29 Revenue Model Options for Industrial Companies curated by @arnevbalen boardofinnovation.com
Why did Board of Innovation make a tool to explore ways to find new revenues? As an agency specialised in business model innovation, we support our clients to develop sustainable new revenue streams. By asking the right questions, different options to monetise your idea arise. Unfortunately, we can’t be everywhere at the same time. That’s why we've made a flowchart to help you and your team to discuss the alternative monetisation tactics & pricing options. Step 1: Flowchart Find new revenue models for your idea Cool! You just it for free! Maybe Of course! How No! It's not about the Do you want more than one contact moment with your user? Not relevant devastated if their user data was lost! High chance that you'll 7. Loss/Aversion Absolutely! Don't forget to check this one as well! Yes, they would love it! Does your product need a critical amount of users to show it's value? Is it your goal to have direct revenue from this product/service? Of course! 2.Tip jar/donation Is the variabel cost per extra user non-existent or negligible? not living in the faster, stronger! we make software! We do have some Middle Ages anymore! Harder, better, That's why Seriously? We are Charity? No thanks! 5. Pay-what-youwant You can probably Afraid that you make even more won't receive extra costs... what's coming lower the money on this! Just enough donations? Can you think of features that only part of your user base would pay for? is always kind of exciting! 10. Convenience/ Shortcuts Sounds like You won't gambling! than the smell regret this! F*ck off! of fresh money give it a try! Yes! 4. Freemium Didn't I say I don't What would that mean ! for your idea? a teleportation! Find the exit... Ever played Monopoly? Go back to start! Close... 12. Exclusivity/ Limited Availability #Awesome! You have some options that your users might be willing to pay for. Do you want the user to own the product once they pay? Yes! Would you like proof of interest from your users before you launch? Damn right about that! 23. Crowdfunding Will the user have the exclusive right to use this product? Not We will launch nessecarely! anyway! Do your users want to pay every time they use your product/service? Not really! What about these colours? Do you think the user might have trouble paying the entire product at once? No! Yes! Paid! The user = Client Monetization driver (How to cash in) Always come together Free! For the user. Third party pays the bills Nope! Yes! No, but we do have a recurring cost in mind! Crowdfunding is only the beginning... Can one product be shared amongst different users? Yes! Could you introduce physical consumables to be used together with the product? No! Try to imagine… What would that mean ! for your idea? What would that mean ! for your idea? Try to imagine… Try to imagine… ! but yet so far... 9. Mystery/Surprises What would that mean ! for your idea? Try to imagine… Your journey requires want them to pay? Hmmm... Making money on your product seems to be a tough one. Get out of your comfort zone! It's innovate or die. in the morning... 11. Helping peers/ Gifts Definitely! mass needed! Not knowing No, it would value! Solution the money! 3. Barter No... 6. Vanity/ Reputation For example: 10. Convenience/ shortcuts Integrated It's not about Nope, no critical What about offering a box without telling what's inside? Hell yeah! Yes! 1. Early Exit One Laptop Per Child 13. Get one Give one Nothing better this road once! 17. Matchmaking platform Yes, Do you want to have an integrated solution that seems to be your own offering? My product is all In fact, yes! use everything they have! Did you develop a feature/product significantly more convenient than the best alternative users have? No! Amongst everyone! Would users value the possibility to share the product with their peers? You can only walk trusted partner they need! Not at all, they already Nope! Would the status only be relevant amongst the user base of your product? Remember: Advice to 16. Data Resell Are there any complementary services/products to your offer that your users expect? be useful! Can the user receive a higher status by using the product? That's how advantage! is fine! Do your users have non monetary resources the company (or other users) normally would have to pay for? Yes, that would Not relevant! is our competitive No! Exactly! users to pay! it works! Do you want to offer a product/service to people that can't afford it? Step 3: Brainstorm template 15. Affiliate/ Referral Shht... user data Do you generate user-data relevant for others? Not Does your product/service remember previous use of a user? (eg. memory card) find more reasons for 14. Advertising How to cash in on your ne Ads, are just not sure if necessary! users to pay! Note: This is not a scientific tool. Don’t expect the ultimate solution. you crazy? ability to pay. I'm for my product! High chance that you'll They would be Do you dream of making even more money with this idea? Check! Not really... everyone will pay! find more reasons for 8. Privacy/ Anonymity Do you believe other companies would have interest in targeting your user base? Will users have to give their personal details in order to use your