How do I Create a Revenue Model for my Startup?

A model through which your startup will earn money is called a Revenue Model. The Revenue model forms an important part of your Business Model. Bad revenue models can result in startup failure.

While creating a Revenue Model, the following should be kept in mind.

Who to Generate Revenue from: An entrepreneur needs to assess who the main beneficiary of the business is and the revenue should ideally be generated from it.

When Revenue is Collected: Analyse when you want to collect revenue. For example a hiring agent can charge a company upfront on signing up or each time someone is employed in that company. Bad collection timing can affect the efficacy of the model. For example, in Bitequest, we used to collect revenue for every customer we sent to a restaurant. Revenue was collected post sending customers and was collected at the end of the month. Because of this, a lot restaurants tended to delay/default on the payments. Our cash flow took a beating.

How Much to Charge: This can be based on current market data or based on some logic or reasoning. Charging low will mean a loss of revenue and charging high may not be able to attract paying customers.

Getting this mix right will make your Revenue Model robust and the chances of your startup generating revenues higher.


Originally published at etrlearning.blogspot.in on April 19, 2016.

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