The model outranks the price
Changing a price is a decision; changing what you charge for is a change of business. Most organisations spend far more attention on the first.
Business Core · Object
Monetisation
How the organisation turns what it offers into money. Not the price, but the whole structure: what is charged for, by whom, how often, and on what basis.
The term
What it is
Monetisation is the revenue half of the business model. It covers what is charged for, on what basis, and how the money actually arrives — and only one part of that is the number on the price list.
The choice of what to charge for shapes the business more than the amount. Charging per seat, per transaction, per outcome or per period produces different incentives, different customers and different operations, from the same underlying offer.
It belongs beside the value proposition because the two constrain each other. A proposition that promises unlimited use cannot be monetised per unit, and a model that charges for volume will quietly push the operation towards producing volume.
Why it earns a place
What goes wrong without it
It decides which customers you get
A pricing metric selects a customer type as surely as a marketing campaign does, and does it more permanently. Per-seat pricing attracts and repels differently from usage-based pricing.
Revenue quality differs from revenue amount
Two businesses with the same turnover can be worth very different amounts, depending on how predictable, repeatable and defensible that turnover is.
One level in
The modules within monetisation
Four working areas: what you charge for, how much, what is left, and how good the revenue is.
Revenue model
What the organisation charges for and on what basis — subscription, transaction, licence, outcome, or a mix. The most consequential choice in this object and often the least examined.
LearnMargin structure
What remains after delivery, and how that changes with volume. A business with a healthy margin at small scale and none at large scale has a structural problem, not a pricing one.
LearnRevenue quality
How predictable, recurring and concentrated the income is. Three customers producing eighty per cent of revenue is a different business from thirty producing the same total.
Learn
Across the framework
What it touches
- Goal CoreA purpose the monetisation model cannot sustain is one the company will quietly abandon.
- Market CoreWillingness to pay is a market fact, discovered rather than decided.
- Data CoreMargin, retention and concentration are the measures this object lives or dies by.
- Omni CoreHow and when a customer is charged is part of what they experience.
Beyond the framework
Models worth knowing here
The Omnigoal says where this belongs and what it touches. It does not tell you how to think about it — other people have done that, and done it well. These are theirs.
The business model canvas
Osterwalder & Pigneur · 2010Nine linked areas that together describe how an organisation creates, delivers and captures value.
Its contribution was making a business model a single visible object that a group could argue over, instead of thirty pages nobody read. Because the areas are linked, changing one obliges you to look at the others — which is where most of the value is, and where most people stop.
- Reach for it when
- Early, when the shape of the business is still being decided, and whenever a change to pricing or channel needs its consequences traced.
- Where it stops
- It describes; it does not evaluate. A coherent-looking model can still have no customer, and the canvas has nothing to say about competition or timing.
Alexander Osterwalder & Yves Pigneur, Business Model Generation, Wiley, 2010.
The Van Westendorp price sensitivity meter
Peter van Westendorp · 1976Also known as PSM
Four questions about price that between them mark out the range a market will tolerate.
Rather than asking what someone would pay, it asks at what price something would seem too expensive, expensive but worth considering, cheap, and so cheap that quality is in doubt. The four answers plotted together give a band with a floor and a ceiling, and the floor is the finding people forget: too low reads as a warning.
- Reach for it when
- When setting a price for something new, where there is no history to extrapolate from.
- Where it stops
- It measures stated intent, not behaviour, and it says nothing about volume at any price. It gives you a plausible range to test, not a price.
Peter H. van Westendorp, “NSS Price Sensitivity Meter”, ESOMAR Congress, 1976.
Value-based pricing
Thomas T. Nagle & Reed K. Holden · 1987Set price from the value delivered relative to the customer’s next best alternative, not from what it cost to make.
The method works from a reference price — what the buyer would otherwise do — and adds what your offer is worth more, minus what it is worth less. Its discipline is that both halves must be quantified from the buyer’s position, which is precisely the work that cost-plus pricing exists to avoid.
- Reach for it when
- When margins are being set by adding a percentage to cost, or when a discount is about to be given without knowing what was given away.
- Where it stops
- It needs a defensible estimate of what the alternative is worth to someone else, and that estimate is often unavailable and always arguable.
Thomas T. Nagle & Reed K. Holden, The Strategy and Tactics of Pricing, Prentice Hall, 1987.
These are other people’s models, named here so you can go to the source and use them properly. The Omnigoal is not affiliated with their authors and is not endorsed by them; nothing of theirs is reproduced here — no canvas, no diagram, no wording. Each is described in our own words, with the originator credited, because the framework is a place to put thinking, not a replacement for the people who did it. Model names and trademarks belong to their respective owners and are used here only to refer to the work itself.
Every model in the framework, and where each one belongsAsk what the pricing metric rewards the organisation for producing. Whatever it is, that is what will increase, whether or not it was the intention.
The other objects in the Business Core
HR
Responsible for managing the organisation’s workforce. HR’s purpose is to recruit, hire, train, and support employees, ensuring they are high-performing, satisfied, and aligned with the company’s goals.
LearnValue Proposition
Centres on articulating the unique benefits and value that your business’s products and services provide to customers, ensuring these offerings are directly aligned with customer needs and contribute effectively to the organisation’s overall strategy.
LearnCore Competencies
These are the unique strengths and abilities that give the company a competitive advantage in the market. The purpose is to focus on these key areas to drive innovation, efficiency, and value creation.
LearnBusiness Assets
Represents the valuable resources owned by the company, such as physical property, intellectual property, technology, or capital. The purpose of assets is to support the company’s operations and strategic objectives, providing the foundation for growth and stability.
LearnOperational Systems
These are the procedures and tools used to conduct the day-to-day business activities efficiently. The purpose is to ensure smooth operations, optimise productivity, and maintain quality standards across the organisation.
LearnPartners
Involves collaboration with external organisations or individuals that complement or enhance your business capabilities. The purpose is to leverage these partnerships for mutual benefits, such as expanding market reach, sharing resources, or enhancing product offerings.
LearnStakeholders
These are the individuals or groups that have an interest in or are affected by the company’s activities, including employees, customers, investors, and the community. The purpose is to manage and balance their expectations and needs, fostering positive relationships and ensuring the long-term success of the business.
LearnFinance
Ensures the strategic management and oversight of company funds, focusing on budgeting, forecasting, and resource allocation to support sustainable growth and financial health.
LearnSupply Chain
Supply Chain encompasses the strategic and operational management of goods and services from procurement to delivery, optimising logistics to ensure timely distribution and customer satisfaction.
LearnManufacturing Operations
Manufacturing Operations focuses on optimising factory performance and production processes. This object ensures that machinery and manufacturing systems are managed strategically to maximise efficiency, reduce costs, and enhance product quality.
LearnCompliance
Focuses on maintaining legal and ethical integrity across all business operations. This includes ensuring regulatory, financial, data, environmental, health & safety, and corporate social responsibility standards are met to foster a sustainable and trustworthy business environment.
Learn