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Revenue Streams in Business Model Canvas

Published: 21 July, 2023

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Table of Contents

Without a clear path for bringing money and resources into the enterprise, all businesses are doomed to fail. Every business model must clearly indicate which revenue streams will attract enough customers to keep the lights on. Businesses fail because, though the founders may have great ideas and motivation, their business models do not properly take into account how they will generate revenue. The success of any enterprise hinges on establishing viable revenue streams and resource acquisition strategies. Hence, it is imperative for every business model to thoroughly account for how it will generate income to avoid potential pitfalls.

What are Revenue Streams?

Revenue streams.

Revenue streams encompass diverse sources of income from which an organization generates revenue by either selling goods, providing services, or a combination of both. These revenue sources can vary in nature, being either recurring, transaction-based, project-based, or a mix of different types, depending on the specific nature of the organization’s business operations .

It outline how you earn money, what price is each of your customer segments truly willing to pay? Identify each possible revenue stream per customer segment.

Think hard about the possible pricing mechanisms per Revenue Stream. Surprisingly, pricing can often be a source of differentiation! Pricing mechanisms can include auctioning, bargaining, fixed-list prices, market- or volume-dependent prices, or yield management.

A Business Model can also involve transactional revenues resulting from one-time customer payments (e.g., a sale) or recurring payments (e.g., a subscription). In the context of the Revenue Model, think also about any other benefits you may be getting. Not all value is monetary!

Importance of Revenue Streams

It’s a matter of good business to reflect upon how your company generates cash and other revenues, and the full leveraging of revenue streams is only possible when you take a full accounting of your entire business model.

Each customer segment that you develop provides one or more revenue streams, each of which needs to be considered. It’s a lot of work, analyzing each revenue stream to make sure that you’re being properly compensated for the value you provide. But without revenue, clearly, a business cannot succeed.

Revenue streams are crucial for the success and sustainability of any business. Here are the key reasons why revenue streams are important:

1. Financial Stability and Growth: Revenue streams serve as the lifeblood of a business, providing essential funds to cover operational expenses, invest in growth opportunities, and foster innovation. Diversified revenue streams can mitigate risks and create a more stable financial foundation.

2. Business Viability: A reliable source of revenue is critical for a business’s long-term survival. Revenue streams ensure that a company can sustain its operations, deliver value to customers, and remain competitive in the market.

3. Flexibility and Adaptability: Having multiple revenue streams equips a business to adapt to changes in the market, customer preferences, and economic conditions. If one revenue stream is affected negatively, others can continue to support the business.

4. Competitive Advantage: Unique and innovative revenue streams give a company a competitive edge by differentiating it from competitors. Attracting customers with distinct offerings can lead to increased market share.

5. Customer-Centric Approach: Diverse revenue streams enable businesses to cater to different customer segments. Understanding varied customer needs and preferences allows a company to tailor products or services, enhancing customer satisfaction.

6. Revenue Optimization: Understanding the performance of each revenue stream enables a business to identify opportunities for optimizing pricing, distribution, or marketing strategies. This leads to more efficient revenue generation and increased profitability.

7. Long-Term Sustainability: Businesses with strong and varied revenue streams are better positioned to thrive in the long term. A sustainable revenue model enables a company to weather challenges and maintain steady growth over time.

8. Investment and Stakeholder Confidence: Multiple revenue streams attract investors and stakeholders, showcasing a robust and resilient business model. Backing a company with a diversified revenue portfolio is more appealing to potential investors.

9. Innovation and Growth Opportunities: Exploring new revenue streams drives innovation within a business. Seeking untapped markets or developing complementary products/services unlocks new growth opportunities.

10. Funding for Research and Development: Revenue streams provide vital financial resources for research and development efforts. Continuous improvement of offerings helps a company stay ahead of the competition and meet evolving customer demands.

At Digital Leadership, we see companies struggle to turn great ideas in ongoing revenue generation. This is truly one of the most difficult facts that all business analysts face. An entrepreneur might have good ideas, customer demand may be robust, but these great services and products will cease to be available if a solid revenue stream cannot be developed. We provide Business Model Strategy and Marketing Strategy Consulting services which allows a company to identify and assess potential risks and develop appropriate mitigation strategies. By understanding its revenue streams, cost structures, and customer segments, a company can proactively identify vulnerabilities and develop contingency plans. We enable businesses to create targeted marketing campaigns, leverage digital channels, and maximize their marketing return on investment By leveraging Our expertise, businesses can develop effective business model strategies that align with their goals and target audience.

Find out how we can help you

Corporate training, innovation consulting and much more.

The Main Categories of Revenue Streams

We divide the key concepts here in two main categories of revenue streams: transaction revenue and recurring revenue. Strong businesses have many ways of generating income, and the business that relies on merely one revenue stream risks oblivion with that revenue stream dries up.

Types of Revenue Streams

Revenue is a key performance indicator for nearly every business model. Understanding the different revenue streams and the way a business earns money is important as the business prepares for or considers the implementation of innovation.

Successful businesses rarely have a single revenue stream. Employing multiple revenue streams hedges your bets in case part of your operation fails or the business environment changes.

We identify six different revenue streams you might be able to leverage in your business. Again, having the chance to draw revenue from multiple revenue models will always provide your strongest chance of success. Revenue models and other important concepts behind business transformation strategy are further discussed in our new book, How to Create Innovation , which you can download through the Digital Leadership website.

The Only Book On Innovation You’ll Ever Need

+FREE access to 50+ complimentary download packages covering the details with plenty of helpful background information

Revenue streams are the various sources of income through which a business generates revenue. They can be classified into different types based on the nature of the income source. Here are the main types of revenue streams:

Main Types of Revenue Streams

Other types of revenue streams, revenue stream examples, 1- transaction-based revenue:.

This stream is generated from one-time customer payments resulting from the sales of goods or services.

• E-commerce sales: Revenue generated from online sales of products to individual customers.
• Retail store sales: Proceeds from in-store purchases made by customers.
• Ticket sales: Revenue obtained from selling tickets for events, concerts, or shows.
• App purchases: Income from customers buying mobile applications from app stores.

2- Service revenue:

Revenues are earned by providing services to customers, typically calculated based on the time spent, such as hourly consulting fees.

• Consulting services: Earnings from providing expert advice and guidance to clients.
• Legal services: Revenue generated by offering legal advice and representation to individuals or businesses.
• Accounting services: Income earned from providing accounting and financial services to clients.
• Personal training sessions: Fees charged for offering one-on-one fitness training to clients.

3- Project revenue:

Earnings are derived from one-time projects with both existing and new customers, where the revenue is linked to the successful completion of the project.

