Revenue Model Options

27 curated by @arnevbalen boardofinnovation.com

flickr cc 59937401@N07
 Why did Board of Innovation
When should I use it?
make a tool to explore ways to find new revenues?
As an agency specialised in business model innovation, we support This flowchart will be most effective in one of the following 2 use cases:
our clients to develop sustainable new revenue streams. By asking • You have a new idea and you are wondering if you can monetise it.
the right questions, different options to ‘cash in on your new idea’ will • You already developed your business model and you would like to
arise. Unfortunately, we can’t be everywhere at the same time. That’s challenge your current monetisation strategy. 

why we made a flowchart to help you and your team to discuss the
alternative monetisation tactics & pricing options. Note: This is not a scientific tool. Don’t expect the ultimate solution.

How to cash in on your ne

Step 2: Step 3:
Step 1: Flowchart
Find new revenue models for your idea Answer quick! What comes to mind
first is the right answer. Here we go:
Start here! Hint >You might find gold at
the other side of this tunnel

Will the majority of users pay for

Revenue Cards Brainstorm template

your product?
Cool! You just
No, let's give
teleported Yes!
it for free!
yourself here!
Maybe

Of course! How Will users have to give their Do you believe other companies Do you dream of
can I let them personal details in order to use would have interest in targeting Check! making even more
your product/service? your user base? money with this idea?
pay otherwise?
14. Advertising
Not really...
Do you think your users could No! Ads, are
feel uncomfortable if all their It's not about the
you crazy?
friends know that they use ability to pay. I'm
Obviously...
your product/service ? Do you want more than one just not sure if
contact moment with your 15. Affiliate/
everyone will pay! Referral
user? Shht... user data
Not relevant Do you generate user-data
is our competitive
for my product! relevant for others?
High chance that you'll advantage! Remember:
Not Advice to
find more reasons for You can only walk
necessary! Do you want to offer a 16. Data Resell trusted
users to pay! product/service to people No! this road once!
8. Privacy/ partner
that can't afford it?
Anonymity is fine!

For example:

They would be
devastated if Does your product/service Exactly! 17. Matchmaking
remember previous use of a platform
their user data user? (eg. memory card) Yes,
Are there any complementary Do you want to have an
was lost! services/products to your offer Yes! integrated solution that seems Integrated

10. Convenience/ shortcuts

Do your users have non monetary that your users expect? to be your own offering? Solution
resources the company (or other
High chance that you'll
Not relevant! Yes, that would users) normally would have to pay for?
find more reasons for My product is all
be useful! It's not about
users to pay! they need!
the money!

Can the user receive a higher Not at all, they already 1. Early Exit
7. Loss/Aversion status by using the product? In fact, yes!
use everything they have! Does your product need a critical Is it your goal to have
Absolutely! Nope! Definitely!
amount of users to show it's value? direct revenue from this
product/service?

Don't forget Did you develop a feature/product Nope, no critical

Would the status only be relevant
to check this significantly more convenient than mass needed!
amongst the user base of your product? One Laptop Per Child Of course!
one as well! the best alternative users have?
That's how
13. Get one -
it works! 3. Barter 2.Tip jar/donation
Give one Harder, better,
No! Amongst everyone! That's why
No... Is the variabel cost per extra user faster, stronger!
we make
non-existent or negligible?
software!
Seriously? We are 5. Pay-what-you- You can probably
Hell yeah! What about offering a Charity?
Would users value the possibility to not living in the want Afraid that you
box without telling No thanks! make even more
share the product with their peers? We do have some won't receive
what's inside? Middle Ages anymore! money on this! Just
extra costs... enough donations?
6. Vanity/ give it a try!
Reputation
Not knowing
No, it would
Yes, they what's coming Can you think of features that only
lower the Yes!
would love it! is always kind part of your user base would pay for?
value!
of exciting!
10. Convenience/
Sounds like 4. Freemium
Shortcuts
You won't Didn't I say I don't
Nothing better gambling!

What would that mean ! What would that mean ! What wou
regret this! want them to pay? Your journey requires
than the smell F*ck off!
a teleportation! Find
of fresh money
Hmmm... the exit...
in the morning... Making money on your product seems to be a tough one. Ever played Monopoly?
Get out of your comfort zone! It's innovate or die.

for your idea?
 for your idea?
 for yo

Go back to start!

Close...

