Revenue Streams Business Model Canvas

In the Business Model Canvas, the Revenue Streams building block details the way a business intends to solve customer problems for financial gain. Revenue streams represent the various ways a business generates cash from each customer segment.

Understanding revenue streams in the Business Model Canvas

In determining revenue streams, the business must answer the following questions:

For what value are customers ultimately willing to pay? This is determined by how big a problem is in their life.
How much does each revenue stream contribute to overall revenue in terms of percentage contribution?
How do customers prefer to pay? In other words, how will these preferences influence the revenue stream(s) chosen?

There are two types of revenue streams. The first is a transaction-based stream, where customers make a one-time payment for a product or service. The second is a recurring stream, where customers make continuous payments to maintain access to the product or certain product features.

Note that this section of the Business Model Canvas represents the cash the company generates – not the profit.

Revenue stream pricing mechanisms

Pricing mechanisms refer to the impact of pricing on the expected supply and demand of a product. Each company revenue stream can have its own pricing mechanism, which can be divided into two types.

1 – Fixed pricing

Fixed pricing mechanisms have predefined prices based on a static set of variables. Examples include:

List price

Where prices are fixed and non-negotiable. The main courses on a restaurant menu are list price. Every diner pays the same amount for the same dish.

Product feature dependent

Here, the price depends on product quality or value proposition features. Organic foods tend to attract a higher price than their non-organic equivalents.

Customer segment dependent

Where the price is determined by a customer segment. Some businesses offer discounts to seniors or those with a qualifying membership card.

Volume dependent

Where the price is a function of the volume purchased. Costco shoppers who purchase in bulk tend to be charged less per item than customers who shop in traditional supermarkets.

2 – Dynamic pricing

Dynamic pricing mechanisms, on the other hand, change according to fluctuating market conditions.

There are also four types in this category:

Yield management

Product pricing is determined by inventory levels at the time of purchase.

Yield management is a feature of airline and hotel reservation systems, with prices fluctuating according to supply and demand.

Negotiated pricing

Where the buyer and seller negotiate a mutually beneficial price. Negotiation is often involved in the sale of a home or vehicle.

Real-time market

Prices are determined by broader supply and demand factors.

The stock market is perhaps the best example, with share prices based on the number of buyers and sellers at any given time.

Oil, iron, coal, uranium, and other commodity prices also fluctuate for the same reasons.

Auction

Where the price is determined by a competitive bidding process.

Revenue stream models

How are revenue streams generated? Let’s take a look at a few models below:

Asset sales

Where a company sells the rights to a physical product to consumers. Amazon and eBay are two examples.

Subscription fees

Which are paid by consumers for constant access to a product or service. Examples include Spotify and Netflix.

Usage fees

In this case, the company earns revenue based on how much a consumer uses its services. Pricing for smartphone contracts depends on how much data the customer desires.

Licensing

This involves a company charging customers access to copyrighted or patented intellectual property. Licensing is a common revenue stream in the music, sports, media, and technology industries.

Lending, renting, and leasing

As the names suggest, money is made by the company selling temporary access to its products or services for a set period.

Key takeaways

In the Business Model Canvas, the Revenue Streams building block details the way a business intends to solve customer problems for financial gain. These revenue streams may be transaction-based or recurring.
Revenue streams are based on fixed or dynamic pricing mechanisms, with both mechanisms influencing price via broad and sometimes more localized supply and demand factors.
Examples of revenue stream models include asset sales, usage fees, subscription fees, licensing, lending, renting, and leasing.

Key Highlights

Revenue Streams Definition: Revenue streams represent the different ways a business generates cash from its customers in exchange for the value it provides to them. It focuses on how the company plans to solve customer problems for financial gain.
Types of Revenue Streams: There are two main types of revenue streams: transaction-based and recurring. Transaction-based revenue streams involve one-time payments for products or services, while recurring streams involve continuous payments to maintain access to products or specific features.
Revenue Stream Pricing Mechanisms: Pricing mechanisms in revenue streams refer to how pricing affects the supply and demand of a product or service. Pricing can be fixed, with predefined prices based on static variables, or dynamic, changing according to fluctuating market conditions.
Fixed Pricing Mechanisms: Examples of fixed pricing mechanisms include list prices (non-negotiable prices), product feature-dependent prices, customer segment-dependent prices, and volume-dependent prices.
Dynamic Pricing Mechanisms: Dynamic pricing mechanisms change based on market conditions. Examples include yield management (pricing based on inventory levels), negotiated pricing (mutually beneficial price negotiation), real-time market pricing (based on broader supply and demand factors), and auction pricing (competitive bidding).
Revenue Stream Models: Revenue streams can be generated through various models, including:
- Asset Sales: Selling physical products to consumers (e.g., Amazon, eBay).
- Subscription Fees: Charging consumers for constant access to a product or service (e.g., Spotify, Netflix).
- Usage Fees: Earning revenue based on consumer usage (e.g., smartphone contracts based on data usage).
- Licensing: Charging customers for access to copyrighted or patented intellectual property (e.g., music, sports, media, technology).
- Lending, Renting, and Leasing: Selling temporary access to products or services for a set period.