• Construction projects: Earnings from one-time construction projects, such as building a house or office.
• Website development: Revenue from developing websites for clients.
• Event planning: Income earned by planning and organizing one-time events for businesses or individuals.
• Marketing campaigns: Fees charged for executing marketing campaigns on behalf of clients.

4- Recurring revenue:

This is a vital revenue model frequently adopted by businesses as it offers predictability and a consistent income source. It encompasses ongoing payments from customers for continued services or after-sale support.

• Software as a Service (SaaS) subscriptions: Earnings from ongoing monthly or yearly fees for access to software applications.
• Membership fees: Revenue from monthly or annual membership fees for exclusive access to services or benefits.
• Property rental: Income obtained from renting out properties to tenants on a regular basis.
• Maintenance contracts: Fees charged for providing ongoing maintenance and support services to customers.

How to choose your Revenue Streams

Choosing the right revenue streams is vital for the success of your business. Here’s more information about each step:

• Define your unique value proposition: Clearly articulate what sets your products or services apart from competitors. Understand how your offerings address customers’ pain points and fulfill their needs better than alternatives.
• Understand your target audience and their needs: Identify your ideal customers and thoroughly comprehend their preferences, behavior, and challenges. Tailor your revenue streams to align with their specific requirements.
• Research market opportunities and assess profitability: Analyze the market landscape to spot potential revenue streams. Evaluate the revenue-generating potential of each option and weigh it against associated costs to ensure profitability.
• Diversify revenue sources to mitigate risk: Relying on a single revenue stream can be risky. Implement multiple streams to create a balanced income portfolio, reducing vulnerability to market fluctuations or changes in customer behavior.
• Prioritize customer value and embrace technology: Place customers at the center of your revenue strategy. Continuously enhance the value you provide to them and leverage technology to optimize sales processes and customer interactions.
• Monitor competitors and be agile in adapting to change: Keep a close eye on your competitors’ revenue approaches. Stay flexible and adapt quickly to market shifts or emerging trends, ensuring your revenue model remains relevant and competitive.

Pricing Mechanism in Revenue Streams

Pricing mechanisms play a critical role in revenue streams within a business model. The pricing strategy directly impacts how much revenue a business can generate from its products or services. Different pricing mechanisms are closely linked to specific revenue streams and can influence the overall financial performance of a business. Here’s how pricing mechanisms relate to revenue streams in a business model:

Revenue Model Framework

Your capabilities are the processes, systems of knowledge, and specific skills that a firm possesses based on which it operates, earns revenue, and competes with other firms.

In Digital Leadership’s eXtended Business Model Canvas , Revenue streams and the Revenue Model play a significant role in business innovation. More information about this canvas, and many other business model canvas suggestions and work-throughs, are available on the Digital Leadership website, and in the book How to Create Innovation .

Download the Complete eXtended Business Model package, including instructions for putting it to work for you today.

Business Model Canvas Template

Final thoughts: questions for reflection.

In closing, understanding your various revenue streams, and developing multiple revenue streams, is vital in securing your company’s future. If there are types of revenue streams your company hasn’t considered, we urge you to consult with innovation experts so you can advance your current business model.

Some of the questions we’d explore are listed below. If you can’t answer all of them, there’s a chance you don’t completely understand how your company generates revenue.

We’d love to explore it with you.

• How do we earn money?
• What are our revenue streams?
• For what value are our customers really willing to pay?
• How much are our customers currently paying to satisfying this JTBD?
• What are the main substitutes for our product?
• How much does each revenue stream contribute to overall revenue?
• What other benefits are we getting?

Revenue streams are fundamental elements in a business model that determine how a company generates income. The diversity of revenue streams is crucial for business success, as it allows companies to mitigate risks and adapt to changing market conditions. Transaction-based revenue streams offer straightforward and adjustable income, while recurring revenue streams provide stable and predictable earnings. Businesses must carefully consider their revenue models and pricing mechanisms to ensure they attract enough customers and sustain long-term profitability. By understanding the various revenue streams and their connection to customer needs, companies can proactively develop effective strategies, optimize their revenue generation, and secure a prosperous future in today’s competitive landscape.

Frequently Asked Questions

1. what are the revenue streams business model canvas questions.

The revenue streams section of the Business Model Canvas addresses the ways a company generates income from its products or services. To identify and analyze revenue streams, consider the following questions:

• a. What is the main source of revenue for your business? Identify the primary way your business makes money.
• b. Who are your customers? Define your target audience and understand their needs.
• c. What value do you offer your customers? Identify the unique benefits your products or services provide.
• d. How do customers pay for your products or services? Determine the pricing strategy and payment methods.
• e. Are there different customer segments? Explore if you have different groups of customers and whether they generate revenue differently.
• f. Do you have multiple revenue streams? Investigate if your business generates income from various sources.

2. How do you calculate revenue stream?

To calculate revenue stream, multiply the number of units sold or services rendered by the price per unit. The formula for calculating revenue is:

Revenue = Number of Units Sold (or Services Rendered) × Price Per Unit

For example, if a company sells 100 units of a product at $50 each, the revenue from that particular revenue stream would be:

Revenue = 100 units × $50 per unit = $5,000

3. How do you create 4 revenue streams?

• Product and Service Diversification : Expand your offerings by developing a variety of products or services that target different customer needs. This approach allows you to reach a broader customer base and increases the chances of generating more revenue.
• Subscription Model : Implement a subscription-based revenue stream where customers pay a regular fee to access exclusive content, features, or ongoing services. This recurring income can provide stability and predictable cash flow.
• Licensing and Franchising : Explore opportunities to license your technology, brand, or business model to other companies. Alternatively, consider franchising your business to enable others to replicate your successful model under your brand.
• Affiliate Marketing and Partnerships : Generate additional revenue by collaborating with other businesses through affiliate marketing. By promoting their products or services and earning commissions for successful referrals, you can capitalize on complementary offerings without direct competition.

4. How do you write revenue stream in the business model canvas?

In the Business Model Canvas, the revenue stream is represented in the “Revenue Streams” block. When writing your revenue stream in the canvas, be clear and concise. Include the key components of your revenue generation strategy, such as:

• Main Revenue Source : Describe your primary source of income, whether it’s from product sales, service fees, subscriptions, licensing, etc.
• Customer Segments : Specify the customer groups that contribute to each revenue stream.
• Pricing Mechanism : Explain how you determine the price of your products or services.
• Value Proposition : Connect the revenue stream to the value your products or services provide to customers.

