market Rate of revenue making (cash) Rate of revenue making (accrual) Time Time Revenue Revenue Revenu e lag Revenu e lag
- 66. www.futurebooks.com UNDERSTAND Revenue drivers Test at lowest cost Know the metrics http://futurebooks.com.sg/blog/writing-business-plans-that-speak-to-investors/2308
- 68. www.futurebooks.com TERMS OF USE Restrictions on Use of Contents 1. Except as otherwise provided, the Contents of this Document shall not be reproduced, republished, uploaded, posted, transmitted or otherwise distributed in any way, without the prior permission of FUTUREBOOKS PTE LTD. To use any parts of the Contents of this Document, the user must seek permission in writing, stating the c Contents for use; intent of use; manner of use; time frame of use and identity of the user. FUTUREBOOKS PTE LTD reserves the right to refuse permission without declaring reason(s); and/or if information submitted by user is deemed insufficient. 2. You may view, download and print the Contents if: (a) the Contents are used for non-commercial or personal use only and will not be copied or posted on any network computer or broadcast in any media, and (b) no alterations, additions or modifications of the Contents are made in any way (c) due acknowledgement is given to “FUTUREBOOKS PTE LTD” and citing the sources for the relevant data extracted. 3. Modification of any of the Contents or use of the Contents for any other purpose will be a violation of FUTUREBOOKS PTE LTD ‘s copyright and other intellectual property rights. Graphics and images on this Document are protected by copyright and may not be reproduced or appropriated in any manner without written permission of FUTUREBOOKS PTE LTD. 4. Any request to otherwise reproduce the Contents from this Web Site for publication or commercial use should be addressed to: info@futurebooks.com.sg. Disclaimer of Warranties and Liability 5. The Contents of this Document are provided on an “as is” basis without warranties of any kind. To the fullest extent permitted by law, FUTUREBOOKS PTE LTD does not warrant and hereby disclaims any warranty: (a) as to the accuracy, correctness, reliability, timeliness, non-infringement, title, merchantability or fitness for any particular purpose of the Contents of this Document; (b) that the Contents available through this Document or any functions associated therewith will be uninterrupted or error-free, or that defects will be corrected or that this Document and the server is and will be free of all viruses and/or other harmful elements. 6. FUTUREBOOKS PTE LTD shall also not be liable for any damage or loss of any kind caused as a result (direct or indirect) of the use of the Document, including but not limited to any damage or loss suffered as a result of reliance on the Contents contained in or available from the Document.