Case Studies

Company	Revenue Model	Case Study	Analysis
Netflix	Subscription-Based Model	Netflix’s subscription streaming service	Netflix relies on monthly subscription fees, providing access to a vast library of content with no ads.
Spotify	Freemium Model	Spotify’s free and premium music streaming	Spotify offers both free ad-supported and premium ad-free subscriptions, generating revenue from premium users and advertisers.
Amazon	E-commerce and Marketplace Model	Amazon’s online retail and third-party sellers	Amazon generates revenue through product sales, third-party seller fees, and Amazon Web Services (AWS).
Google	Advertising Model	Google’s online advertising, AdWords, and AdSense	Google earns revenue by displaying ads on its search results pages and partner websites.
Apple	Hardware and Ecosystem Model	Apple’s sale of hardware and services	Apple generates revenue from the sale of hardware (iPhone, Mac) and services (Apple Music, App Store).
Airbnb	Commission Model	Airbnb’s commission from host and guest bookings	Airbnb earns a percentage from hosts and guests for each booking facilitated on its platform.
Uber	Commission and Ride Fees Model	Uber’s commission from drivers and ride fees	Uber takes a commission from driver earnings and charges riders based on distance and time.
LinkedIn	Subscription and Recruitment Model	LinkedIn’s premium subscriptions and job postings	LinkedIn generates revenue from premium subscriptions, talent solutions, and marketing solutions.
Dropbox	Freemium and Subscription Model	Dropbox’s cloud storage and file-sharing	Dropbox offers free storage with premium subscriptions for additional features and space.
Facebook (Meta)	Advertising and Data Monetization Model	Facebook and Instagram’s advertising and user data	Meta earns revenue by displaying targeted ads to users and monetizing user data.
Etsy	Handmade and Artisanal Goods Marketplace	Etsy’s platform for artisans and crafters	Etsy provides a platform for artisans to sell their unique handmade products to a global audience.
Upwork	Freelance Talent Marketplace	Upwork’s platform for freelancers and clients	Upwork connects businesses with freelance talent for various projects, spanning from writing to programming.
eBay	Online Auction and Sales Marketplace	eBay’s platform for auctions and sales	eBay allows individuals and businesses to buy and sell a wide range of goods through auctions and direct sales.
Alibaba Group	B2B and B2C E-commerce Marketplace	Alibaba’s e-commerce and wholesale platforms	Alibaba connects global buyers and sellers, facilitating trade and e-commerce transactions on a massive scale.
Turo	Peer-to-Peer Car Rental	Turo’s platform for car owners and renters	Turo enables individuals to rent their vehicles to travelers, disrupting the traditional car rental industry.
Fiverr	Freelance Services Marketplace	Fiverr’s platform for freelance services	Fiverr offers a marketplace for freelancers to offer a wide range of services, from graphic design to content writing.
TaskRabbit	On-Demand Task and Service Marketplace	TaskRabbit’s platform for taskers and clients	TaskRabbit connects individuals with skilled taskers who can complete a variety of household and business tasks.
OpenTable	Restaurant Reservation Marketplace	OpenTable’s platform for restaurant reservations	OpenTable allows users to book restaurant reservations and helps restaurants manage their tables efficiently.
StockX	Sneaker and Collectibles Marketplace	StockX’s platform for sneakers and collectibles	StockX provides a marketplace for authenticated sneaker and collectible sales, ensuring transparency and trust.
Poshmark	Fashion Resale Marketplace	Poshmark’s platform for fashion resale	Poshmark connects fashion enthusiasts to buy and sell gently used clothing and accessories.
Thumbtack	Local Services Marketplace	Thumbtack’s platform for local service providers	Thumbtack helps users find and hire local service professionals, from plumbers to wedding photographers.
HomeAway (Vrbo)	Vacation Rental Marketplace	HomeAway’s platform for vacation rentals	HomeAway offers a marketplace for vacation rentals, connecting travelers with property owners.
Booking.com	Hotel and Accommodation Booking	Booking.com’s online travel agency platform	Booking.com enables travelers to book hotels and accommodations worldwide, serving as an intermediary between customers and hotels.
Zillow	Real Estate Marketplace	Zillow’s platform for buying and selling homes	Zillow provides tools for home buyers, sellers, and renters, simplifying the real estate process.