5. What is an example of revenue streams for a small business?

• Product Sales : Imagine a small business called “Artisan Treasures” that sells handmade crafts, such as unique pottery, handwoven textiles, and artisanal jewelry. They operate both a charming brick-and-mortar store in a local market and an online e-commerce platform, allowing customers from around the world to purchase their one-of-a-kind products.
• Service Fees : Consider a small graphic design agency named “Creative Solutions.” They offer a variety of services to clients, including logo design, branding packages, and marketing collateral. Clients pay the agency service fees based on the scope and complexity of the design projects they undertake.
• Subscription Model : “FitLife Fitness” is a small boutique gym that offers personalized workout plans, nutrition guidance, and exclusive fitness classes. They have a subscription-based revenue stream, where members pay a monthly fee to access premium content, participate in specialized classes, and receive personalized fitness coaching.
• Freemium Model : “TechMaster Software” is a small tech startup that develops a video editing software. They offer a free version of the software with basic editing features, attracting a large user base. To access advanced features like special effects and high-resolution exporting, users can opt for a paid upgrade, generating revenue for the company.
• Affiliate Marketing : Let’s take an example of a small lifestyle blog called “TrendyExplorer.” The blog features articles on fashion, travel, and beauty. They partner with fashion and travel companies as affiliates, promoting their products and services through the blog. When readers make purchases or bookings through the provided affiliate links, the blog earns commissions.

6. What are the revenue streams of Coca-Cola?

Coca-Cola has multiple revenue streams that contribute to its overall income. Some of its key revenue streams include:

• a. Beverage Sales : Revenue generated from selling Coca-Cola’s diverse range of beverages, including Coke, Diet Coke, Sprite, Fanta, and others.
• b. Bottling Partnerships : Coca-Cola licenses its products to bottling partners worldwide, earning revenue through royalties and supply agreements.
• c. Branding and Trademark Licensing : Coca-Cola licenses its brand and trademarks for use in various products, merchandise, and marketing campaigns.
• d. Fountain Sales : Revenue from selling beverages to restaurants, cinemas, and other establishments through fountain dispensers.
• e. Advertising and Sponsorships : Income generated from advertising its products and sponsoring events, sports, and entertainment.

7. What is the difference between revenue model and revenue stream?

The difference between a revenue model and a revenue stream lies in their scope and focus within a business’s overall revenue generation strategy

Connecting The Dots: The UNITE Business Model Framework

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Revenue Streams Business Model Canvas

In the Business Model Canvas , the Revenue Streams building block details the way a business intends to solve customer problems for financial gain. Revenue streams represent the various ways a business generates cash from each customer segment.

Table of Contents

Understanding revenue streams in the Business Model Canvas

In determining revenue streams, the business must answer the following questions:

• For what value are customers ultimately willing to pay? This is determined by how big a problem is in their life.
• How much does each revenue stream contribute to overall revenue in terms of percentage contribution?
• How do customers prefer to pay? In other words, how will these preferences influence the revenue stream (s) chosen?

There are two types of revenue streams. The first is a transaction-based stream, where customers make a one-time payment for a product or service. The second is a recurring stream, where customers make continuous payments to maintain access to the product or certain product features.

Note that this section of the Business Model Canvas represents the cash the company generates – not the profit .

Revenue stream pricing mechanisms

Pricing mechanisms refer to the impact of pricing on the expected supply and demand of a product. Each company revenue stream can have its own pricing mechanism, which can be divided into two types.

1 – Fixed pricing

Fixed pricing mechanisms have predefined prices based on a static set of variables. Examples include:

Where prices are fixed and non-negotiable. The main courses on a restaurant menu are list price. Every diner pays the same amount for the same dish.

Product feature dependent

Here, the price depends on product quality or value proposition features. Organic foods tend to attract a higher price than their non-organic equivalents.

Customer segment dependent

Where the price is determined by a customer segment. Some businesses offer discounts to seniors or those with a qualifying membership card. 

Volume dependent

Where the price is a function of the volume purchased. Costco shoppers who purchase in bulk tend to be charged less per item than customers who shop in traditional supermarkets.

2 – Dynamic pricing

Dynamic pricing mechanisms, on the other hand, change according to fluctuating market conditions.

There are also four types in this category:

Yield management

Product pricing is determined by inventory levels at the time of purchase.

Yield management is a feature of airline and hotel reservation systems, with prices fluctuating according to supply and demand.

Negotiated pricing

Where the buyer and seller negotiate a mutually beneficial price. Negotiation is often involved in the sale of a home or vehicle.

Real-time market

Prices are determined by broader supply and demand factors.

The stock market is perhaps the best example, with share prices based on the number of buyers and sellers at any given time.

Oil, iron, coal, uranium, and other commodity prices also fluctuate for the same reasons.

Where the price is determined by a competitive bidding process. 

Revenue stream models

How are revenue streams generated? Let’s take a look at a few models below:

Asset sales

Where a company sells the rights to a physical product to consumers. Amazon and eBay are two examples.

Subscription fees

Which are paid by consumers for constant access to a product or service. Examples include Spotify and Netflix.

In this case, the company earns revenue based on how much a consumer uses its services. Pricing for smartphone contracts depends on how much data the customer desires.

This involves a company charging customers access to copyrighted or patented intellectual property. Licensing is a common revenue stream in the music, sports, media, and technology industries.

Lending, renting, and leasing

As the names suggest, money is made by the company selling temporary access to its products or services for a set period.

Key takeaways

• In the Business Model Canvas, the Revenue Streams building block details the way a business intends to solve customer problems for financial gain. These revenue streams may be transaction-based or recurring.
• Revenue streams are based on fixed or dynamic pricing mechanisms, with both mechanisms influencing price via broad and sometimes more localized supply and demand factors.
• Examples of revenue stream models include asset sales, usage fees, subscription fees, licensing, lending, renting, and leasing.

Key Highlights

• Revenue Streams Definition: Revenue streams represent the different ways a business generates cash from its customers in exchange for the value it provides to them. It focuses on how the company plans to solve customer problems for financial gain.
• Types of Revenue Streams: There are two main types of revenue streams: transaction-based and recurring. Transaction-based revenue streams involve one-time payments for products or services, while recurring streams involve continuous payments to maintain access to products or specific features.
• Revenue Stream Pricing Mechanisms: Pricing mechanisms in revenue streams refer to how pricing affects the supply and demand of a product or service. Pricing can be fixed, with predefined prices based on static variables, or dynamic, changing according to fluctuating market conditions.
• Fixed Pricing Mechanisms: Examples of fixed pricing mechanisms include list prices (non-negotiable prices), product feature-dependent prices, customer segment-dependent prices, and volume-dependent prices.
• Dynamic Pricing Mechanisms: Dynamic pricing mechanisms change based on market conditions. Examples include yield management (pricing based on inventory levels), negotiated pricing (mutually beneficial price negotiation), real-time market pricing (based on broader supply and demand factors), and auction pricing (competitive bidding).
• Asset Sales: Selling physical products to consumers (e.g., Amazon, eBay).
• Subscription Fees: Charging consumers for constant access to a product or service (e.g., Spotify, Netflix).
• Usage Fees: Earning revenue based on consumer usage (e.g., smartphone contracts based on data usage).
• Licensing: Charging customers for access to copyrighted or patented intellectual property (e.g., music, sports, media, technology).
• Lending, Renting, and Leasing: Selling temporary access to products or services for a set period.