product/service? can I let them pay otherwise? Do you think your users could feel uncomfortable if all their friends know that they use your product/service ? This flowchart will be most effective in one of the following cases: • You have a new idea and you are wondering if you can monetise it. • You already developed your business model and you would like to challenge your current monetisation strategy. Step 2: Revenue Cards Hint >You might find gold at the other side of this tunnel No, let's give Yes! teleported yourself here! Obviously... Start here! Answer quick! What comes to mind first is the right answer. Here we go: Will the majority of users pay for your product? When should I use it? ! What wou for yo Try to Yes! Nope! 22. Fractional Ownership Good idea! Always come together 25. Razor-blade 19. Subscription (time related) 20. Leasing 21. Pay-per-use 18. Flat rate (one-time-fee) Do you see the option to sell something extra to part of your customer base? 24. Add-ons Rules of the game: • Start from a concrete idea • Continue until you are at a location where you have been already (vicious cycle!) • Check all answers before choosing a path • Don’t judge yet, seriously! Rules of the game: • Check cards to understand the monetisation principle if you need some clarification or examples. • It’s totally ok to peek into the revenue cards that you didn’t have as an outcome from the flowchart ;) Download all files for free: www.boardofinnovation.com/FindNewRevenue ! ! What wou for yo Try to Rules of the game: • Take all outcomes into consideration For example: • Translate10. Convenience/ shortcuts the theoretical outcome into concrete ways to earn money • Ask all team members to come up withwould that mean ! translation mean ! their own What What would that What wou for your idea? for your idea? Try to imagine… Try to imagine… ! ! for yo Try to
#1 Loss/Aversion Free! For the user. Value Proposition Third Party pays the bill Pricing tactic A technique used by drugs dealers for many years and also known as locking-in customers: give something for free (or cheap) and provide lots of hassle (€ or effort) when they want to change to a different service/solution. 2 Examples to turn theory into practice 1. Dropbox 2. SAP Dropbox is the most expensive player in the cloud storage market, but they were first and everyone integrated 3rd party services with their Dropbox account. Who knows what might stop working once you switch to an alternative? Do we really have to explain this one? SAP has roots that reach to the deepest core of your organisation. Trying to kill this parasite will take your sweet, blood and tears (without any guarantee of success). How much value do you create? Where we would start our pricing strategy: Costs related to risks of cutting loose the old solution + cost of training all employees to use it
#2 Exclusivity/ Limited Availability Free! For the user. Value Proposition Third Party pays the bill Pricing tactic Having something with a certain exclusivity is a show-off. It has always been like that and it will always be the case. The more people have access to the product, the harder it gets to use this as a value perceiver. 2 Examples to turn theory into practice 1. Board of Innovation 2. Monsanto Highly intensive programs like the ‘innovation bootcamp’ and services such as ‘Hire a lean entrepreneur‘ require an extensive amount of time and effort from the (limited) corporate disruptors available in Board of Innovation’s team. ‘Be different and be first’ is our advice when you choose this path. Most startup acquisitions are happening in a B2B context. The prime reason for a corporate giant to acquire a B2B startup is getting exclusive use of good people or products. Lots of B2B startups are built and launched to be acquired. (image: Monsanto buying Weather Corp. for $1.1B in 2013) How much value do you create? Where we would start our pricing strategy: Set a (very) high price and lower if you don’t get traction
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#3 Acquisition convenience Free! For the user. Value Proposition Third Party pays the bill Pricing tactic The acquisition of new customers is an expensive business associated to convincing a customer to buy your product/service. Ultimate convenience is achieved when customers are coming to you without active sales or marketing. 2 Examples to turn theory into practice 1. Theranos 2. Lafarge retailer support Blood-testing startup Theranos operated for years in near-total secrecy, despite raising hundreds of millions of dollars at a valuation of around $9 billion. Their technology works but apparently 90% of all tests are outsourced to others. The industry perceived it as cheating but in our opinion it’s damn smart to outsource when you can not deliver (everything) yet. Lafarge, world’s largest cement manufacturer, links retailers with microfinance organisations so that the stores can offer loans and construction support to low-income consumers. Lafarge’s primary investment is in a team of home-improvement “counselors” who market the service through channels such as info kiosks set up in stores. Piloted in Indonesia and Nigeria. How much value do you create? Where we would start our pricing strategy: Saved cost per acquisition (google ads, working hours, etc.)
