Is Your Revenue Model Right for Your Business?
-by JoAnne Berg
This article was originally published on American Express OPEN Forum on March 7, 2011.
Your revenue model is how you profitably match your product or service with your desired customers. No other business decision has more potential to make or break your business. In fact, your entire business will be structured around your revenue model.
The revenue model impacts marketing and sales efforts, and it also affects product and service design, which is why it’s one of the first decisions you need to make when you start a new business. I also recommend that you re-visit the model every year or so when you’re updating your strategic plan.
Let’s start with a couple of classic – and successful – revenue models.
Razor and Blade: Razor companies are actually in the business of selling razor blades. They attract customers by selling cool new razors at a good price, and then keep selling them disposable razor blades. Once they have you as a customer, they find it easy to keep you – that’s where their profitability comes from.
Read the rest on OPEN Forum here….