Use Revenue Modeling Instead

Read: Revenue Model , Pricing Model .

Alternatives to the Business Model Canvas

Fourweekmba squared triangle business model.

This framework has been thought for any type of business model , be it digital or not. It’s a framework to start mind mapping the key components of your business or how it might look as it grows. Here, as usual, what matters is not the framework itself (let’s prevent to fall trap of the Maslow’s Hammer ), what matters is to have a framework that enables you to hold the key components of your business in your mind, and execute fast to prevent running the business on too many untested assumptions, especially about what customers really want. Any framework that helps us test fast, it’s welcomed in our business strategy .

FourWeekMBA VTDF Framework For Tech Business Models

This framework is well suited for all these cases where technology plays a key role in enhancing the value proposition for the users and customers. In short, when the company you’re building, analyzing, or looking at is a tech or platform business model , the template below is perfect for the job.

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FourWeekMBA VBDE Framework For Blockchain Business Models

This framework is well suited to analyze and understand blockchain-based business models. Here, the underlying blockchain protocol , and the token economics behind it play a key role in aligning incentives and also in creating disincentives for the community of developers, individual contributors, entrepreneurs, and investors that enable the whole business model . The blockchain-based model is similar to a platform-based business model , but with an important twist, decentralization should be the key element enabling both decision-making and how incentives are distributed across the network.

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Gennaro Cuofano

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Business Model: Revenue streams

The next element of the Canvas that I will talk about is the Revenue Streams.

In this chapter you will learn how you can make money selling your product or service to your customer segments .

First, let’s clarify what Revenue is all about. Revenue is the amount of money that is brought into a company through its various business activities (e.g. sales of products and services). Let’s break this down:

For example, if you sell 100 pumpkins per week and sell each pumpkin for 230 shillings, then your weekly Revenue will be 23,000 shillings . You can do the same calculations for monthly and yearly revenue. However, since sales may vary over the month and year, you may have to do more detailed calculations. But I hope you got the point on how to calculate it.

You should be aware that this would be your gross revenue . Your net revenue is calculated as the gross revenue minus any discounts or returns that you had during the year.

Let us assume that a restaurant sold 1,000,000 shilling worth of food during one year. At the same time, it offered 30,000 shillings worth of discounts to students and senior citizens who redeemed coupons. The restaurant also refunded 5,000 to unhappy customers during the year. As a result, the restaurant’s net revenue can be calculated as: 1,000,000 - 30,000 - $5,000 = $965,000

Revenue stream

A Revenue Stream is the building block presenting the cash a company generates from each Customer Segment. Most businesses need at least one great revenue stream to earn money.

Revenue Streams can be generated in many different ways and you can use a mix of these different ways for your company:

• Sale of physical product : The customer pays in cash for the product (for example, pumpkins, books, furniture…) and the customer is then free do whatever she or he wants with it.
• Usage fee : The customer pays a user fee for a particular service, such as water, phone, hotel room, etc. As such, the amount paid by the customer depend on how much of the service is being used (for example, how many liters of water, how many nights at the hotel, how many calls etc.)
• Subscription fee : The customer pays, for example, once a month, or yearly, for a particular service. For example, sports/gym facilities often use this option. Even if you do not use it, you pay. This could also work for products. You have your customers pay an amount to you every month and in return you deliver your product on a regular basis.
• Lending/renting/leasing : This Revenue Stream grants someone the right to use a particular product for a fixed period of time in return for a fee. This method can be used for rentals of cars, rentals of farm machinery etc.
• Brokerage fees: Through this Revenue Stream, your company gets its revenue from an intermediate service. This method is often used by real estate agents (earning a commission every time they match the buyer and seller) and credit card providers (getting a percentage of the value of each sale completed between the merchant and the customer).
• Advertising: Your business may charge fees for advertising a product, service or brand. For example, newspapers and media often rely on this method.
• Volume and unit selling : Your company charges a fixed price for a product. However, if the customer choses to buy your product in higher quantities, they could get a discount (either by a lower price or additional products). You can have different prices and discounts for different Customer Segments. For example, to encourage large purchases of pumpkins, you give 2 free pumpkins to every customer who buys more than 50 pumpkins.

While a promotion strategy seems to be very attractive (giving out products/services for free), you should not use it as your main revenue model since customers get easily used to getting them for free and if you suddenly stop giving products/services away, your customers may leave you and move to your competitor.

Also, you need to be aware of the different payment modalities that you may offer to your customers. I will go into this in the Finance module.

Take away: You would need to decide what kind of Revenue Stream best fit your company, and customers.

Esther’s revenue streams

My revenue model for selling pumpkin products is three-fold.

1. Sale of physical product: Processed pumpkin products, such as juice and sauces, can be bought with cash or debit/credit card.

2. Volume selling: For sliced pumpkin pieces, I have a promotion strategy . Since I promise my customers to only sell them fresh products and since pumpkin slices get spoiled quicker than the whole pumpkin, I sell them in bundles. So, if a customer buys one bag of pumpkin slices, s/he pays 350 shillings. If s/he buys three bags, s/he pays only 950 shillings (regular price for 3 bags bought separately would be 1,050 shillings (3 times 350). I give them a discount to encourage them to buy more slices. The likelihood of increased sales increases. And, the risk of spoiled pumpkins is transferred away from me to my customers.

3. Secondary revenue stream: If I have not sold the slices to my regular customers before they start getting spoiled, I sell them to a winery who then produces wine for me.

Take away: Now write down in detail what your revenue model looks like.

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Revenue Streams in Business Model Canvas

1. introduction to revenue streams, 2. types of revenue streams, 3. factors influencing revenue streams, 4. benefits of implementing revenue streams, 5. challenges to generating revenue streams, 6. examples of successful revenue streams, 7. strategies for developing effective revenue streams, 8. how the business model canvas helps with revenue streams, 9. conclusion.

Revenue streams in business model canvas

When creating a business model, it is important to consider all of the potential revenue streams that the company could utilize. This is especially important when starting a business from scratch, as not all possible revenue sources are available to established businesses.

