By changing your revenue model, you can diversify your business and explore and test innovative or entrepreneurial ways to increase your revenue.
Essentially, the revenue model or strategies you use to monetise must meet the business objectives specific to your business model. You can apply one or multiple revenue models. Here are some to consider.
Customers can seek services on seasonal, ongoing, project or needs basis. Look for opportunities to create a need in your market or branch into new markets. Consider adding or refining existing services to complement your primary services.
Examples of service models include hair salons, legal services and car repairs and maintenance.
Capitalise on loyal customers with a recurring income stream. Consider short-term plans such as one-month or three-months allowing customers to trial what you offer, or 12-month packages that ‘lock in’ your customers.
When considering the pricing structure, target your cheapest plan to new users. Make the next plan up the most expensive in value for money. This helps drive customers to the long-term plan as it becomes the most cost-effective option. Examples include magazines, apps and industry bodies.
This is a clever way to tap into extra revenue. Simply include links to other relevant products on your website or social channels and in return get kickbacks or commission when a purchase is made. It allows you to engage online audiences as it strengthens your brand and customers resonate with a related product.
In this model, you provide basic services for free but aim to entice your customers to pay for premium features. Customers try your product, see the value and in time convert to being a paying customer. Spotify is a great example of this model.
If you work in a service industry, you can have consistent revenue by receiving an agreed fee for a service you provide at regular intervals. The service provided can be weekly, monthly or quarterly. For example, a photographer who takes snaps for an art gallery whenever there’s a new exhibition.
Explore the opportunity to create a physical event or virtual experience. This is a good way for your customers to understand your products. Anyone who signs up is already engaged so you have a dedicated audience. These can also lead to extra sales of your products, services, subscriptions/memberships and even generate word of mouth. BridgeClimb mainly provides customer experiences for revenue.
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Let’s imagine there’s a new retailer in your local shopping centre: Philippa’s Patisserie.
They offer specialty cakes and pastries all made fresh on the premises. Customers can eat in or takeaway.
Within a few months they gain a loyal customer base. Word gets around about their delicious cakes for all occasions and they receive many enquiries outside of their local area. Soon after, they commence a delivery service to a 20-kilometre radius.
With their popularity on the rise they start selling branded merchandise: T-shirts, reusable coffee cups and oven mitts, and the piece de resistance, they publish a book featuring their prized recipes. The book sells like hot cakes, but customers want practical advice. Workshops are run on cake decorating sharing the tips of their trade.
So from humble beginnings of selling cake products, Philippa’s Patisserie embraced business opportunities. It changed its original revenue model by introducing other revenue injecting streams:
To shape up your revenue model, do your market research: understand what your customers want and identify needs. Know your products and know them well.
Make the most of opportunities or learn to create them. Test the market and always be ready to adapt.
Jenny Dikranian is a content writer passionate about entrepreneurship and innovation in inspiring business success.
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