! !
11. Helping peers/ 12. Exclusivity/ but yet so far...
9. Mystery/Surprises
Gifts Limited Availability

#Awesome! You have some Would you like proof of Damn right
Do you want the user to own the
options that your users Yes! interest from your users
might be willing to pay for.
product once they pay?
before you launch? about that!

Try to imagine… Try to imagine… Try to

23. Crowdfunding
Not We will launch Crowdfunding is
Not really!
nessecarely! anyway! only the beginning...

What about these colours? Will the user have the

exclusive right to use
Do your users want to
pay every time they use
Do you think the user might
have trouble paying the entire Yes!
Can one product
be shared amongst Yes!
this product? your product/service? product at once? different users?
22. Fractional
Ownership
Nope!
No!
Yes! Could you introduce physical
Yes! consumables to be used
together with the product?
Paid! Monetization driver Free! Third party Nope! No, but we do
The user = Client (How to cash in) For the user. pays the bills have a recurring
No!
cost in mind! Good
idea!
Always come together Always come together 25. Razor-blade

Do you see the

19. Subscription 18. Flat rate
(time related) 20. Leasing 21. Pay-per-use (one-time-fee) option to sell
24. Add-ons
something extra
to part of your
customer base?

What would that mean ! What would that mean ! What wou
for your idea?
 for your idea?
 for yo
! !
Rules of the game: Rules of the game: Try to imagine… Try to imagine… Try to
• Start from a concrete idea • Check cards to understand the
• Continue until you are at a location where monetisation principle if you need some
you have been already (vicious cycle!) clarification or examples.
Rules of the game:
• Check all answers before choosing a path • It’s totally ok to peak into the revenue
• Take all outcomes into consideration
• Don’t judge yet, seriously! cards that you didn’t have as an outcome For example:

• Translate10. the theoretical
Convenience/ shortcuts outcome
from the flowchart ;)
into concrete ways to earn money
• Ask all team members to come up
Download all files for free: with their own translation
What would that mean ! What would that mean ! What wou
www.boardofinnovation.com/FindNewRevenue for your idea?
 for your idea?
 for yo
! !
Try to imagine… Try to imagine… Try to
 Free! Value
For the user. Proposition
#1 Vanity/Reputation Third Party
Pricing tactic
pays the bill

Allowing customers to distinguish themselves from other customers will make

them feel important. Often used in gaming!

2 Examples to turn theory into practice

1. Windows 8 Pro 2. Reputation in games

Pro and Business versions of Windows do not differ that much in features, Gamers of World of Warcraft often pay to fit in, for exclusivity, to show
while Pro is priced much higher than the basic version. But wait… Do you commitment or simply to show off to the starters (aka .#noobs) in the game.
want to be the one opening your ‘Windows Home Edition’ with a new client? It’s all about perception!
 Free! Value

#2 Loss/Aversion
For the user. Proposition

Third Party
Pricing tactic
pays the bill

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 alternative.

2 Examples to turn theory into practice

1. Dropbox 2. Seven

Dropbox is the most expensive player in the cloud storage market, but they
Seven is a fitness app with a goal to workout each day for 7 months. If you
were first and everyone integrated 3rd party services with their dropbox
miss a day, you lose a heart. Once you lose your 3 hearts, you have to start
account. Who knows what might stop working once you switch to an
again from zero. Expert tip: Extra hearts can be bought ;).
alternative?
 Free! Value
For the user. Proposition
#3 Privacy/Anonymity Third Party
Pricing tactic
pays the bill

When you don’t want other people to find out who is using the service, users
might want to pay for this matter. 


2 Examples to turn theory into practice

1. DateMeKenya 2. Vanilla Visa

Anonymity is crucial when you want to hide what you are doing.
Vanilla Visa is a gift or reward card that works the same as a normal
DateMeKenya has the anonymity feature only available for their paying
creditcard but without identification. Fees are higher than regular credit
members. You don’t want your husband/wife to find out that you are dating,
cards but the money is untraceable.Expert hint: Extra hearts can be bought ;).
right?
 Free! Value
For the user. Proposition
#4 Mystery/Surprises Third Party
Pricing tactic
pays the bill

Giving people a reason to believe that they might win a lottery creates customer
experience. Not knowing what’s coming can often be exciting!