Freelancer.com	Freelance Job Marketplace	Freelancer.com’s platform for freelance jobs	Freelancer.com connects employers with freelancers to complete a wide range of projects, from software development to graphic design.
Rover	Pet Services Marketplace	Rover’s platform for pet care services	Rover connects pet owners with pet sitters and walkers, offering a range of pet care services.
99designs	Design Services Marketplace	99designs’ platform for design contests	99designs hosts design contests, allowing businesses to receive custom designs from a global community of designers.
WhatsApp	Subscription and In-App Purchases Model	WhatsApp’s subscription and in-app sticker purchases	WhatsApp offers a free messaging service with revenue generated from subscriptions and in-app purchases.
Patreon	Membership and Crowdfunding Model	Patreon’s support for content creators	Patreon allows creators to offer exclusive content to paying members, generating income through memberships.
Shopify	Subscription and E-commerce Model	Shopify’s e-commerce platform and subscription fees	Shopify offers e-commerce solutions and earns revenue through monthly subscription fees and transaction fees.
HubSpot	Inbound Marketing and SaaS Model	HubSpot’s inbound marketing and SaaS services	HubSpot provides inbound marketing and sales software on a subscription basis, generating recurring revenue.
Airbnb for Work	Corporate Travel and Service Fees Model	Airbnb for Work’s service fees for corporate travel	Airbnb for Work charges service fees for businesses booking accommodations and experiences.
Coursera	Online Education and Certification Model	Coursera’s online courses and specialization certificates	Coursera offers courses for free or as part of a subscription, with revenue generated from paid certificates.
Yelp	Advertising and Local Business Model	Yelp’s advertising and partnerships with local businesses	Yelp offers advertising and business solutions, generating revenue through partnerships.
LinkedIn Talent Solutions	Recruitment and Subscription Model	LinkedIn’s recruitment tools and premium subscriptions	LinkedIn Talent Solutions provides tools for talent recruitment and generates revenue through premium subscriptions.
Square	Payment Processing and Financial Services	Square’s payment processing and financial services	Square offers payment processing and financial services, earning revenue through transaction fees and subscriptions.
Salesforce	CRM and Enterprise Software Model	Salesforce’s customer relationship management (CRM)	Salesforce generates revenue from its CRM software and cloud services for enterprises.
Udemy	Online Learning and Course Sales Model	Udemy’s marketplace for online courses	Udemy allows instructors to sell courses, with revenue shared between the platform and instructors.
GoFundMe	Crowdfunding and Platform Fees Model	GoFundMe’s crowdfunding platform and fees	GoFundMe facilitates fundraising campaigns and charges platform fees on donations.
Shutterfly	Photo Printing and Personalized Products	Shutterfly’s photo books, gifts, and printing services	Shutterfly generates revenue by selling personalized photo products.
Robinhood	Commission-Free Stock Trading Model	Robinhood’s commission-free stock and crypto trading	Robinhood offers commission-free trading and generates revenue through order flow payments.
Salesforce Marketing Cloud	Marketing Automation Model	Salesforce Marketing Cloud’s marketing automation	Salesforce’s marketing automation tools generate revenue through subscription and usage fees.
DoorDash	Food Delivery and Service Fees Model	DoorDash’s food delivery and service fees	DoorDash charges service fees to customers and restaurants for food delivery services.
Expedia	Online Travel Booking and Commissions	Expedia’s online travel booking and commissions	Expedia earns revenue by facilitating online travel bookings and taking commissions from hotels and airlines.
GitHub	Developer Tools and Enterprise Services	GitHub’s code hosting and collaboration platform	GitHub provides free and paid developer tools and earns revenue from enterprise subscriptions.
SurveyMonkey	Survey and Data Insights Model	SurveyMonkey’s survey creation and data analysis	SurveyMonkey offers survey tools and generates revenue from premium plans and data insights.
ZoomInfo	B2B Sales and Marketing Intelligence	ZoomInfo’s B2B sales and marketing intelligence	ZoomInfo offers B2B data and intelligence services, earning revenue through subscriptions and sales.

