1. Business Plan Preparation Revenue Model
Frank Moyes Leeds College of Business
University of Colorado Boulder, Colorado
Revenue Model

2. Two Approaches Top down – market penetration & timing
Bottom up – pipeline, revenue by customer
Revenue Model

3. Revenue Drivers Depends on market Examples Market penetration
Market size & growth
Price & discount
Capacity utilization rate
Sales cycle
Lead time
Response rate
Churn rate
How measure?
Revenue Model

4. Revenue Model (Top Down)
Market size - number of customers, transactions or units, purchases
Growth rate
Market penetration rate
Frequency of purchase – per day, week, month
Capacity Utilization
Product or services
Initial product/service
Roll out - new services or product introductions
Prices
Price per customer, transaction or unit
Average revenue per customer or transaction
Channel strategy - discount
Revenue Model

5. Revenue Model (Bottom-up)
Identify specific customers
Identify decision maker
Determine
Annual purchases
Level of satisfaction with current suppliers
What do you need to do to for them to purchase
If you meet the criteria, how much business can you expect
Revenue Model

6. What is a Revenue Model? Market potential Market share
Size & growth
Market share
Penetration rate
Roll-out strategy
Product/Service offered
Range & mix
New Products/Services
Obsolescence
Frequency of purchase – per day, week, month
Capacity Utilization
Channel strategy - discount
Prices
Revenue Model