There are many different types of revenue streams that a business can utilize. Some of the most common are:

Sales: This is the primary type of revenue that businesses rely on to generate income. sales revenue comes from the sale of products and services. It can be generated through the direct sales of products and services, through the sale of secondary products and services that are used in conjunction with the main product or service, or through the sale of advertising space.

Cost of goods sold (COGS): COGS is another type of revenue that businesses generate. COGS represents the cost of goods that a business sells. This includes items such as materials, labor, and overhead costs.

Other income: Other income refers to any money that a business makes that is not related to sales or COGS. This could include revenue from investments in the company, donations from customers, or fees that the business charges for services such as consulting or web design.

Equity: Equity is another type of revenue that businesses can generate. Equity refers to the value of ownership stakes in a company. This could include shares of stock, options, or other forms of ownership.

Royalties: Royalties are another type of revenue that businesses can generate. Royalties come from the payment of a fee for use of someone elses intellectual property (IP). This could include patents, copyrights, or trade secrets.

Management fees: Management fees are another type of revenue that businesses can generate. Management fees are charged for services such as consulting, financial planning, or marketing services.

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There are many types of revenue streams in business. Each has its own benefits and drawbacks. Before you create your business model, it's important to understand the different types of revenue streams and their potential uses.

Revenue streams can be classified into three main categories:

1. Product Revenue Streams : This type of revenue comes from selling products or services. Product revenue streams can be divided into two categories: direct product sales and indirect product sales. Direct product sales involve selling the product directly to the customer. Indirect product sales involve selling the product to a third party and then selling the product to the customer.

2. Service Revenue Streams : This type of revenue comes from providing services such as consulting, training, and software development. Service revenue streams can be divided into two categories: direct service sales and indirect service sales. Direct service sales involve providing services directly to the customer. Indirect service sales involve providing services to a third party and then selling the service to the customer.

3. cost revenue Streams : This type of revenue comes from charging customers for goods or services. Cost revenue streams can be divided into two categories: fixed cost revenue streams and variable cost revenue streams. Fixed cost revenue streams involve charging customers for goods or services that will remain unchanged regardless of how much revenue is generated (for example, rent, salaries, and marketing expenses). Variable cost revenue streams involve charging customers for goods or services that will change in response to how much revenue is generated (for example, depreciation costs for equipment, credit card fees, and commissions).

There are also hybrid revenue streams that combine two or more of the above types of revenue. For example, a company may sell products and provide services simultaneously. Alternatively, a company may sell products and charge customers for costs (such as shipping and handling costs) associated with those products.

Before you create your business model, it's important to understand the different types of revenue streams and their potential uses. Different revenue streams may be better suited for different types of businesses. For example, a company that sells products may be better off using a product revenue stream, while a company that provides services may be better off using a service revenue stream.

Factors Influencing Revenue Streams

There are many factors influencing revenue streams in business model canvas. Some of these factors are:

1. The business model. This includes the type of product or service that the business offers, the pricing structure, and the distribution channels.

2. The competitive landscape. This includes the presence of similar businesses, the level of competition, and the attractiveness of the market.

3. The company's strengths. This includes the company's unique selling points and its ability to deliver on those points.

4. Changes in the market. This includes changes in consumer behavior, technological advances, and economic conditions.

5. The company's strategy. This includes the goals that the company has for its revenue streams, how it plans to achieve those goals, and the resources that it is using to achieve them.

6. The company's capabilities. This includes the skills and resources that the company has available to it, as well as the willingness and ability of those resources to support the company's goals.

The article discusses the benefits of implementing revenue streams within a business model canvas. Revenue streams can provide stability and predictability for businesses, help manage risk, and boost profitability.

When developing a business model, it is important to consider all of the possible revenue streams that a company could pursue. Revenue streams can be divided into two main categories: direct and indirect. Direct revenue streams are those that are generated from the companys primary product or service. Indirect revenue streams are those that are generated from the companys activities outside of its primary product or service.

Direct revenue streams can include sales of a companys products or services, fees charged for services provided by the company, and royalty payments from intellectual property rights. Indirect revenue streams can include fees charged for services used by the company, fees charged for using the companys resources, and advertising revenues.

There are many benefits to implementing a revenue stream within a business model canvas. The most important benefit is stability and predictability. Revenue streams provide a level of certainty for businesses, which can help them plan their future and make more informed decisions. Revenue streams also help manage risk by providing a predictable source of income. Finally, revenue streams can boost profitability by providing a source of extra income that can be used to increase investment in the business or to reduce debt obligations.

My message to students is that if you want to become an entrepreneur and save the world, definitely don't skip college. But go to a school that you can afford. You'll be freed from the chains of debt and succeed on your own ambition and merit. Vivek Wadhwa

There are a number of challenges to generating revenue from blog content.

The first challenge is that readers may not be interested in your content unless it is related to their interests. You may have to convince them to visit your site regularly in order to receive the benefits of your content.

Another challenge is that you may not have the expertise or authority to promote your content. You may have to find partners or sponsors who will help promote and distribute your content.

Another challenge is that you may not have the time or resources to produce high-quality content. You may have to find ways to generate revenue from your content that does not require a high level of quality.

Another challenge is that you may not be able to generate revenue from your content until after it is published. You may have to find ways to generate revenue in advance of publication.

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When creating a business model canvas, it is important to focus on identifying potential revenue streams. Revenue streams can be anything from advertising and sponsorships to content and e-commerce. Here are a few examples of successful revenue streams:

1. Advertising : Ads can be placed on the website and in other media outlets, such as magazines and newspapers. They can also be placed on online auctions and classified websites.

2. Sponsorships : Sponsorships can involve paying an organization to use its name or logo on the website. They can also involve providing free products or services to the websites users.

3. Content : Content can be written by the business itself or contracted out to third-party writers. It can be published on the website, in magazines and newspapers, or on other online platforms.

4. E-commerce : E-commerce involves selling products and services through the website. Products can be sold through the website itself, or through third-party vendors who are affiliated with the business. Services can include web design, web development, and online marketing.

There are many strategies for developing effective revenue streams within the context of the blog Revenue Streams in Business Model Canvas.

Some popular strategies include :

1. Creating and monetizing product or service extensions.

2. developing new products or services., 3. increasing traffic to the blog., 4. offering consulting or coaching services., 5. developing affiliate marketing programs., 6. participating in paid search engine marketing campaigns., 7. sponsoring content on other blogs or websites., 8. conducting online surveys., 9. offering premium content (e.g., white papers, e-books, video tutorials) for sale., 10. developing social media platforms and/or communities that target specific interests or demographics..

The business model canvas is a tool that can be used to help identify and analyze the revenue streams within a business. The business model canvas can help an entrepreneur better understand their company's current revenue model and how it can be improved.

