One of the best ways to think through a problem is the use of the 7 key questions, Who, What, Where, When, Why, How and How much and when it comes to revenue generation these seemingly simple 7 questions are also appropriate.
So let’s consider revenue for your business, money needs to be generated in order for it to be a success but how best can you do it, well ask yourself these questions
Who will pay the revenue
What is the product or service that is being paid for
Where does the revenue come from i.e. the channels that are going to make you money
When the revenue is paid, simply time-based at what point will be paid
Why the revenue is paid, the justification for any potential customer to part with their money
How the revenue is paid, there are a multitude of approaches to payments these days, subscription, one-time payment, rental or lease, etc
how much revenue is paid, the big question, where do you pitch your price point are you bargain basement or premium or even super-exclusive
Each of these MUST be considered and answered carefully, the following pages are here to help
Who Will Pay the Revenue
The Who has two facets to consider, firstly whether the consumer or someone else provides the revenue, i.e. the service free to consumers and revenue will come from an affiliate program, advertising, etc. Secondly, the demographic or target persona for your product and (if you’re going this route) the revenue provider demographics. The appropriate approach will, of course, depend on your product or service but is an opportunity to innovate and disrupt your market.
What is the Product or Service
I hope you know this or have some idea of the product or service you are providing but ensure you have a core product, a focus, a what your known best for, the essence of your brand.
Where the Revenue Comes From
Fundamentally this is your revenue channels, you have a core product or service, OK but what can you provide around this to help drive further revenue. There are many opportunities to leverage other aspects of your business to complement your revenue channels if you can think a little laterally, for example, you may need a niche skilled workforce or an expensive piece of machinery to produce your product, could use of these skills or machines be rented out to other companies? or does your service platform have application in other industries which other companies leverage through a white-label approach?
When the Revenue is Paid
Is revenue taken upfront as with a shop? do you take payment in arrears, do you use trial period, consider the frequency of payment, will you offer payment terms 30 days, 60 days, etc.
How the Revenue is Paid
How is an interesting area, one-time payment, subscription, lease, rent, hybrid, on demand? More and more innovation is appearing in this space so keep an eye on what other industries are doing with payment approaches, SAAS has born many me too’s in other industries, look at Harry’s www.harrys.com they provide razor blades as a service RAAS :o) you sign up and they deliver new blades monthly for monthly subscription, simple but effective. With a lot of businesses talking about and wanting to build recurring revenue sources could you realize this by replicating other industry models.
How Much Revenue is Paid
and finally, the price point… the big question, this must align to your target demographic and your brand strategy – think Poundshop or Harrods for those who do not know UK brands the Poundshop (everything is sold for £1) and target is bargain hunters whereas Harrods is a very high-end London based shop for the very rich – so price accordingly but do not ignore your insight, you may start as a bargain basement but see an opportunity to be something different.
Revenue and cost or the resulting profit is the underlying benchmark to measure the success of your business, if you were to have only one success measure, profit is the one. There are a variety of common and innovative ways to generate revenue and save cost in the right way for your business the one which will be most successful for you is the one that will be most appealing to your customer base. We will be providing more tools, information, and inspiration in the coming months but until then have it at the forefront of your mind and understand your customer base needs to help decide.
Here we have focused on the revenue element of Factor 3, we will be releasing how to manage your costs soon.