#4 Client (of clients) satisfaction (retention) Free! For the user. Value Proposition Third Party pays the bill Pricing tactic The better your product/service meets (and surpasses) the customer expectation, the happier the customer will be and the longer they will stay customer, resulting in less acquisition costs and higher revenues per customer. 2 Examples to turn theory into practice 1. Breezeworks 2. JoyGlobal Small business owners are expected to excel at every role — salesperson, marketer, taskmaster, accountant, dispatcher, and receptionist. Breezeworks assists them so they can deliver better service to their customers. (eg. It keeps a clear overview of remarks from previous jobs.) Joy Global Inc., a Fortune 1000 company, manufactures and services heavy machinery used in mining. The company also deals in aftermarket parts. By installing sensors in their machines they tell their clients when the machines need replacement parts or service. (Smart Services monitoring program) How much value do you create? Where we would start our pricing strategy: Average of extra jobs (retention) X cost of acquiring a new client
#5 Employee satisfaction Free! For the user. Value Proposition Third Party pays the bill Pricing tactic Employees can be seen as internal clients of a company. Keeping them happy is as important as selling good products/services to external customers. The better you treat them, the better for your clients’ business. 2 Examples to turn theory into practice 1. Yambla 2. Wranx Yambla is an ideation tool that helps discover and execute the best ideas in organisations. By endorsing the idea owners and empowering them with the right team members and tools creates a fun, simple and social culture that supports innovation. Wranx provides employees quick, effective educational tools to become skilled in a number of areas. Employees can use this service wherever and whenever they want. Continuous learning does not require classrooms anymore. #awesome How much value do you create? Where we would start our pricing strategy: Average cost of hiring per year divided by average turnover time of employees
#6 Certainty (aka. lower risk) Free! For the user. Value Proposition Third Party pays the bill Pricing tactic Risk comes with a ‘risk minimisation cost’. Lowering the perception of risk is often enough to convince a company to buy your service. Go and find those risk factors ;). 2 Examples to turn theory into practice 1. Democrata 2. Viloc Democrata sells data to the construction and maritime sector. The aggregated data Democrata provides could save construction companies millions of dollars by avoiding ancient burial grounds and other archaeologically important sites. Viloc is a company automating tool management for the construction industry. By placing a handy little transmitter on all equipment of a construction company, the equipment is directly linked to a web application at their office. No more unused or stolen equipment! How much value do you create? Where we would start our pricing strategy: Current cost of yearly safety buffer X added risk of changing the current way of working (0-100%)
#7 Flexibility (aka. lower fixed cost) Free! For the user. Value Proposition Third Party pays the bill Pricing tactic High investments equal high risk. Keeping investments low equals high flexibility, a goal of every CEO. 2 Examples to turn theory into practice 1. Additively 2. Hire a lean entrepreneur An international network of rapid prototypers and additive manufacturers. A given company uploads a 3D model to the Additively website in order for the Additively system to help optimise the costs and efficiency of getting the model 3D printed. Only variable costs for their clients to be found here. A co-intrapeneur that joins 1-2 days per week to keep everyone focused. Most of the time this person will steer the validation of critical business assumptions in the first months of a corporate venture. The collaboration can stop every month without consequences (= shameless BOI advertising). How much value do you create? Where we would start our pricing strategy: Cost of a wrong investment (or hire) X the amount of times this happened during the last few years