2 Examples to turn theory into practice

1. Birchbox 2. Mystery in Gaming

Birchbox is a subscription service that sends you (or someone that received it No payment trigger that the gaming industry doesn’t use! In this mystery
as a gift) a monthly box full of cosmetics. You won’t know what’s inside until crate you have a (small) chance of finding rare items (eg. crystal sword). You
you open it and that’s why it’s so much fun to find in your mailbox. might call it a virtual lottery.
 Free! Value
#5 Convenience/ For the user. Proposition

Shortcuts Third Party

pays the bill Pricing tactic

Delivering a product/service that is more convenient/easy to use compared to

existing alternatives is worth paying for!

2 Examples to turn theory into practice

1. Shyp. 2. Zynga Games

You want to send a camera to your brother abroad but you hate the hassle
The power of ‘Zynga-like’ games is the simple choice e.g. when you want to
with sending? Shyp will be your best friend! You simply take a picture of the
grow a plant you can: grind (click 5000x), spam (invite 50 friends for double
camera, choose the destination and Shyp comes to pick it up within 30
speed) or pay (#coins).
minutes.
 Free! Value
#6 Helping Peers/ For the user. Proposition

Gifts Third Party

pays the bill Pricing tactic

Think about this as paying a round of drinks in a pub with your friends. You will
get instant social status as a result. Giving something valuable to someone you
care about creates satisfaction.

2 Examples to turn theory into practice

1. A Small World 2. Baekdal Plus

You check Baekdal Plus, a website full of in-depth research articles and you
A small world is a social network for the #UltraRich. If you are not part of it,
find a highly relevant article for your colleague. Baekdal Plus lets you share
you wont be ‘one of them’. To get access, you need an invite. To get an invite,
that $20 article for free if you have subscription ($9/month). Great deal, isn't
you need to pay. Get it?
it?!
 Free! Value
#7 Exclusivity/ 
 For the user. Proposition

Limited Availability Third Party

pays the bill Pricing tactic

Having something with a certain exclusivity is a certain 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. Vertu 2. Wu-Tang Clan

Vertu offers a phone for a stunning €12 000 and you know what? People pay! Instead of selling copies to all their fans, Wu-Tang Clan released just one copy
The reason: it’s your key to exclusive services (e.g. a concierge to call in any of its secret Album. Musea can rent the album to offer fans to listen the
circumstance) and events. album once for $40/time.
 Free! Value 2 Examples to turn theory into practice

#8 Non monetary
For the user. Proposition

Third Party
Pricing tactic
pays the bill

There is no such thing as a free lunch! Apart from direct revenue, companies
launch products/services for other reasons: user base, prestige, contact details,
etc.

How it usually works - General visualisation

1. Whatsapp
Mobile messaging with friends all over the world is becoming
Service more popular than social media. WhatsApp had 450Mio users
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Inc (and their address book) when acquired by Facebook for
$16Bio. Fact: WhatsApp had no revenue model at that time.

MyStartup.com 5 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. Thunderclap
The world's first crowd-speaking platform. At time of writing
(March 2015), over 3 million people have donated their social
reach for ideas and causes that matter. The service given to the
users in this case is ‘reputation’.
 Free! Value 2 Examples to turn theory into practice

#9 Tip jar/Donation
For the user. Proposition

Third Party
Pricing tactic
pays the bill

Some products need a lot of users to function appropriately. Some people will
highly appreciate what they get. Giving these people a chance to show this
appreciation in a gift (€) is a tip jar/donation.

How it usually works - General visualisation

1. Wikipedia

Wikipedia’s sole revenue stream is donations from users that

love the online encyclopedia. When you have (and need) a huge
user base, some of these users will be willing to help.

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Information

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MyStartup.com Consumers

Donation

2. Amazon Smile

Amazon uses donations as a sneaky loyalty scheme. With every

purchase, Amazon Smile donates 0.5% of the purchase price to
a cause of your choice.
 Free! Value 2 Examples to turn theory into practice

#10 Barter
For the user. Proposition

Third Party
Pricing tactic
pays the bill

Receiving products/services you want in return for another good or favour.

Most barter are triangle deals!

How it usually works - General visualisation

1. homeexchange.com

Home exchange is a website that allows you to exchange your

own home with other travellers for a limited amount of time
(aka. your holiday period) in return for a $9,95/month
Consumer subscription fee.

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Platform
Product Product

MyStartUp.com
5

Commission

Consumer Consumer

Product

2. Swap your car

The government of Murcia (Spain) encouraged their

inhabitants to swap their car for a free lifetime tram pass.
Note: this is not a triangle deal!
 Free! Value 2 Examples to turn theory into practice

#11 Freemium
For the user. Proposition

Third Party
Pricing tactic
pays the bill

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. Spotify

Free users of Spotify receive advertisements every 20

minutes, paying users don’t. Nothing more nothing less, it
doesn’t have to be complex all the time.

