Revenue models meri.kuikka@aalto.fi jani-pekka.jokinen@aalto.fi

There is no business model without revenue

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Revenue models vs. revenue streams A revenue model is a framework for generating revenues. 1 revenue model/service or product A revenue stream is an amount of money coming in to a business or organization from a particular source. A service or a product can have multiple revenue streams

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Components of revenue models Who pays? (defining paying customers / segmentation) Pays for what? Pays when? Pays how? (pricing model & payment system) Pays how much? (price setting)

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Pricing models of transport services

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Pricing of Kutsuplus service Date of inclusion

Unnamed / “Kutsuplus”

“Normal” “Economy” “Fast” Taxi

01.10.2012 1.88 € + 0.19 €/km

- - - 5.70 € + 1.48 €/km

08.02.2013 - 1.88 € + 0.19 €/km

1.50 € + 0.15 €/km

- 5.70 € + 1.48 €/km

11.03.2013 - 1.88 € + 0.19 €/km

1.50 € + 0.15 €/km

2.63 € + 0.26 €/km

5.70 € + 1.48 €/km

03.04.2013 - 3.50 € + 0.45 €/km

2.80 € + 0.36 €/km

4.90 € + 0.63 €/km

5.70 € + 1.48 €/km

18.11.2013 - 3.50 € + 0.45 €/km

2.80 € + 0.36 €/km

- 5.36 € + 1.38 €/km

12.01.2015 3.50 € + 0.45 €/km, 20% discount from 10AM to 2PM

- - - 5,90 € + 1,55 €/km

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Positioning of transport services

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Revenue model pictionary

Types of Revenue Models & Streams: • Asset sale (most common) / Single purchase model • Usage fees • Subscription fees / Subscription model • Lending / Renting / Leasing • Licensing • Brokerage fees • Advertising based model • Premium model • Pay what you want model • Donation model • Freemium

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Single purchase model

The traditional method: buy something and pay for it, once.

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Subscription model

The subscription model is a revenue model where a customer must pay a subscription price to have (continuous) access to the product/service. The model was pioneered by magazines and newspapers, but is now used by many businesses and websites.

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Premium model

The premium revenue model is the concept of offering high end products and services appealing to discriminating consumers. Brand image is an important factor in the premium business model, as quality is often a subjective matter. This business model seeks a higher profit margin on a lower sales volume.

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Usage fee / Pay-per-use model

Pay per use services are payment structures in which a customer has access to potentially unlimited resources but only pays for what they actually use.

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License fees

Licensing fees are paid as part of an agreement that defines the terms under which a tangible property is licensed for use by one party (a “licensor”) to another (the “licensee”). Royalties and license fees are generally paid on: Trademarks. Copyright. Patents.

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Advertising-based model

Online businesses and media companies often look to advertisers for most or all of their revenue. This is known as an advertising-based revenue model.

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Pay what you want

Pay what you want (or PWYW) is a revenue model where buyers pay their desired amount for a given commodity, sometimes including zero. In some cases, a minimum (floor) price may be set, and/or a suggested price may be indicated as guidance for the buyer.

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Tip jar / donation

The donation model is based on users donating to the organization to help towards operation costs.

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Freemium

Freemium is a revenue model by which a product or service (typically a digital offering or application such as software, media, games or web services) is provided free of charge, but money (premium) is charged for proprietary features, functionality, or virtual goods.

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Things to remember when choosing your own revenue models • You don’t need to choose just one

type of revenue model • This is not a complete list, new

revenue streams turn up all the time.

• Ultimately, what matters is customer satisfaction

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