Lesson 6 – Revenue Model

George, how will you capture the value you are offering?

Watch this interview

George and Jeroen discuss how to establish a pricing structure to turn value into revenue (and a nudge to talk to more customers!)

 Time required: 21 minutes
PRO TIP: click below to download an AUDIO ONLY version so that you can listen on the go!

2) Review background for this lesson’s exercise

This lesson, you will be designing a value proposition. Before we start, we need these ingredients that you’ve been working on:

  • Initial customer segment (Beachhead market) defined (Lesson 3 + 4)
  • Solution defined
  • Value proposition defined (Lesson 5)
  • Read: The 5 elements of a revenue model

Time required:  10 minutes, depending on your reading speed

A revenue model is the way you capture value. What is the simplest revenue model you can start with?

What is a Revenue Model?

This and next lesson are about revenue models and business models. Even though people use them interchangeably, they are not the same thing.

A model is a (partial) representation of reality. The business model represents how a business generates and captures value. The revenue model is a part of the business model, it shows how you capture value.

The way you deliver value, i.e. your solution, is required to make decisions on your revenue mode. You can’t set a price on an ill-defined product. Makes sense, right?

Designing your revenue model is fairly easy once you know 1) what you are selling and 2) to whom you are selling. If you don’t know those two things yet, go back to the previous lessons.

If you have these two things figured out, check out this design guide of a revenue model. It features a step by step process of the 5 decisions you need to make on your revenue model.

Tip: Keep it as simple as possible, you can always make it more complicated.

3) Do these exercises

Defining the 5 elements of your revenue model

Add Lesson 6 slides to your Journey Scrapbook, then use the table and cheat sheet to help you think through a pricing strategy. Good luck!