Revenue is the income you generate from providing your digital service or product to customers. It can come from numerous sources, such as grants, contracts, subscriptions, and donations.
Revenue is one of the key building blocks for a sustainable business model. When completing this part of the business model, you will need to not only capture the expected revenue in terms of a financial amount but also what the revenue models are that you’re looking to develop. For many organizations, a sustainable business model will rely on more than one revenue stream, both for resilience and to ensure that there is at least some surplus to reinvest in the ongoing development of the digital solution and your organization.
First, you will need to discuss your revenue aspirations with all of the relevant stakeholders for your organization. Do you just want to cover the deployment of your digital solution, or do you also need to cover ongoing development? Are you seeking enough funds to scale your solution, or do you want to create a surplus for investment elsewhere?
Depending on your organization or network, there are some revenue streams and uses that will be preferable. There may also be certain parameters for what funding you will or won’t accept. For example, there might be an investor or customer you don’t want to work with or a type of public fund you may not want to accept. You will need to make a clear decision with all the key stakeholders on what your aspirations and parameters are and then discuss the potential revenue models that would enable you to achieve those aspirations.
Case Study: Funding/Revenue Decision
On the Aid, Evolved podcast, Sebastian Manhart talks of how Simprints turned down four out of five opportunities due to cost/benefit or ethical issues. For example, an INGO in Ethiopia wanted to distribute condoms from a truck in villages and record the biometrics of each person who received the condoms. Simprints quickly told them that it was a completely disproportionate use of biometrics and turned down the project.
To complete the revenue model building block in your Business Model Sustainability Canvas, you and others in your organization will need to determine what your revenue aspirations are and which revenue models and streams seem most applicable to your organization and digital solution. Section 5.1 will provide guidance on the various revenue models.
Section 5.1: Revenue Models in the Aid Sector
This section helps outline the many revenue models and revenue streams that can be used for ICT4D solutions. To create a resilient and sustainable business model, you may need to combine a number of these revenue models together.
Key discussion areas:
- Explore key revenue models that may fall into these five types: project-based revenue models, product- or service-based revenue streams, indirect revenue models, fundraising models, and investment streams. See Section 9.2: Cost Reduction Strategies
- Identify revenue streams within each of these models that seem most appropriate for your organization and solution
Ensure that all stakeholders have agreed what the revenue aspiration is and document it.
Agree on any parameters for investment and revenue and document them.
Identify potential revenue models to experiment with.
Aim to achieve a diversity in revenue streams to increase resilience and sustainability of the business model.
Complete the following in your Business Model Sustainability Canvas:
- Identify the revenue model/s with any key metrics (e.g. price point) where possible.