Business Model Canvas: a tool for defining Business Models (part 6)

Revenue In order to be successful in our business, it is very important to structure and understand our business model. Even though we can achieve this objective in different ways, I have dedicated this series of articles to an excellent tool that makes it easy to achieve this goal. This tool was created by Alexander Osterwalder and Yves Pigneur and was named the Business Model Canvas.

On the last posts of this series I have been introducing this tool and also explaining the right side building block which relate to subjects of our customers: customer segments, value proposition, channels and customer relationship. In this article I will write about the way in which we can monetize our business, in other words, the revenue streams.


What should we structure around the Revenue Streams?

Before I answer the previous question we must be conscious of the importance of this block, taking into account that every company (even the non-profit ones) is created to generate money. In this way as businessmen we must be aware of every revenue stream our business has or will have. However around this concept we must define and structure many subjects.

In the first place and bounded to the value proposition, we must know which are the values that each of our customer segments are willing to pay. In the second place we must know how each segment is paying today and is willing to pay in the future. Understanding this will make easier the way in which we make business. On the third place, and taking into account that we might have more than a revenue stream, it is fundamental that we know how each of these streams contributes to the overall revenues. This will help us to understand the importance of each revenue stream an according to this we will be able to take better strategic decisions. Finally we must know which of our streams are going to be a result of a one-time customer payment and which ones will result from an ongoing payment. Once again this will help us to make strategic decisions and establish tactics that will help us to achieve our goals.


Some types of Revenue Streams

Even though we can find many models to monetize our business, in this section I will like to mention some. Remember that with innovation and new business models that are developing by the hand of Internet, day after day we are going to have more options to generate income. However the next are some of the options our company has: Asset sales, usage fees, subscription fees, renting or leasing, licensing and Advertising.


Before I finish this post I will like to remind you that since we might have many customers we can sell our products and services with different prices according to the segment, add or take features in order to make it more or less expensive or price it according to the volume the customer is buying. On my next post I will begin to write of the blocks that depend on the structure inside our company, starting with the key resources.


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