License Revenue is earned by a company for allowing its copyrighted or patented material to be used by another company. Some examples of things that may be licensed include songs, sports team logos and technology. Often, License Revenues are connected with Maintenance Revenues (e.g. to maintain the license via upgrades) and Support Revenues (e.g. to support the customer in running its licensed product). The Lean-Case Revenue Stream Licenses bundles a License specific Revenue Model, the Revenue Forecast Model and revenue related cost models.

Check out the following example to understand the basics of a License Revenue Model (see figure below):

  • a Business sells License Services to 2 different customer types: SMB Customers and Enterprise Customers
  • SMB Customers typically sign a 36-months contract, paying a one-time License Fee of €10.000, a yearly Maintenance Fee of €2.000 and a monthly Support Fee of €500
  • Enterprise Customers sign a 36-months contract, paying a one-time License Fee of €20.000, a yearly Maintenance Fee of €4.000 and a monthly Support Fee of €1.000
  • SMB Customer make up 75% and Enterprise Customers make up 25% of all new customers.
  • the Business adds 1 Sales Team to the business in January 2018
  • This team acquires 10 new customers per month (for the above example: 7.5 SMB and 2.5 Enterprise customers). 

 

Related Categories 

Follow the links below to dive into more detail on how to create a Service Revenue Stream: