How to Build a Revenue Model:

A Step by Step Guideline

How To Create A Winning Revenue Model

 1) Choose a revenue model approach
that is best for your company and
background.

• Choosing a Revenue model for your startup

Business is very Crucial ,
• After you identifying , The Right Revenue
model approach , you might only Proceed to
Build your own Revenue Model
 2) Your revenue model should allow
you to communicate your value.

• What is special about your offerings? Your

revenue model should show what is unique
about you.

• For example, if you offer the kind of service

that customers will subscribe to, this is a
selling point.
 3)  Identify potential investors
strategically based on your revenue
model.
• If you’re looking for funding, it helps to identify
strategic investors who are knowledgeable in your
space. Make development choices that speak strongly
to investors and build your pitch around these choices.

• Think big picture and long-term and try to find like-

minded investors, financiers who aren’t just looking
for profit short-term but are willing to wait for ROI to
be realized.
 4) Project out into the foreseeable
future.
• Investors want to know what the time horizon
looks like, when there is going to be money to
be seen, what the next major milestones are—
bottom line
• when are you going to start making revenue?
  5) Understand that your revenue
model is always evolving.
• The overall architecture of your approach may not
change much over time, but you should continually
be refining your model and reforecasting.
• There are many revenue models to choose from. For
example, if you’re a service-based business, you can
sell services individually or offer a subscription model.
• Just keep an open mind and accept the fact that you
may need to pivot your revenue model at some point
if it’s not working to support your business.
6) Identify the key variables for your
company.
• Your variables will be process specific and will
depend on what stage you’re in. Basically
you’re looking to find those variables that
have the most impact on your revenue
 7) Review your revenue model on a
regular basis and adjust it as needed.
• If your business is just starting, you will have a
much stronger understanding of your revenue
after a month than you will before you began.
• Increase the amount of time you spend on the
revenue sources that work well.

• Decrease the time you spend on revenue sources

that are not working as well as you projected until
you can revise your strategies for them.
 Revenue Modeling in Retail Industry

• The retail business is one of the largest and

most diversified sectors covering a very broad
range of products from clothing and footwear
to appliances/electronics and home-related
accessories.
Figure 1: Approach 1 – Revenue Growth

Year over year (YOY) is a method of evaluating two or more measured events to compare
the results at one time period with those of a comparable time period on an annualized
basis. YOY performance is frequently used by investors seeking to gauge (measing)
whether a company's financial performance is improving or worsening
Figure 2: Approach 2 – Sales per Average
Store

Exchange Offering Prospectus (EOP) : A form of prospectus that allows a company to

conduct a prospectus offering through the facilities of a stock exchange, rather than
issuing them directly to the public. The company then applies to list the securities on the
exchange.
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