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.
 Free! Value
#12 Pay-what-you- For the user. Proposition
2 Examples to turn theory into practice

want Third Party

pays the bill Pricing tactic

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. Humble Bundle

Humble Bundle offers book and game bundles for a price that
you choose yourself. If you are one of the top payers, you
receive limited bonus books/games.

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Information

5
MyStartup.com Consumers

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! Value 2 Examples to turn theory into practice
For the user. Proposition
#13 Get one-Give one Third Party
Pricing tactic
pays the bill

Sometimes you want to target a user segment that simply can’t afford your
product in any way. The decision to make another segment pay double has been
made for charity: laptops, flash lights, etc.

How it usually works - General visualisation

1. One Laptop per child

For every laptop bought in the US and Europe, one of these

laptops was sold to charity organisations for highly deducted
prices. Fact: the low tech of these laptop triggered the
notebook trend (9” laptops) in the US and Europe.

2. Starbucks campaign

For every coffee bought, Starbucks donated 25 cents to Oasis,

an organisation helping locally based family organisations
worldwide.
 Free! Value 2 Examples to turn theory into practice

#14 Advertising
For the user. Proposition

Third Party
Pricing tactic
pays the bill

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. Metro News

Metro is free around the world. Their goal? To reach as much

commuters as possible. The more eyeballs they keep rolling,
the more companies will pay for ads in these newspapers.

2. Pinterest

Pinterest is a great way to integrate advertising in behaviour

that people choose to keep doing: finding inspiration - clothes,
furniture, moodboards, etc.
 Free! Value 2 Examples to turn theory into practice
For the user. Proposition
#15 Affiliate/Referral Third Party
Pricing tactic
pays the bill

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. FindGift.com

FindGift helps people to find the right gift. Once the service
guided you to what you want to buy, you will be directed to the
website of their partner. If you buy, FindGift gets paid.

2. ASAP54

ASAP54 is the Shazam for fashion. If you see something you like,
the app will tell you what it is and where you can buy it. Often
you will even get a direct buying link. Well, that’s convenient
(and #smart). Good integration is the key!
 Free! Value 2 Examples to turn theory into practice

#16 Data Resell

For the user. Proposition

Third Party
Pricing tactic
pays the bill

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
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 as well.

2. Data Coup

The money saved by not providing a free service could be given

to the users willing to share their data. That’s exactly what
DataCoup is doing. You can earn up to $9/month, providing
them all data you already give to other companies.
 Free! Value
#17 Matchmaking For the user. Proposition
2 Examples to turn theory into practice

Platform Third Party

pays the bill Pricing tactic

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.

How it usually works - General visualisation

5
1. Jobr
Money
Jobr is a ‘Tinder’ for jobs matching companies with open
applications (and looking for ‘the perfect applicant’) with
applicants searching for ‘their perfect job’.
Consumer
Service

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Experience Experience
My organization

Service

2. Babelverse
Consumer
5

Babelverse is P2P translator for spoken communication

Money available on-demand in any language and remotely on any
device. Fact: Launched as a business service but envisioning a
tool that will helps bridging the language gap at overseas
nature disasters.
 Free! Value 2 Examples to turn theory into practice
For the user. Proposition
#18 Marketplace Third Party
Pricing tactic
pays the bill

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 most value to is mostly the one that pays the commission fee
(buyer, seller or both).

How it usually works - General visualisation

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Inc 1. Airbnb

Airbnb is a travel service that links people with space available

MyStartUp.com to people searching for a good place to stay (with locals).
Commissions charged are 6-12% of the listing fee.

Platform Commission

Money

Consumer Consumer

Experience Product Service 2. Ebay

Community
Ebay is a well known auction platform for second hand goods.
Apart from commission on listing fee, sellers are also charged
to keep their offer ‘on top of the page’.
 Free! Value 2 Examples to turn theory into practice

#19 Flat rate

For the user. Proposition

Third Party
Pricing tactic
pays the bill

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 extent it’s lifetime for 3
more minutes. You eat it. You’re done.

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Service Product

MyStartUp.com 5
Consumer

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.
 Free! Value 2 Examples to turn theory into practice

#20 Subscription
For the user. Proposition

Third Party
Pricing tactic
pays the bill

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: They are lying :).

