www.pwc.co.nz Revenue Streams Agenda What is a Revenue Stream? Revenue Models Types of Revenue Streams Identifying Revenue Streams Discussion Example Revenue Streams and Cost Structures PwC April 2015 2 What is a Revenue Stream? • Revenue streams are the sources of cash a business generates from each customer segment. • Revenue is a key component of profit: Profit = Revenue - Costs • Any activity that generates income can be described as a revenue stream. • It is common for businesses to have multiple revenue streams. Revenue Streams and Cost Structures PwC April 2015 3 Revenue Models Revenue models describe the different ways a business generates revenue streams from its products and services. Category Revenue Model Paid The user = client • • • • • • Third Party • Advertising • Franchise • Referral Broker/Matchmaking • Commission • Auction Free For the user • • • • • Mixed Business Subsidised • Crowdfunding • Razor and blade • Open source Revenue Streams and Cost Structures PwC Single purchase Subscription Usage Add-ons Licence Renting/lending/leasing Pay-what-you-want Freemium Donation Barter/swapping Early exit strategy April 2015 4 Types of Revenue Streams There are two types of revenue streams: • Transaction revenues result from one-time customer payments. Examples: one-time sale of product or service; commission • Recurring revenues result from ongoing payments for either the delivery of a value proposition to customers, or to provide postpurchase customer support. Examples: subscriptions fees; usage fees; lending/renting/leasing Revenue Streams and Cost Structures PwC April 2015 5 Identifying Revenue Streams When identifying revenue streams, consider:  How can you generate income from your product or service?  How much are your customers willing to pay?  How do your customers want to pay?  How do you maximise what your customers pay?  What additional/supplementary revenue streams can you generate? Revenue Streams and Cost Structures PwC April 2015 6 Discussion Example https://www.youtube.com/watch?v=yyjFkpIEW1c What are the existing revenue streams for My Food Bag? What other possible revenue streams could there be for My Food Bag? Revenue Streams and Cost Structures PwC April 2015 7 Any questions? © 2015 PricewaterhouseCoopers New Zealand. All rights reserved. PwC refers to the PricewaterhouseCoopers New Zealand member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.