This revenue models and metrics guide template has 10 pages and is a MS Word file type listed under our sales & marketing documents.
Sample of our revenue models and metrics guide template:
A Brief Guide on Revenue Models & Metrics A Condensed Guidebook to Help You Understand Revenue Models and Business Metrics Table of Contents Table of Contents 2 Introducing Revenue Models and Metrics 3 Why Do You Need a Revenue Model? 3 The Ten Main Types of Revenue Models 4 Model #1 - Transactional 4 Model #2 - Ad-Based 4 Model #3 - Retail Sales 4 Model #4 - Web Sales 5 Model #5 - Direct Sales 5 Model #6 - Free Product with Charged Services 5 Model #7 - Freemium 6 Model #8 - Affiliate Revenue 6 Model #9 - Channel Sales 6 Model #10 - Subscription 7 Why Do You Need to Track Metrics? 8 Five Types of Metrics You Should Track 8 Metric #1 - Sales Revenue 8 Metric #2 - Customer Lifetime Value 8 Metric #3 - Customer Acquisition Cost 9 Metric #4 - Net Profit Margin 9 Metric #5 - Website Traffic 10 Create Structure in Your Business 10 Introducing Revenue Models and Metrics Having a good idea for a product or service is just the first step in creating a sustainable and profitable business. To ensure your business succeeds, you need two things: A revenue model that maximizes the money you earn from your product or service. A deep understanding of the key metrics that underpin your business. This document examines why you need models and metrics. It also shares some of the most powerful business models and discusses the crucial metrics that all business owners must track. Why Do You Need a Revenue Model? The simple answer is that a revenue model creates structure. It defines how you will manage your company's various revenue streams. Furthermore, your model will detail the resources required to ensure each revenue stream continues to produce at a high level. Ultimately, your revenue model helps you to determine which revenue generation strategies to follow and which you should abandon. Your model should also reveal who your ideal customer is, how to price your products, and how to position yourself in the marketplace. The Ten Main Types of Revenue Models Each potential revenue model you adopt has benefits and drawbacks. Below is a list of the ten main types of revenue models. Model #1 - Transactional One of the most direct methods of generating revenue, this model involves creating a product or service that customers have to pay to gain access to. It's a simple model, which makes it attractive to customers. However, the popularity of the model means you will likely face competition from other businesses that use it. What's more, a transactional model may not be the best way to generate recurring revenue. Model #2 - Ad-Based This model typically involves providing something for free while using ads to generate revenue. Many content-based websites use this revenue model, as they use ad software to generate revenue based on the number of visitors they receive. This is a simple model that also allows you to advertise your product as being "free" to the consumer. However, it also requires you to attract millions of users to your product to be viable. Model #3 - Retail Sales Similar to the transactional model, retail sales involve selling a product to a customer directly. The key difference here is that a retail product is always physical. This model also requires you to have a physical store, which means you must account for shelf space and inventory. The model does allow you to offer deals easily and make simple sales. Unfortunately, it's not suitable for service-based businesses. Model #4 - Web Sales Again, this model is similar to the transactional model. However, here you will offer your products or services only online. Customers must visit a specific website and make their payment via your chosen payment processing service to access your products or services. The model works with a wide range of offerings and provides convenience to customers. However, it doesn't allow you to form relationships with customers. Model #5 - Direct Sales This model requires you to have a sales team that's capable of either calling or visiting potential clients to make sales. It's ideal for businesses that require the building of relationships with customers before a sale can be attempted. The key challenge with this model is that it will require you to invest in a sales team, which may make it difficult to scale. Model #6 - Free Product with Charged Services A fairly unique model, this involves giving away your product for free but charging for related services. For example, you may charge for the installation, training, and customization related to a piece of software while not charging for the software itself. The benefits of this model are that you can build some brand awareness while being able to offer a "free" product. The drawback is that your product essentially becomes a marketing cost, with your revenue dependent on which services a client chooses to use. Model #7 - Freemium This model involves providing a free version of your product, with users having the option to pay for premium features. LinkedIn leverages this model, as its premium version offers users more connection opportunities. Many software-as-a-service (SaaS) companies also leverage this model, as it allows them to give users a taste of what they offer while tempting them into paying for the premium version
