PHASE 6: REVENUE MODEL
Align your pricing model with the value your customers expect to gain from your products.
Choosing revenue models that align with buyer preferences will increase your ability to win. More than any other part of pricing, your revenue model is the way you communicate to your customers exactly what they are purchasing. And what they are purchasing should align to the way that they receive value from your product. Use an outward-in approach to define value from your customer’s point of view as opposed to an inward-out cost approach. Choosing a revenue model that is in alignment with customer value will expedite your sales significantly. Developing and innovative new revenue model will make you the industry disruptor.
1. You have defined which revenue model you and your competitors use (i.e. Perpetual ownership, Software (upfront fee + maintenance), Rental, SaaS, Variable, Pay as You Go, 2-part Tariff (fixed fee + variable component), Auction, Freemium, Fixed ROI (pay a portion of the value delivered)).
2. You have quantified how frequently your customers consume your product.
3. You are aware and have documented the revenue model of each competitor in each market.
4. Your customers tolerable of unexpected costs.
5. Recurring revenue streams are critical to your business.
6. You have determined what type of budget your clients use to pay for your product. (CapEx, OpEx)
7. You are aware of how buyers prefer to pay (lump sum, reoccurring, per transaction).
8. Your buyers are willing to pay an adjustable fee depending on the value they receive over time.
9. Your revenue model aligns with your business objectives.
10. Your revenue model is disruptive in the market.
• Revenue Model Analysis
• Competitor Revenue Models
• Revenue Model Options
• Revenue Model Evaluation Criteria
• Revenue Model Scoring