#8 Vanity/Reputation Free! For the user. Value Proposition Third Party pays the bill Pricing tactic Allowing businesses to distinguish themselves from other businesses will make them feel important. Often used in gaming! 2 Examples to turn theory into practice 1. Windows 8 Pro 2. Gore-Tex While Windows Pro is priced much higher than the basic version, both versions of Windows do not differ that much in features, The reason is simple. Would you like to be the one opening your ‘Windows Home Edition’ at the first meeting with a potential client? Gore-Tex is THE membrane to make something 100% waterproof while keeping air going through. Using the membrane provides manufacturers of shoes, jackets, etc. a trademark that distinguishes them from manufacturers using other solutions. (Example in flooring: Quickstep Seal & Click) How much value do you create? Where we would start our pricing strategy: Pricing interviews are required in this case - and in all other cases ;) -
#9 OPEX saving Free! For the user. Value Proposition Third Party pays the bill Pricing tactic Automation of repetitive tasks and making an organisation ‘lean’ are examples of clean OPEX savings. No company is perfect. Search and find ;). 2 Examples to turn theory into practice 1. Robin 2. Chitale Dairy Robin provides an online service that recognises the arrival of people in a certain room. The service automatically schedules in spontaneous meetings, or indicates whether a room is being used or not. Chitale Dairy places Allflex RFID tags in cows’ ears to receive information on whether the animals are in heat or need to be vaccinated or dewormed. This information is transmitted via the cloud to farmers’ mobile devices. the goal is to increase the amount of milk production while reducing the number of cows, which will also reduce the methane production of the farm. How much value do you create? Where we would start our pricing strategy: For people: time saved in hours X proportion that can (or will be) used to do something productive for the company X average wage cost per hour. For other OPEX: fix a reference cost & claim part of the savings after a certain time
#10 Transparency Free! For the user. Value Proposition Third Party pays the bill Pricing tactic Open communication and transparency are key trends in business. The more leaders can share with their employees, clients, shareholders and partners, without unveiling ‘real’ company secrets, the more trust they receive. 2 Examples to turn theory into practice 1. Cemex Smart Silos 2. Ticto CEMEX installs sensors in the customer's silos to track consumption and inventory information. The cement inventory levels are monitored and transmitted. CEMEX personnel creates a demand plan and dispatches cement to the customer's site, ensuring a seamless and continuous supply.. Customers can view current stock levels and orders received in the CEMEX Connect customer Online resource center. By using light, color and patterns on a badge with a LED and e-ink display, Ticto is using a visual indicator that allows any group of individuals to regulate itself. Ideal for a flexible workforce with variable applicable rules on safety, security, allowances, credentials, contracts, etc. How much value do you create? Where we would start our pricing strategy: How much time do managers ‘lose’ by managing questions or mistakes based on limited information? What is the cost of fraud in your company?
Free! For the user. Third Party pays the bill #11 Strategic partnership Value Proposition Pricing tactic 2 Examples to turn theory into practice Typically two companies form a strategic partnership when each possesses one or more business assets that will help the other, but that each respective other does not wish to develop internally. In a one time deal, we call it barter. How it usually works - General visualisation 1. Coca Cola & Global fund Service HQ Inc MyStartup.com Inc 5 If the Coca-Cola company can deliver a bottle of soda to a village deep in the African countryside on a daily basis, why can’t governments and nonprofits figure out how to do the same with life-saving pharmaceuticals? Coca Cola launched a pilot project in Tanzania and decreased delivery time by 84%. Company Consumer Lower price than service cost (often free) Data, the right to use data or something else non monetary and valuable for the MyStartup.com 2. Sony & SOPG China banned game consoles from 2000 until 2014, which caused Sony difficulty in penetrating the Chinese market. The joint venture with Shanghai Oriental Pearl Group should help to market Sony’s PlayStation products in the country.
