What are our benefits and sources of income? In other words; what is the revenue model?
What value are our customers willing to pay for? How are they going to pay and how much? How often? There are lots of ways to generate Revenue Streams. Here are some of the most common revenue models:
The most traditional revenue model from the list. The one-time sale of a product or service. The relationship with the customer can be short-lived and the lifetime value of your customers can be low. Something to keep in mind.
Subscription or Membership Model
The customer pays for access to your product or service for a certain period of time. With software, this is often referred to as SaaS (Software As A Service).
If you own the intellectual property rights as a company, you can rent these rights to other companies. An example of this is Dick Bruna, who sells licenses for the Miffy brand. Producers of t-shirts with an image of Miffy have to pay license fees to Dick Bruna. White labeling is also a form of a licensing model.
In addition to being able to sell products, you can also opt for rental. Think Hertz, where you rent a car for a few days.
You can also charge customers for how much they've used your product, infrastructure, or resources. The more the customer consumes or wants to use, the more he pays. We know this model from telecom and internet providers, for example. With Dropbox, users pay for the amount of storage they think they need.
Premium (freemium or paymium) model
In addition to your base product, you can also offer a premium version of your product or premium features to extend your base product. When the base product is offered for free, we call this model freemium (a combination of the words 'free' and 'premium'). Think Slack. Free to use, but if you want a searchable archive, you'll have to pay. If the base product has a price, the model is called paymium. In-app purchases within an app are also a form of a premium model.
Intermediary or affiliate model
If you let users use your product or service to buy goods or services from another party with whom you have made agreements, you may receive an affiliate commission on these purchases. E-bay is an example of this.
Advertising or sponsorship model
With this model you do not earn directly from the customers of your product, but from a third party. You promote another company in your product and receive compensation for it. Think of banners and advertisements on news websites.
Simple: you make something on behalf of another party and receive money in return. The profit margin is the income.
You see more and more companies combining two or more revenue models, instead of simply choosing one of the above models. This makes it easier to respond to market demand and to realize a profitable business.