Week 11: Revenue Model

REVENUE MODEL

    In the week 11, I haven't realized this until later, I learned that when starting up your company, you should not be embarrassed when talking about money and price. This is because, naturally as an entrepreneur, the ability to talk about money and pricing is a sign of skill, not a sign of money lover. Revenue models are strategies to generate cash for our startup idea from our customers. Before the heartseekers decided which revenue model to choose, we needed to gain an understanding on revenue model:

    In creating revenue models, I've learned the 3 common mistakes entrepreneurs do:

1. Confusing revenue model as the price you charge your customers
2. Pricing based on how much it cost you to produce.
3. Thinking your price is less than your competitors

    The key questions to ask when choosing the revenue model are the following:

1. What value are customers willing to pay for?
2. How do customers pay for the products today?
3. How much are they currently paying?

    Some of the common revenue models are:

• Asset Sales - this is the sales ownership right to a physical product.
• Usage Fee - this is when fee is proportional to the usage of the service
• Subscription Fee - free for a continuous access to the service
• Renting - free for temporary access to goods.
• Licensing - Free for use of some IP
• Advertising - Fee paid by brands and companies to get in front of potential customers.
• Intermediation - A fee for bringing together two or more parties into a transaction.

  

    With these things in mind, I gathered the heartseekers to decide what our revenue model is best for our startup product. After some brainstorming, we decided to use intermediation as the revenue model. The rationale for this is by looking closely at our competitor. Our competitor, as mentioned by the previous blog, are Shopee, Lazada, and Facebook Marketing. All of these brands use intermediation as the revenue model for their product, by bringing two parties into a transaction, in most cases, the customer and the seller. Our startup product involves the business owners and students, making intermediation the perfect revenue model for our IC availability mobile application,

    By partnering with local stores, we create a win-win situation. Students benefit from the convenience of accessing real-time inventory information and making informed decisions about their shopping trips. Local stores benefit from increased visibility and a new channel to attract customers. Our revenue is generated through facilitating these transactions, without placing any financial burden on the students themselves.