Free! For the user. Third Party pays the bill #12 Freemium Value Proposition Pricing tactic 2 Examples to turn theory into practice Segmenting your user base in users that get the service for free and users that pay, is called a freemium business model. The paying customers usually have access to superior features. How it usually works - General visualisation 1. Slack HQ Inc Free Service Inc SME My organization Pro Service 5 Slack is a platform for team communication: everything in one place, instantly searchable, available wherever you go. Slack is free to use for as long as you want and with an unlimited number of people. Functionalities will be limited once your organisation reaches 10k messages. Inc SME Pro Pay per use Inc Pro Service Corporate 5 Subscription Clients 2. Dropbox Dropbox gives more online space to their PRO users that paid for the service. Meanwhile, Business users have unlimited space and extra services for teams to collaborate.
#13 Pay-what-youwant Free! For the user. Value Proposition Third Party pays the bill Pricing tactic 2 Examples to turn theory into practice Similar to donation but with a stronger focus on revenues, not users. Here you get to choose what you pay for the product. Only works when variable costs are negligible (e.g. music, games, virtual books, software, etc.) How it usually works - General visualisation 1. Zest Each year, business coach Jennifer Martin, owner of Zest Business Consulting, offers new clients the opportunity to pay what they want for a two-hour business strategy session. These clients are often happy to give her testimonials or offer referrals and 30% are converted into clients who pay regular rates after experiencing the value of her services. HQ Inc MyStartup.com Information Product 5 Inc Consumers Company Money 2. 8k design agency Offer what you want for their services and they pick the offers they like. Apart from money, value drivers for 8k could be: availability of their designers, big brands for their portfolio, etc.
Free! For the user. Third Party pays the bill #14 Setting the standard Value Proposition Pricing tactic 2 Examples to turn theory into practice Companies make one of their core assets (technology, user base, etc.) available for competitors and/or partners to accelerate the market and to make their technology the standard. Often only one technology can survive. Do you remember the Betamax vs. VHS cassette battle? How it usually works - General visualisation 1. Tesla Makes all their electric vehicle patents available for free. Ford (Electric), BMW (Electric) and Toyota (hydrogen) followed their example in a race to get the entire industry to adopt their technology. Service Service Right HQ Inc MyStartup.com 5 Consumer Lower price than service cost (often free) 2. SmartThings SmartThings is building an open platform for smart homes and the consumer Internet of Things. They have been able to create a community of 5,000 developers that use its open platform. Consequently, 1,900 new devices and 2,300 new apps were developed on its platform in a span of 90 days.
#15 Advertising Free! For the user. Value Proposition Third Party pays the bill Pricing tactic 2 Examples to turn theory into practice The user becomes the product. Companies pay to reach the customers of your service. The desired result is to drive consumer behaviour with respect to a commercial offering. How it usually works - General visualisation 1. Coursera HQ Inc Inc Service My organization Coursera is an education platform that partners with top universities and organisations worldwide, to offer courses online for anyone to take, for free. Imagine the impact of a powerful lecture with 200k students attending… Company 5 Money 5 Pay per X Inc Advertiser 2. Mobile World Congress Exposure All (big) industry conferences and fairs are sponsored by companies in return for exposure: a speaker, an exhibitor stand, a logo on all flyers, etc. Sponsorship is a way of advertising (with a nice fiscal advantage).
