To stress the importance of a Revenue Model, this article will focus on the PC Repair industry. This is the field (along with Web Design and IT Consultation) that is primarily associated with TASKE INC. However, a solid Revenue Model is essential to the success of any online business venture.
Most computer repair companies are started by technicians or IT professionals who are quite confident in their technology skills. They usually have experience in technical support, and believe, if they were self-employed, could earn a significant income.
When an IT professional takes the entrepreneurial leap, the immediate focus usually lands on how to acquire clients, customers, and jobs.
As the fledgling entrepreneur sets out to establish a business, the first year or two, it will be difficult to make ends meet. You're working twice as hard as you did when working for a company, but your income is significantly less.
Most IT professionals fail to find success within the first year of their entrepreneurial venture and are often forced back into working as an independent contractor or employee.
Before you quit your day job, before you invest any of your own money in your company, and before you advertise, you will need a revenue model. This will actually be the cornerstone of your Business Plan, and you will definitely need one of those. ** 30-page Business Plan Template - Only $5 **
What is a Revenue Model?
A revenue model is how you plan on making money by satisfying the needs of your customers.
Analyze any business you interacted with in the past week. Why did you make your purchase?
Gas stations offer inexpensive soft drinks, hoping you will buy a bag of chips to go with it. McDonald’s asks you to try their latest sandwich for free with the purchase of fries and a drink, hoping you will come back for more. Even a plumber uses a revenue model when he attempts to sell a “hydro-scrub” of your sewer line for $50.
The point of a revenue model is to have a number of products and services available that your customers might need. Subsequently enticing them to purchase those products and services in a way that maximizes the profitability of each customer interaction.
Components of a Sales Model
Revenue models have 9 basic components. No matter what mix of products and services you offer, you must know exactly what they are and how they interact with each other in your revenue model.
When an IT professional takes the entrepreneurial leap, the immediate focus usually lands on how to acquire clients, customers, and jobs.
As the fledgling entrepreneur sets out to establish a business, the first year or two, it will be difficult to make ends meet. You're working twice as hard as you did when working for a company, but your income is significantly less.
Most IT professionals fail to find success within the first year of their entrepreneurial venture and are often forced back into working as an independent contractor or employee.
Before you quit your day job, before you invest any of your own money in your company, and before you advertise, you will need a revenue model. This will actually be the cornerstone of your Business Plan, and you will definitely need one of those. ** 30-page Business Plan Template - Only $5 **
What is a Revenue Model?
A revenue model is how you plan on making money by satisfying the needs of your customers.
Analyze any business you interacted with in the past week. Why did you make your purchase?
Gas stations offer inexpensive soft drinks, hoping you will buy a bag of chips to go with it. McDonald’s asks you to try their latest sandwich for free with the purchase of fries and a drink, hoping you will come back for more. Even a plumber uses a revenue model when he attempts to sell a “hydro-scrub” of your sewer line for $50.
The point of a revenue model is to have a number of products and services available that your customers might need. Subsequently enticing them to purchase those products and services in a way that maximizes the profitability of each customer interaction.
Components of a Sales Model
Revenue models have 9 basic components. No matter what mix of products and services you offer, you must know exactly what they are and how they interact with each other in your revenue model.
A revenue model needs to:
- Have a client (Customer who presents a problem)
- Have a solution that resolves your client’s problem
- Connect solution to another product or service
- Investigate additional up-sell opportunities
- Close sale in a compelling fashion
- Summarize the sale and reaffirm value to customer
- Network Partners that represent agreements between your business and other companies. This affiliation is necessary to produce and market your services. Amalgamations such as hardware and software, parts suppliers, retail outlets, shippers, advertising agencies, and media outlets, are vital components of your revenue model. Successfully advertising the value of your services will rely heavily on your partnerships.
How to Build Your Revenue Model
Building a revenue model is not a difficult task. Especially when you consider that the most successful online company to date - Google - did not initially have a revenue model.
Building a revenue model is not a difficult task. Especially when you consider that the most successful online company to date - Google - did not initially have a revenue model.
Do not attempt to follow Google's pattern because there are a plethora of business failures that a good revenue model might have prevented.
A good revenue model is the thread that links your products and services together. It is a well orchestrated method to let your customers know what you have that is beneficial to them and it gives compelling reasons why they should do business with your company.
Creating your revenue model:
List all of the products and services you offer. Determine which of your products or services will satisfy the largest number of clients. In the PC Repair business, a Maintenance Checkup is a good service to promote because it offers a little of everything. Every computer problem involves a Maintenance Checkup in some form or fashion. Your most useful product is considered your gateway offering.
Starting from your gateway offering, develop lines of reason – based on specific problems – that would lead you to recommend each of your other products or services under certain circumstances. For example, if you offer data recovery services, a customer complaining of a blue screen of death may be suffering from a failing hard drive.
Does that data recovery customer need a new hard drive? Did the hard drive crash because of insufficient memory? If so, the customer not only needs a hard disk, but more memory as well.
Rehearse your pitch. Nothing sounds worse than a person who sounds like they don’t believe what they are saying or know what they are talking about. Find someone who won’t think you are crazy and role play. Ask your partner to challenge you. This is best done with a non-technician because that is who your customer will be.
When implementing your revenue model, you will tweak it based on customer input.
Up-Selling
It is not necessary to up-sell on every customer interaction. If you call Dell, HP, or any other large computer firm, because of a problem you're having with your computer, they seem to be more interested in selling you something, rather than fixing your PC. Leave that type of up-selling to the major corporations because they can afford to lose a customer, you can't.
A good revenue model does more than generate profits for the company that employs it. Businesses that are successful in the long-term rely on repeat customers and word of mouth.
Revenue models are designed to extract as much profit from a customer interaction as possible while at the same time providing superior services.
Cons of not having a Revenue Model
If the gas station didn’t have the inexpensive fountain drinks, you may have never found what has become your favorite snack. If McDonald’s didn’t get you to try that new sandwich you might have eaten the same old thing every day.
Quality revenue models deliver good products and services at a price the customer is willing, and eager to pay, because you've clearly stipulated the need for the product.
Failing to recognize the importance of a systematized revenue model is the single greatest factor in the failure of small businesses. Having a solid revenue model puts you ahead of the game, and gives you the competitive edge you'll need to be successful.
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