Revenue Streams are the basic Lean-Case concept to add and manage different types of revenues sources.
Get a first idea about
The figure below shows an example for a business which generates revenues from Subscriptions (e.g. customers pay monthly subscriptions for an accounting service) and Services (e.g. customers also pay for intitial training and integration into the accounting service).
Each Revenue Stream integrates
- the revenue side of the business as well as all
- revenue-related cost, in particular
- the cost to get a customer (Customer Acquisition Cost) and
- the cost to keep a customer (Cost of Goods Sold).
This is relevant to understand the profitablilty of each revenue stream (Gross Profit and Net Profit).
A Revenue Stream breaks down into two sections (see figure below):
- the Customer Contract Section and
- the Tab Section
Customer Contract Section
The Customer Contract Section allows to define the specific Revenue Model by defining typical Customer Contract Types. Each Customer Type represents a typical customer segment which buys your products/services.
- Forecast Model (see tab) to define how many new customers per contract type you sign up over time
- Revenue-Related Cost Models to define Customer Movements, Staffing related cost, Cost-of-Goods-Sold (CoGS), Cost-of-Selling and Cost-of-Marketing
How to decide if you add one or more Revenue Streams to your Model?
- If you have different revenue sources with different cost structures, it is wise to add separate Revenue Streams.
- If you have one revenue source with different customer types which have similar cost structures in terms of getting and keeping them, you can model them as part of one revenue stream (it is always possible to break them apart later).