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Inc

Service

MyStartUp.com 5
Consumer

Subscription

2. Dollar shave club

Every week you receive fresh razorblades in your mailbox for

$1/month. That’s convenient! Apart from razorblades, you
might find this kind of services for socks, fruit, candybars, etc.
 Free! Value 2 Examples to turn theory into practice

#21 Leasing
For the user. Proposition

Third Party
Pricing tactic
pays the bill

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. LeasePlan

Leasing of cars is a service used by all companies worldwide.

Leaseplan is one the leading providers of this service.

5
Inc HQ
Inc

Flat Fee Service

Company MyStartUp.com 5
Consumer

Product (bought) Fee/Time

2. Lease a Jeans

Not much people think about it, but leasing is a revenue model
used for other goods as well: diamonds, bags, jackets and yes,
jeans as well. Hint: check www.mudjeans.com
 Free! Value 2 Examples to turn theory into practice

#22 Pay-per-use
For the user. Proposition

Third Party
Pricing tactic
pays the bill

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. Blendle

Do you read the entire newspaper? Exactly, me neither.

Blendle is an aggregator of most Dutch newspapers. It sells the
articles separately for 10-20% of the newspaper price.

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Service

MyStartUp.com 5
Consumer

Fee per use

2. Car vending machine

Did you know that the average car is idle 97% of the time?
Paying only for that 3% does makes sense! Our world would
need 30 times less cars. Here: a car vending machine in China
where you pay $3,5 per hour.
 Free! Value 2 Examples to turn theory into practice
For the user. Proposition
#23 Dynamic pricing Third Party
Pricing tactic
pays the bill

A pricing strategy with highly flexible prices for products or services based on
different variables: demand-based, time-based , profile-based, etc.

How it usually works - General visualisation

1. Qatar Airways

Airlines change prices depending on the day of the week, time

5
of day, and number of days before the flight, number of seats,
departure time and average cancellations on similar flights

Price based on
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Inc one or multiple variables

My organization Consumer

Service

2. SF Park

Parking spaces are provided with a sensor, detecting parking

availability. To help achieve the right level of parking availability,
SFpark periodically adjusts meter - and garage pricing up and
down to match demand. Fact: ’14 pilot project in San Fransisco
 Free! Value
#24 Fractional For the user. Proposition
2 Examples to turn theory into practice

ownership Third Party

pays the bill Pricing tactic

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. Elite Destination Houses

Always nice to go on holiday to your own villa. Elite Destination

Houses sells to groups of people and maintains the villas
during the year.
Consumer

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Inc

Shared Product

MyStartUp.com Consumer
5

Total price divided by

# consumers

Consumer

Product
2. Share a car
Owners
This could be your car-sharing calendar: brown is your
neighbour’s holiday in Spain. Red are your important meetings
in Paris. The rest of the time the car is available.
 Free! Value 2 Examples to turn theory into practice

#25 Pre-Sales
For the user. Proposition

Third Party
Pricing tactic
pays the bill

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. Always to be combined with another pricing tactic!

How it usually works - General visualisation

1. The Dash
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Inc

The Dash (by Bragi) are Wireless Smart Headphones launched

on Kickstarter. Bragi used a crowd funding platform for raise a
MyStartUp.com development budget and to receive customer feedback before
investing in production facilities.

Service % Commission
Small Reward

5
Community
Member
Small Micro-Funding

Large Reward

Fund Seeker
Community 2. Pave
5 Member

Large Macro-Funding Funding Pave is a service to fund students for expensive universities. As
Crowd a student, you pay part of your wage to the investors once your
start earning.
 Free! Value 2 Examples to turn theory into practice
For the user. Proposition
#26 Up-selling Third Party
Pricing tactic
pays the bill

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. Audi
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Inc
The entry level Audi R8 has a ‘modest’ price tag of €120k. By
Free/Cheap Product requesting a more luxury interior, extra options or some extra
horse power, you will have to pay extra. An Audio R8 full option
would cost you more than €250k.

MyStartUp.com 5 Consumer

Low Price

Upgrade

2. Wordpress Support
5

Fee Wordpress is a free open-source DIY website platform. If you

need a more custom solution or if you do have some trouble,
you can pay for a support service.
 Free! Value 2 Examples to turn theory into practice

#27 Razor-blade
For the user. Proposition

Third Party
Pricing tactic
pays the bill

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

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.

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.
 their if onta n
user ct m t more t
data ome han Do y
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