Revenue Model: how to collect money from your customers
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There are countless factors that you need to take into account when a company brings a product into the market, this article reviews one of the most important: how does your company make #money
? The revenue model describes the structure of how a company generates #revenues
, outlining how the firm charges customers and produces #profits
. A company can collect money from a myriad of different sources and the revenue model includes every aspect of the firm’s revenue-generation strategy. The introduction of the #internet
and of personal devices created several opportunities to #innovate
the way companies charge clients for #products
provided the appropriate ecosystem for the development of many new revenue models to capture #value
from users and clients. Companies can collect revenues through different strategies: markup, arbitrage, licensing, commission, rent & lease, subscription, advertising, pay-as-you-go, freemium, interests, donations and many others. Traditionally, companies have always used a #markup
strategy, setting the price based on the overall costs plus a desired profit per item. However, other revenue models have proved to be more effective in the last years. #Subscription
-based models seem to be one of the favorite ways to sell services due to the constant #cash #flow
ensured by monthly #payments
collected from a large customer base. #Pay
-per-usage models are spreading as well, providing access to goods and services rather than selling them seems to be a successful model, appreciated by customers. A relevant trend is the frequent #servitization
of products, offering extended #benefits
and additional services together with products in order to add value and increase profits. The gaming industry is shifting from direct sale models to #free
-to-play ones where revenues are generated through additional purchases made to customize or upgrade players’ experience.
Check the images above: have you noticed current trends in the revenue models of different industries?
in the comments below!