05. Revenue model

05. Revenue model

How much do you need to live on a month? Which revenue models suit your services and products? Which new revenue models can you think of?

The goal of step 5

In this step you determine the revenue models for each of your products and services. The sum of these models is your total business revenue model. A total revenue model is important because:

  • It gives you peace of mind. It helps to know how you are going to earn your money. This ensures that you can stay focused and be creative without that little voice in your head telling you that you need to earn something.
  • It allows you to focus on your drive and the creative process. More financial resources mean that you can decide to outsource tasks that you don’t like or that you are less good at. This allows you to focus on your creativity so that you can become stronger and grow more. The result is an organic growth model in which you deve – lop both personally and professionally.
  • It provides a rationale for what you do. A good revenue model is a sign that peo – ple are prepared to pay for your products and services, which they evidently value. This gives you a feeling of recognition and appreciation.
  • Continuity is created as you search for more revenue models. You are not de – pendent on one source of income or, for example, a subsidy that may be cut. This means that your enterprise can continue to exist.
  • It gives you freedom. Financial resources can provide freedom because you can do things (such as travel) without needing to convince anyone of the benefit of it. It also gives you more control over your own life.

Revenue models

There are different ways of being paid for the work you do. How you are paid will often depend on the role that you take in your enterprise, but some of the most common revenue models are described below;

1. You often receive an hourly fee for projects and agree on a total project price. Find out how to do this in the workbook: http://creativebusinessmap.com/en/book/.

2. Are you hired as a freelancer? In that case, you are often paid per hour. If someone else sells your designs or products, you will often receive a percentage of the turnover.

3. If you sell your products through a web shop or in a shop or gallery, a certain margin will be added to the price that the consumer or end user pays. If you mainly work for advertising campaigns, you will usually receive a fee – the media tax – for the use of your work in various media.

4. Funds and subsidies can also be an interesting source of income for many artists and designers. However, on this site we focus on achieving your own, independent income.

There are also some less common revenue models that may be worth looking into.

5. For example, exchange might be interesting. If you are just starting up, you could exchange your photographs for a website, for example. Some artists also exchange their work with one another so that they build up an interesting collection. In the United States and the United Kingdom, there are even time banks, on which you make a certain amount of time available in exchange for other services.

6. In a circular system or setting, you ‘trade’ your work. The challenge is to get some kind of financial reward from this, because you still have ‘touchpoints’ with the regular ‘cash economy’ (in other words, you still need to pay your rent).

7. If you provide artwork for a start-up, it may be interesting to receive shares in exchange. You often see this in the gaming industry, where the artwork represents a significant proportion of the total budget. However, as there is no budget available in the start-up phase, you may become a shareholder rather than receive a fee.

8. If you are looking for funding for a project or product, crowdfunding could be an interesting option. Popular crowdfunding websites include voordekunst and kickstarter. In addition to funding, you also receive exposure and can test whether there is any interest from potential consumers.

9. If you have developed a certain solution for a client, you could consider offering this solution to other people. You will need to describe the solution precisely, so that you can present it very clearly to the client. In other words, you turn it into a product – a process that is also called productising.

An example of productising is Online Department’s UX Scan. The UX scan assesses client’s websites based on certain parameters. The client knows exactly what he is getting, and the product usually also results in a new assignment.

10.You also see more and more entrepreneurs marketing the service connected to a product, because it is the service that makes them unique. This also provides opportunities in many creative settings. There are even specialised service design agencies for this, such as Livework. However, graphic design agencies are also increasingly providing strategic advice, which they can only charge for if they actually name it as such and offer it as a service. This is discussed in the following interview with the agency Instrument on 99u, ‘When you realize that you are doing strategy work and not charging for it, you need to add it as a service and start charging people.’

http://99u.com/articles/54626/instrument-from-15-person-production-shop-to-130-employee-digital-creative-agency

11. You could also consider subscriptions, which means that you supply companies with support or artwork on a continuous basis and receive a regular income.

New revenue models

In this interview, Jules Erhardt from the creative agency Ustwo talks about their search for new revenue models.

Ustwo rethinks the agency business model

http://99u.com/articles/54497/ustwo-rethinks-the-agency-business-model

Plus, internet artist Rafael Rozendaal sells the websites that he creates as autonomous pieces of art (with an obligation to keep them online for a certain period of time). http://www.newrafael.com/websites/

Of course, it can be difficult to put a value on creativity. This is why it is essential to keep searching for new revenue models. This is a topic that is close to our heart, so if you have an idea or would like to discuss your thoughts, please don’t hesitate to contact us.

Your turn

You can now start working out your revenue model and making your first calculations. The workbook takes you through the process, step-by-step.

Conclusion

Now that you have more insight on the different revenue models and which are relevant, you have the outlined the cornerstones of your business. A variety of options and combinations are still possible. In the next step you will define where your priorities lie and which steps you will make to get started.