#16 Affiliate/Referral Free! For the user. Value Proposition Third Party pays the bill Pricing tactic 2 Examples to turn theory into practice When referring your customers to another company, you are driving their sales. Depending on the product and program, 5-10% of the product price is a good indicator of the lead fee you’ll receive. How it usually works - General visualisation 1. Zenefits Contact data HQ Inc My organization Zenefits is offering free cloud-based HR software to any company. So companies can centralise all of their employees’ information in one dashboard, which is a big win. In this dashboard, there are suggestions for health care insurance plans, which the employer will pay for with a 5% referral fee. Inc Company Buyer Free Service 5 Product Money 5 Referral fee Inc 2. Bosch tele-diagnostics Company Seller Leads Bosch offers remote vehicle diagnostics services to vehicle owners and dealers through its tele-diagnostics system. To make the service effective for the users, Bosch’s system enables information exchange with third-party services such as car workshops and roadside assistance.
#17 Data Resell Free! For the user. Value Proposition Third Party pays the bill Pricing tactic 2 Examples to turn theory into practice Selling customer data is a lucrative business for many purposes: targeted advertising, medical research, personalised services, etc. Being transparent is one of the keys to success! How it usually works - General visualisation 1. PatientsLikeMe HQ Inc Inc Free Service My organization PatientsLikeMe offers a valuable (and free) P2P service for people searching for the best treatment of their disease. Anonymous data is sold to Pharma, so they can come up with better treatments. Users Data Insights 5 Access fee Inc Data Buyer 2. KISSmetrics KISS metrics connects all marketing data to real people. Companies can see everything a person has done, from the first touchpoint to the last and are able to anticipate on this behaviour.
Free! For the user. Third Party pays the bill #18 Matchmaking Platform Value Proposition Pricing tactic 2 Examples to turn theory into practice When matching 2 relevant parties to each other, both value your service and might pay for it. Dating platforms are the best known example of matchmaking platforms. All kinds of Tinders for X exist already (eg. Jobr is a Tinder for jobs). How it usually works - General visualisation 1. Powerlinx 5 Money Inc “Finding your next strategic partner should take minutes, not months” is what they claim. Powerlinx is a platform to find suppliers, clients, partners, etc. Consumer Company Service HQ Inc Experience My organization Service Experience Inc 2. Babelverse Consumer Company 5 Money Babelverse is P2P translator for spoken communication available on-demand in any language and remotely on any device. Fact: launched as a business service but envisioning a tool that will help bridging the language gap between oversees volunteers and victims of nature disasters.
Free! For the user. Third Party pays the bill #19 Marketplace Value Proposition Pricing tactic 2 Examples to turn theory into practice A marketplace always has clear supply and demand. Bringing these 2 sides together might require a platform (marketplace) or a serviceprovider (broker). The one delivered the most value to is mostly the one that pays the commission fee (can be buyer, seller or both). How it usually works - General visualisation HQ Inc 1. FLOOW2 MyStartUp.com FLOOW2 is 'the World's Reset Button’, a sharing marketplace for business equipment, services and personnel. Perfect if you need short term resources or if you have overcapacity. 5 Platform Commission 5 Inc Inc Money Consumer Company Consumer Company Experience Product Community Service 2. StyleSeat StyleSeat is the platform for professionals in the beauty and wellness industry to run and grow their business. Consumers receive a one-stop-shop for beauty & wellness appointments. Easily copyable to healthcare or manufacturing industry.
#20 Negative working capital requirement Free! For the user. Value Proposition Third Party pays the bill Pricing tactic 2 Examples to turn theory into practice While most corporations have figured out how to start a business with other people’s money, some companies have figured out how to actually run a business on other people’s money by collecting as much money as possible in advance from customers and holding out on paying others. How it usually works - General visualisation 1. AB Inbev Being world's largest brewer with a 25 percent global market share, has its advantages. While clients have to pay after a month, suppliers (eg. farmers) get paid only 4 months after delivery. The result: a pile of cash of aprox. $10B for AB Inbev. Grain Sell Beer Cash in Cash-20 Negative WCR (estimate for AB Inbev: 3 months = 10Bio) 2. Verizon Communications Wireless and broadcasting companies are best in this business. Where they really generate cash is in their careful management of operating working capital. Verizon for example can use 50% of its revenues for growth investments.