The business model canvas is divided into four quadrants: products, customers, revenue, and costs. Within each quadrant, various items can be analyzed. For example, within the products quadrant, different revenue streams could be analyzed such as product sales, affiliate sales, and licensing fees. The customer quadrant could include analysis of the company's customer base, including information on who the company's customers are, how they are acquired, and what services or products the company provides. The revenue quadrant could include analysis of various revenue sources, such as advertising revenue, subscription revenue, and product sales. The costs quadrant could include analysis of the company's costs associated with generating revenue, such as marketing expenses, research and development expenses, and administrative expenses.

The business model canvas can be helpful in identifying opportunities for growth and improvement. For example, if the company's current revenue model relies heavily on advertising revenue, it may be possible to shift some of that revenue to a more sustainable source such as subscription revenue. Additionally, if the company's costs are high relative to its revenue, it may be possible to reduce those costs in order to increase profitability.

Overall, the business model canvas can be a useful tool for entrepreneurs in understanding their company's current revenue model and potential improvements.

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Now that you have completed the Business Model Canvas, it is important to think about how all the different revenue streams work together and how they help your business grow. In this concluding section, we will discuss some of the most important revenue streams to consider when designing your business model.

When starting a business, it is important to think about all the different ways in which you can generate revenue. There are many different methods that businesses can use to generate revenue, and it is important to choose the ones that will help your business grow and be successful.

The following are some of the most important revenue streams to consider when designing your business model:

1. Product Revenue : The first type of revenue that a business can generate is product revenue. This is generated by selling the products that the business has created. It is important to think about what kind of products to create and how to market them in order to generate the most revenue.

2. Service Revenue : Another type of revenue that a business can generate is service revenue. This is generated by providing services that are valuable to customers. It is important to think about how to provide the best possible service and how to market it in order to generate the most revenue.

3. Advertising Revenue : Another type of revenue that a business can generate is advertising revenue. This is generated by using ads to promote the business or its products. It is important to think about how best to use ads and how to market them in order to generate the most revenue.

4. Fees Received from Partners or Customers : Another type of revenue business can generate is fees received from partners or customers. This is generated by charging partners or customers a fee for using or purchasing the products or services of the business. It is important to think about how to charge partners or customers and how to market them in order to generate the most revenue.

5. Other Revenues : Other types of revenues that a business can generate include income from investments, royalties, and bonuses. It is important to think about all of the different ways in which these types of revenues could be generated and how to market them in order to generate the most revenue.

When thinking about all of the different ways in which a business can generate revenue, it is important to consider all of the different aspects of the business model. It is also important to think about how each type of revenue will help the business grow and be successful.

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Revenue Model Types in Software Business: Examples and Model Choice

Revenue model vs business model, revenue model vs revenue stream, transaction-based revenue model, advertisement-based revenue model, commission-based revenue models, markup revenue model, affiliate revenue model, interest revenue model, donation-based or pay-what-you-want revenue models.

A business starts with an idea of how to generate value for a customer. So, if a customer is looking for a table, you can produce a table, market it, ship it, and receive payment for it — and that’s your business model. The total amount of money earned — in other words, revenue — is the coal that keeps your train running. Depending on the business model’s complexity, revenue will cover manufacturing, distribution, marketing, and other costs.

Besides simple transactions, there are many ways to generate revenue. That’s even truer for software companies: Web distribution and the nature of software create various possibilities to monetize code. Think of licensed/freemium apps, service subscriptions, and others. All of these represent a certain mechanism that specifies how a business generates revenue. The structure of this mechanism is called a revenue model.

Here’s our video breakdown of revenue models

For those exploring the world of business strategy planning, we’ll elaborate on the definition of the revenue model, and the correlation between business models and revenue streams. We’ll also analyze different types of revenue models and look at some examples to scrutinize the pros and cons of each approach. Finally, we’ll reflect on how to choose or develop a model for your business.

What is a revenue model?

A revenue model is a plan for earning revenue from a business or project. It explains different mechanisms of revenue generation and its sources. Since selling software products is an online business, a plan for making money from it is also called an eCommerce revenue model.

The simplest example of a revenue model is a high-traffic blog that places ads to make money. Web resources that present content, e.g., news (value), to the public will make use of its traffic (audience) to place ads. The ads in turn will generate revenue that a website will use to cover its maintenance costs and staff salaries, leaving the profit.

Revenue models are often confused with business models and revenue streams. To avoid any misinterpretations, let’s quickly define these three terms that form a business strategy.

A business model (BM) is a broad term outlining everything concerning the main aspects of the business, all of which are contained in the answers to the following questions.

• What value will we create?
• How will we deliver it?
• How will we bring in revenue?
• How will we earn profit?

Numerous forms of business models can’t be classified in a single list because each part is highly individual to the industry, type of product/service, audience, or profitability. Business models are often depicted strategically on a business model canvas . This is a compound representation of all the key elements of a BM.

A business model canvas template by AltexSoft

So the BM describes how a business will work from the standpoint of value generation. Revenue models, on the other hand, are a part of the business model used to describe how the company gets gross sales.

A revenue model is used to manage a company’s revenue streams, predict income, and modify revenue strategy. The revenue itself is one of the main KPIs for a business. Measuring it annually or quarterly allows you to understand how your business operates in general and whether you should change the way you sell the products or charge for them.

But what are revenue streams?

A revenue stream is a single source of revenue that a business has. There can be many of them. Streams are often divided by customer segments that bring revenue via a given method. The two terms – revenue stream and revenue model – are often used interchangeably, since, from a business perspective, the subscription revenue model will have a revenue stream coming from subscriptions. However, models can name multiple streams divided into customer segments, while the principle of revenue generation (subscription) will remain the same.

Revenue model types

Any start-up, tech company, or digital business may combine different revenue models. The revenue model will look different depending on the industry and the product/service type.

Here we will pay more attention to the most common revenue models used in the software industry and online business.

A transaction-based model is a classic way a business can earn money. The revenue is generated by directly selling an item or a service to a customer. The customer can be another company (B2B) or a consumer (B2C). The price of the product or service constitutes the production costs and margin. By increasing the margin, the business can generate more income from sales.

Selling products or services entails using different pricing tactics. While some of them may be considered separate revenue models, these tactics are often used in pairs. Because pricing tactics can be seen as pricing plans in a software business, we can clearly define the following types.

Licensing/one-time purchase. This entails selling a software product by license that can be used by a single user or a group of users. The general idea is to offer a product that requires making only one payment for it, e.g., Microsoft Windows, Apache Server, and some video games.

Subscription/recurring payment. Unlike licensing, a user receives access to the software by paying a subscription fee on a monthly/annual basis, e.g., Netflix, Spotify, and Adobe products.

