Revenue Strategy

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What is Revenue Strategy?

In simple terms, Revenue Strategy is:

How much you charge the Customer; (Amount)
When you charge the Customer? (Pricing Model)

One of the most popular questions business owners ask (especially at the beginning of a venture) is “HOW DO I PRICE MY ______?”

The Amount cannot be unjustifiably above your competition (Market-Based), but must be high enough to compensate you for your time and risk (Cost-Based).

Pricing Model

Thanks to the onset of technology and other innovations, the means in which you can schedule your collections has grown tremendously.

Should you charge the customer upfront or after service?
Is your product/service based on usage?
Should you give some of it away for free? All away for free?
How can you bundle services to match customer needs?

So many choices mean just as many opportunities to price your offering just right, no matter what market you are in.

This may sound daunting, but no worries. BROCSway evaluates your industry norms pricing and how/if you should conform…or disrupt!

Market-Based Amount

What price do your competitors charge? Are you above or below what your target customers are willing to pay?

Your customer is the most important element of your business. Close your eyes. Imagine you are your customer. Where else is the customer looking (or finding) solutions. How are these businesses fulfilling their promise? And more specifically, as it relates to your Revenue Strategy, how much are they charging their customers? The amount gives you an idea of how much the customer is willing to pay for your solution.

Key question, how do you compare to your competitors?

Cost-Based Amount

How much does it cost to produce your product or service? How are you factoring the value of your time into the price?

This is an easier question to ask than it is to calculate. Thankfully, BROCSway has simple exercises to walk you through your customers’ journey that helps you decide which resources it will take to execute your business tactics. How much are the direct material and labor costs? What about the monthly spend on indirect (backoffice) expenses? How much time will you spend on all of the different tasks in comparison to how much your time is worth? You must look at the whole picture of what it takes to bring your value to market and deliver. If you can’t charge more than what will cover expenses, you will always operate in the red.

Key question, how much does it cost you to provide your service?

Non-Profit Note

Many people start a business to solve a problem. Perhaps a problem they have personally encountered or something they have observed in their community.

In some situations, we find out (or already know) that the Target Customer does not have the means to pay directly for a good or service. In that situation, we can take a different Revenue Strategy to ensure your organization can solve the problem at hand while maintaining sustainability for years to come.

For example, if the problem you are trying to find a solution for is feeding hungry children nutritious food, these children and their families may not have means to purchase the food directly from your organization. Partnering with a local grocery and creating a “buy an apple, give an apple” campaign may be the way to get funds you need.

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