Free! For the user. Third Party pays the bill #21 Flat rate Value Proposition Pricing tactic 2 Examples to turn theory into practice This is how most products are sold. You pay a one time fee and you own the product or you receive access to a lifetime service. How it usually works - General visualisation 1. A banana You buy it. You draw a face on it to extend its lifetime for 3 more minutes. You eat it. You’re done. HQ Inc Inc Service MyStartUp.com Product 5 Consumer Company One-Time Fee 2. VPN Unlimited VPN Unlimited is your one-stop-shop for protecting your WiFi connection, securing your online activity, and bypassing web content restrictions. You pay €40 for a lifetime subscription.
#22 Subscription Free! For the user. Value Proposition Third Party pays the bill Pricing tactic 2 Examples to turn theory into practice A subscription is a service you sell in a certain timeframe. The service can vary: receiving a newspaper every day, using a cloud service (software), being able to call car assistance when needed, etc. How it usually works - General visualisation 1. Adobe Creative Cloud Adobe Creative Suite has had a ‘single purchase for life’ for a long time. Now they switched to a cloud service: you only pay for what you need for the time you need it. According to Adobe it’s cheaper. Disclaimer: for frequent users it’s not ;). HQ Inc Inc Service MyStartUp.com 5 Consumer Company Subscription 2. Zubie Zubie is a connected-car app that provides location tracking, driver scoring, alert and location sharing services by connecting each car to the internet with a Zubie key. Subscription fee of $149/year/key
Free! For the user. Third Party pays the bill #23 Leasing Value Proposition Pricing tactic 2 Examples to turn theory into practice Customers receive a physical product for a limited period to fulfil their needs. Within the leasing period, a product can only serve the needs of one customer (exclusive use). How it usually works - General visualisation 1. Pay-per-lux (Philips) Clients pay for the light they use, while Philips remains the owner of all fixtures and installations. One of the main reasons: energy savings without investment costs of LED lights. Service in collaboration with Cofely. Implemented at Schiphol Airport. 5 HQ Inc Inc Company MyStartUp.com Product (bought) Inc Service Flat Fee 5 Consumer Company Fee/Time 2. Barco Leasing Program The fast pace of projection disruptions resulted in cinemas to either work with outdated technology or spend more than they earn. Barco proposed to deliver a projection service instead of selling the projectors with a cost per hour projected.
#24 Pay-per-use (= result based) Free! For the user. Value Proposition Third Party pays the bill Pricing tactic 2 Examples to turn theory into practice Some products are only used a limited amount of times per customer (a car is idle 97% of the time on average). Paying only for the times you need a product/ service creates flexibility and increases the value per use. How it usually works - General visualisation 1. Siemens mining Proximity monitors, speed controllers, lane keeping assistants – such systems are commonplace on cars. Now, similar systems are finding applications in mining vehicles as well. The objectives: greater productivity, efficiency, and safety. Currency: Cost per ton mined HQ Inc Inc Service MyStartUp.com 5 Company Consumer Fee per use 2. Asian Paints In India, Asian Paints offers the service of painted walls rather than selling a can of paint. This service strategy has benefitted beyond new revenues. It helps to ensure that their high end products are applied properly, which further helps in improving customer satisfaction. Moreover, selling services also helps the firm to get closer to the end-customer.
#25 Dynamic pricing Free! For the user. Value Proposition Third Party pays the bill Pricing tactic 2 Examples to turn theory into practice A pricing strategy with highly flexible prices for products or services based on different variables: demand-based, time-based , profile-based, performance based, etc. How it usually works - General visualisation 1. Qatar Airways Airlines change prices depending on the day of the week, time of day, and number of days before the flight, number of seats, departure time and average cancellations on similar flights 5 HQ Inc Price based on one or multiple variables Inc Company Consumer My organization Service 2. DSM reflective coating DSM charges clients a percentage of the extra revenues or savings by the extra energy generated because of DSM antireflective coating on their solar panels.