Pay-per-use. This pricing tactic is mostly used by different cloud-based products and services that charge you for the computing powers/memory/resources/time used. Examples are Amazon Web Services and Google Cloud Platform.

Freemium/upselling. Freemium is a type of app monetization in which a user may access the main product for free, but will be charged for additional functions, services, bonuses, plugins, or extensions, e.g., Skype, Evernote, LinkedIn, and many video games.

Hybrid pricing. Sometimes pricing plans are a mixture of more than one. So that freemium plan might morph into some form of pay-per-use tiered plan. After passing some limit in computation or resources, a user can be forced to use or offered another type of pricing. Examples are Mailchimp, Amazon Web Services, and SalesForce.

Various combinations of pricing tactics can be used simultaneously, which is more often seen in cloud-based products that offer multiple payment options at once. The revenue model in this case remains based on the transaction and purchases made by the customers. The difference in pricing tactics will modify how the revenue is generated and basically depends on the type of product/service you sell.

The pros. You have full control over the pricing strategy.

The cons. The cons will depend on the industry/product type and pricing tactics, as the model itself imposes a constant generation of sales with the help of advertising and marketing strategies. The only con we might mention here is the financial burden connected with sales you will carry on your own.

Transaction-based revenue model examples. Nearly any company that produces and sells its products uses this type of revenue model. Examples are Samsung, Rolls Royce, Nike, Microsoft, Apple, Boeing, and McDonald’s, to name a few.

The advertisement-based revenue model is a plan with which businesses make money by selling ad spaces. It is one of the most standard methods of producing top-line growth, and it’s valid both for online and offline businesses. It’s often used by websites/applications/marketplaces or any other web resource that attracts huge amounts of traffic.

The pros. Having a high-traffic resource allows you to monetize the ad space nearly instantly. Often, there is a strong demand for advertising space, especially with organic traffic and platforms with the target audience.

The cons. Running advertising campaigns to gain web visibility on various platforms like social networks is a standard marketing activity with targeting instruments more precise than ever. However, advertisements are everywhere, so you might think twice about whether you want to distract a user by placing an ad in your app – even if it is a secondary revenue stream.

Ad-based revenue model examples. YouTube, Instagram, Facebook, and Google are just a few prominent examples. All these platforms generate revenue by displaying advertisements to users and charging businesses for exposure. In addition to promotion, these platforms may also generate revenue through other sources, such as premium subscriptions or licensing agreements.

A commission-based revenue model is one of the most common ways businesses make money today. A commission is a sum of money a retailer adds to the total cost of a product or service.

A commission may be charged per marketplace or transaction and can be assigned as a

• flat rate, a fixed sum of money for any type of transaction, e.g., a $450/300/1500 transaction is charged with a $20 commission;
• percent of transaction size, e.g., a $100 transaction is charged with a 10 percent commission – $10; or
• tiered commission, a percent or flat rate that grows based on the transaction volume, e.g., 50,000 transactions are charged a 4 percent commission, 150,000 transactions a 7 percent commission.

Marketplaces and eCommerce platforms, in particular, utilize commissions the most. Another large category includes businesses that connect service providers/renters with consumers. Think of any ride-hailing company, food delivery, online travel agency (OTA) , or alternative accommodation services.

The pros. Revenue is easily predictable because of the sheer fee.

The cons. There are many problems bound to the concept of a commission, but the major one goes to the scalability of a business that’s attached to a transaction size or volume. In general, dependency on the product supplier’s sales makes generating revenue require upfront investments and competitive superiority.

Commission-based revenue model examples. Airbnb is a platform that allows individuals to list and rent their homes or apartments as short-term rentals . It generates revenue by charging a commission on each booking made through its platform. The commission is typically a percentage of the total booking cost and is paid by the host (property owner). Other examples are Booking.com, Uber, Lyft, Ticketmaster, Priceline, and Upwork.

Markup is the type of revenue model with which you buy a product at a certain cost and then sell it for a higher price: The difference between the two is your profit margin. This model is often used by wholesale, retail, and service-based businesses.

For example, a wholesaler may be a bed bank — a B2B company that purchases rooms from accommodation providers in bulk at a discounted, static price for specific dates, and sells them to OTAs , travel agents, destination management companies, airlines, or tour operators.

Pros. Markup revenue models are straightforward, allowing businesses to easily calculate their profit margins on each sale. With this approach, businesses can be flexible with their pricing by adjusting the markup to reflect changes in the cost of goods or changes in market conditions.

Cons. While markups provide a great deal of flexibility, some organizations may not have enough resources to manage revenue and apply changes to their markup strategy based on the market state. So they set a uniform markup for all of their products or services. This may lead to prices being too low or too high and businesses may not be able to fully capitalize on the value of certain products.

Markup revenue model examples. In addition to bed banks, airline consolidators leverage a markup model to earn revenue: They are brokers that book flight seats in bulk at discount rates and then resell them to travel agencies. Examples are Mondee, Picasso Travel, and Centrav.

The affiliate model is similar to the commission-based model. The main difference is that, with the affiliate model, you do not sell the product or service on your own platform, but rather redirect the customer to the original provider’s platform to make the purchase and earn a commission on any resulting sales. An affiliate model is a contract between a supplier of a product/service and a promoter. A promoter can be another business/media resource/blogger that recommends a supplier’s product. The earnings will come as a percentage of sales or fees for the number of registrations done via referral links.

Businesses utilizing the affiliate model include metasearch engines as a unique example. Metasearch tools can be found almost everywhere. Their main difference with retailers is that they don’t sell products directly but offer comparison and search as a value. Advertising and affiliate programs are the main revenue models used to get earnings in this case.

The pros. Just like the advertisement-based revenue model, once you have a huge traffic resource, you might apply for an affiliate program to earn money. This will bring you income without any investments because you will basically generate traffic and leads for the affiliate program provider.

The cons. Unfortunately, the percentage of affiliate programs promised to the promoter is quite low. Sometimes it fluctuates between 1-2 percent and requires a high volume of sales generated through your links.

Affiliate revenue model examples. Blogging and event-promoting platforms like Broadway.com or TheaterMania generate revenue using this model. Among other examples are Amazon affiliate websites, e.g., Cloud Living and ThisIsWhyImBroke.

An interest or investment revenue model relates to any type of business that generates revenue in the form of interest on their loans or deposit payments. These are most often banking or electronic wallet companies that work with financial operations.

The revenue is generated by making a loan to a customer or by a customer depositing or investing money (or other resources) into the business. At the end of a return period, a percentage of the loan sum will return as revenue. Debit/credit money provided with the bank accounts also relates to this model. That’s just one of the ways financial companies can make money, combining it with transaction fees for using their e-wallet/bank account.

