In this lesson we cover revenue in the business model canvas. It is one of 9 free lessons in which we cover how to use the business model canvas to grow your startup. We need revenues for our startup as otherwise the lights go out sooner or later. Customers pay us for the value that we provide to them. The amount that they pay us has to cover all of our costs which include our key activities, the resources that we use and the partners who help us deliver.
One of the biggest problems that many startups face is that they deliver value but a customer is not prepared to pay for it. Or not prepared to pay enough to make the business viable. This is what makes the whole process of determining product market fit (or problem-solution fit) so important. It is really easy to create solutions. it is a lot harder to create solutions that people will pay for AND which will cover all the other costs and leave a handsome profit behind.
Revenue in the Business Model Canvas
Revenue Streams is the building block where the cash comes in.
Focus on value instead of cost
How to determine the best pricing mechanism?
- Review your Customer base (from your stakeholdermap if you have created that)
- Determine who has the biggest need and the budget and for your products (Revisit the ‘TEST your idea’ step as part of the Innovation Curve)
- Which of your potential customers is willing to pay most for your service? Estimate these amounts or find evidence from your Prototype your solution step.)
- How do they pay for current alternatives?
- What other pricing mechanisms can you apply to their needs?
- Estimate cost for development, production and promotion. Does this match with the revenue potential?
- Determine the impact on other parts of your Business Model
How to Build a Great Business Model Canvas – The FREE Course
In this lesson we have covered revenue in the business model canvas. We have another eight lessons covering all the key aspects of the business model canvas and how you can use it as a firm foundation for your startup or business success.