Business Core · Monetisation · Module
Revenue model
What the organisation charges for and on what basis. The most consequential choice in the object, and usually the least examined.
The idea
How it works
The pricing metric is the unit the customer is billed against — a seat, a transaction, a month, an outcome. It determines who buys, how the account grows, and what the operation is quietly incentivised to produce.
Changing it is a change of business rather than a commercial adjustment, which is why it is worth deciding deliberately at the start rather than inheriting from whoever set the first price.
Working with it
In practice
- 01
List what could be charged for
Several units are usually available. Writing them all down first prevents settling on the obvious one by default.
- 02
Check what each metric rewards
Whatever the metric counts is what the organisation will produce more of. Make sure that is what you want.
- 03
Test alignment with customer value
The best metrics rise as the customer gets more value. Ones that rise regardless produce friction at renewal.
- 04
Decide the mix
Most businesses run more than one stream. Say which is primary, because that is the one the operation will optimise for.
One level in
The components of revenue model
A component is something that exists afterwards which did not exist before — a deliverable or a mechanism, not an intention.
Whatever the pricing metric counts is what will increase. Check that against the value proposition before committing.
The other modules in monetisation
Pricing
What is charged, and how the level is arrived at — from cost, from competitors, or from the value delivered. The third is hardest and usually produces the best answer.
LearnMargin structure
What remains after delivery, and how that changes with volume. A business with 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. Two businesses with the same turnover can be worth very different amounts.
Learn