#26 Pre-sales Free! For the user. Value Proposition Third Party pays the bill Pricing tactic 2 Examples to turn theory into practice Pre-sales is a way to offer a product/service/right for sale before it is developed entirely. Mostly used to fund a project or to receive proof of customer interest before launch. Used for decades by companies like Boeing, Airbus and Bombardier. Always to be combined with another pricing tactic! How it usually works - General visualisation 1. General Electric HQ Inc FirstBuild™, GE Appliances’ new global co-creation community of designers, engineers and appliances users, launched the Paragon Induction Cooktop with discount pricing through a campaign on IndieGogo. With success! MyStartUp.com 5 Service % Commission Small Reward 5 Small Micro-Funding Inc Community Company Member Inc Inc Large Reward Fund Seeker Company 5 Large Macro-Funding Community Company Member Funding Crowd 2. Intraboot Intraboot is a tool to organise crowdfunding campaigns within your firm. All employees receive a virtual budget and choose together where investments go to and can propose new initiatives. IBM and Audi are pioneers in this area.
#27 Up-selling Free! For the user. Value Proposition Third Party pays the bill Pricing tactic 2 Examples to turn theory into practice aka. Add-ons. Some customers might have deeper pockets than you think. Always allow them them to spend all the money they have! The gaming industry understands this aspect, the music industry does not. How it usually works - General visualisation 1. Salesforce AppExchange Cheap product HQ Inc MyStartup.com Inc 5 Salesforce offers lots of own apps in their AppExchange. Through acquisitions and own development they make sure to sell as much extra products as possible once a company chooses for SalesForce. Company Low Price Consumables 5 Recurring Premium Price 2. BASF Agri tools BASF developed an mobile online tool which enabled the digital disease identification of plants on the field. A direct connection between the most applicable BASF products and the disease is then established to treat the affected plants. Upsales resulted in big growth in South America.
#28 Razor-blade Free! For the user. Value Proposition Third Party pays the bill Pricing tactic 2 Examples to turn theory into practice Revenues are spread over the lifetime of a product. After a flat fee, customers have recurring expenses they can’t refuse. (e.g. Razor blades, coffee pads, updates GPS devices, etc.) How it usually works - General visualisation 1. Nespresso Cheap product HQ Inc MyStartup.com Inc 5 Nespresso doesn’t earn (much) on their coffee machines (they don’t even make them themselves). All of the money comes from the pads. Interesting fact: Dyson chose for the opposite strategy by taking away vacuum cleaner’s bags. Company Customer Low Price Consumables 5 Recurring Premium Price 2. Tomtom GPS updates “An update is still cheaper then a new GPS system, right?” This is exactly how Tomtom and Garmin made big money for years. Users choose to either pay or use outdated maps.
#29 Co-investment Free! For the user. Value Proposition Third Party pays the bill Pricing tactic 2 Examples to turn theory into practice When customers are not able to pay for the entire product, you can allow them to buy it together with peers. Another variation of buying together with peers is ‘group buying’ to achieve a discount on everyones product or service. How it usually works - General visualisation 1. Da Vinci Robots Inc Company HQ Inc My organization Product or development The da Vinci Surgical System is a robotic surgical system made by the American company Intuitive Surgical. It is designed to facilitate complex surgery and allows remote surgery. Often several hospitals share the cost of one device. Inc Company 5 Total investment divided by # companies Inc Company Group of companies 2. IMEC IMEC is a cutting edge research center based in Leuven, Belgium. Together with partners from across the value chain they tackle challenges to co-develop an economically scalable route to high-volume manufacturing of innovative products.
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