The pros. The interest rate provides a clear view of what revenue a business will generate, as the percentage stays unchanged until the return period is over.

The cons. The regulations of an interest rate impact both the customer and the business. Sometimes it depends on the economic environment. Think of currency rate changes that influence potential and existing borrowers.

Interest revenue model examples. Many banks, credit card companies, and other financial institutions use the interest revenue model. For example, peer-to-peer lending platforms, such as LendingClub and Prosper, generate revenue by charging interest on loans funded by investors.

This is a revenue model based on investments made by businesses or customers on a voluntary basis. The product or service itself is free to use by default, so that’s the primary value a company brings to the customer. The revenue is generated in the form of donations, or sometimes in the form of “pay-what-you-want.”

It’s important to mention that there is a difference between a donation-based business and a charity organization. A donation-based company is still required to pay taxes.

The pros. Because of the free access to the product, some companies manage to get increasingly popular, resulting in donations becoming a major part of their revenue.

The cons. The model is never used on its own and the revenue generated by it remains a secondary source because of its random/unstable nature.

Donation-based revenue model examples. AdBlock generates revenue through donations from users who support the development and maintenance of the software. At the same time, AdBlock offers a premium version of the software for a fee, which includes additional features and support. Among other examples is Wikipedia which relies on donations as a significant source of revenue. Additionally, the platform makes money through grants and partnerships.

There are many other revenue models, and a business or project may use more than one revenue model. It is important for businesses and projects to carefully consider their revenue model as it can have a significant impact on the overall success of the venture.

How to choose a revenue model for your business?

Before choosing a revenue model, you need a fully developed business strategy that will include a prepared business model with all its key instances. That means you must take a few steps prior to selecting the revenue model.

Define your value proposition. Map out your product strategy by describing what the product is and what value it brings to the customer. Not all products can be sold: Can you recall the last time you upgraded your WinRAR to a full license? Also, you can analyze the future traffic for your app to understand if you can use ads in it.

Explore the market state and customer groups. This step is to define your user persona and understand how these users usually buy things. Some markets are inclined to purchase just one product, some are inclined to ignore upgrades or in-app purchases. A good example in this field is the death of music-selling platforms that were totally replaced by subscription-based streaming services like YouTube Music, Apple Music, Spotify, and others.

You may also explore the techniques on how to market your product in our dedicated article.

Analyze competitors and their products. You’ll need to learn what mechanisms and revenue streams your competitors use and how they manage their costs. This information will probably show you the market’s pitfalls and dead ends.

Looking at this simple matrix below, we can analyze the capabilities and needs of your company to help you decide the type of revenue model to use.

How to choose a revenue model framewor k

Depending on your business model, the product or service you’re presenting to the user is a subject of exchange. This is your value proposition on the market, so you are in charge of choosing what you want to get back based on the market factors, target audience, etc.

Paid value proposition. In most cases, your value proposition costs money to use. Whether it’s a service or a software product, a customer will need to pay in some form to gain access to your value. Your revenue model in this case will be based on transactions. So develop pricing tactics that will depend on the nature of the product, the type of audience you’re trying to reach, the type of deployment, specifics of product usage, etc.

Free-to-use value proposition. If the value proposition doesn’t require money to use or you choose it to be free, then you need a third party to generate revenue for you. This could be anything based on the previously mentioned types, whether it’s ad space, donations, affiliate programs, or reselling.

The combination of the two will basically present you with the revenue streams that will focus on each of the customer segments. In the case of the paid value proposition, each pricing plan will be a separate revenue stream.

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Further Reading

Ai and machine learning in finance: use cases in banking, insurance, investment, and cx, how to launch a successful product: timing, roles, and product launch checklist , lean startup: build iteratively using feedback loop and lean canvas.

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Revenue Streams

Keeping in mind profit potential, what revenue(s) are you generating from each stakeholder segment for your value?

The Commercial Dimension

A company must ask itself, for what value is each customer segment truly willing to pay?  Successfully answering that question allows the firm to generate one or more revenue stream from each customer segment.  A business model can involve two different types of revenues streams: transaction revenues from one-time customer payments and recurring revenue from ongoing payments.  There are several ways to generate revenue streams: asset sales, usage fees, subscription fees, lending/rental/leasing, licensing, brokerage fees, and advertising. 

The Impact Dimension

In some ways it is important to understand the impact and commerce inside a social enterprise as two separate but symbiotic systems.  The commercial business around which a social enterprise is structured needs to operate as such. At the same time, the impact systems needs to be understood in terms of the social value it is generating.  We need to be able to honestly and openly assess whether this social value is actually ‘saleable’ – whether our commercial customers, or impact customer will pay for this social value and thereby generate revenue… [continued below] 

Professor Sarah Soule explains the goal of the revenue streams block, and poses questions for you to consider as you think through strategic options for your venture. She will discuss the example of Equal Opportunity Schools , a national nonprofit organization with both earned income and philanthropic support. (1:40) 

Design Prompts

• Through what type of Revenue Stream are Customers, Beneficiaries or Investors paying for operations, service and/or product? 
• Are the Revenue Streams based on a fixed price or are they variable based on market conditions? 
• Are the Revenue Streams based on one time transactions or are they based on long-term value of recurring revenue? 
• Are the Revenue Streams in small increments or large sums?

For-profit example

Revenue streams:

• Product sales [c]
• Grants (Shell Foundation & DFID) [i]

d.light sells solar energy solutions to populations without electricity in 60+ nations. See project description and its Impact BMC

Nonprofit example

Equal Opportunity Schools

• Consulting fees [c]
• Grants & state/local subsidies [i]

Equal Opportunity Schools helps minority and low-income high school students succeed in AP and IB courses. See project description and its Impact BMC

i = Impact dimensions,  c = Commercial dimensions,  b = Both dimensions 

More about The Impact Dimension

About organizational structures

Explore all possible revenue streams with the hypothesis of both a nonprofit and for-profit legal structure. Now is not the time to make decisions about whether to start a nonprofit or a for-profit. The availability of sufficient revenue options will be one of several factors to take into consideration to make that decision.

• Osterwalder, A., & Pigneur, Y. (2009). Business Model Generation. New Jersey: John Wiley & Sons, Inc. See pages 30-33
• Burkett, I. Using The Business Model Canvas for Social Enterprise Design . See pages 21-23
• Calderon, J. The Social Blueprint Toolkit. See page 16 
• Fruchterman, J. (2011). For Love or Lucre.   SSIR
• Understanding Legal Structures and Social Enterprise , Stanford Social Entrepreneurship Hub