Related Frameworks, Models, or Concepts	Description	When to Apply
Business Model Canvas	The Business Model Canvas is a strategic management tool that provides a visual framework for describing, analyzing, and innovating business models. Revenue Streams are one of the nine building blocks of the Business Model Canvas, representing the various sources of revenue generated by a business.	Apply the Business Model Canvas to analyze and design business models, including the identification and evaluation of different revenue streams. Use it during the business planning stage or when considering business model innovation to understand how revenue is generated and how it contributes to overall business sustainability and growth.
Value Proposition Design	Value Proposition Design is a methodology for creating compelling value propositions that address customer needs and pain points. Revenue Streams are closely linked to value propositions, as they reflect the value captured by the business from its customers.	Utilize Value Proposition Design to develop value propositions that resonate with target customers and drive revenue generation. Incorporate Revenue Streams analysis to ensure that the value created for customers translates into revenue opportunities for the business, aligning value creation with revenue capture effectively.
Subscription Business Model	The Subscription Business Model involves offering products or services to customers on a recurring subscription basis, typically with regular payments. Revenue Streams in a subscription model consist of subscription fees paid by customers in exchange for ongoing access to the product or service.	Apply the Subscription Business Model to create recurring revenue streams and establish long-term customer relationships. Use it when developing subscription-based offerings or transitioning from traditional one-time sales models to subscription-based revenue models to enhance revenue predictability and customer lifetime value.
Freemium Model	The Freemium Model offers basic features or services for free while charging users for premium features or additional functionalities. Revenue Streams in a freemium model come from a combination of free users (who may generate revenue through advertising or data monetization) and premium users (who pay for access to premium features).	Utilize the Freemium Model to attract a large user base with free offerings and monetize premium features or upgrades. Apply it when developing digital products, software applications, or online platforms to maximize user acquisition and engagement while capturing revenue from users willing to pay for enhanced functionality or value-added features.
E-commerce Business Model	The E-commerce Business Model involves selling products or services online through digital channels. Revenue Streams in an e-commerce model come from online sales transactions, including product sales, service fees, subscription charges, and other revenue-generating activities conducted on e-commerce platforms or websites.	Apply the E-commerce Business Model to establish an online presence and sell products or services directly to customers over the internet. Use it when launching an online store, marketplace, or digital platform to leverage digital channels and technology to reach a wider audience and generate revenue through online sales and transactions.
Platform Business Model	The Platform Business Model facilitates interactions and transactions between multiple groups of users or participants on a digital platform. Revenue Streams in a platform model can come from various sources, such as transaction fees, subscription charges, advertising revenue, data monetization, and value-added services offered to platform users.	Utilize the Platform Business Model to create a digital platform that connects buyers and sellers, service providers and customers, or other user groups to facilitate transactions and exchanges. Apply it when building online marketplaces, social networking platforms, or sharing economy platforms to capture revenue from platform usage, transactions, and ecosystem growth.
Advertising Business Model	The Advertising Business Model relies on generating revenue through advertising placements and sponsorships. Revenue Streams in an advertising model come from advertisers who pay for displaying ads to target audiences on various media channels, such as websites, social media platforms, search engines, and traditional media outlets.	Apply the Advertising Business Model to monetize digital content, websites, apps, or media channels by displaying ads to target audiences. Use it when offering free content, services, or platforms to users and monetizing audience attention and engagement through advertising placements, sponsorships, or branded content partnerships.
Affiliate Marketing Model	The Affiliate Marketing Model involves promoting third-party products or services and earning commissions for driving sales or referrals. Revenue Streams in an affiliate marketing model come from affiliate commissions earned for each successful sale, lead, or referral generated through affiliate marketing activities.	Apply the Affiliate Marketing Model to monetize online content, blogs, websites, or social media channels by promoting affiliate products or services to target audiences. Use it when partnering with affiliate programs or networks to earn commissions for driving sales or referrals and leveraging existing audience reach and engagement to generate revenue through affiliate marketing partnerships.
Licensing and Royalties	Licensing and Royalties involve granting permission to use intellectual property, proprietary technology, or brand assets in exchange for licensing fees or royalties. Revenue Streams from licensing and royalties come from licensing agreements, franchise fees, patent royalties, or other forms of intellectual property licensing arrangements.	Utilize Licensing and Royalties agreements to monetize intellectual property assets, technology innovations, or brand properties. Apply it when licensing out patents, trademarks, copyrights, or proprietary know-how to third parties, franchising business concepts or brand names, or entering into partnership agreements that involve revenue-sharing arrangements based on intellectual property usage or exploitation.
Partnership and Sponsorship Model	The Partnership and Sponsorship Model involves collaborating with other businesses, organizations, or individuals to co-create value, drive brand awareness, or support mutual objectives. Revenue Streams from partnerships and sponsorships come from partnership agreements, sponsorship deals, co-branding initiatives, or revenue-sharing arrangements with partner entities.	Apply the Partnership and Sponsorship Model to leverage strategic alliances, collaborations, or sponsorships to generate additional revenue streams and support business objectives. Use it when partnering with complementary businesses, industry associations, influencers, or event organizers to co-market products or services, access new customer segments, or enhance brand visibility and credibility through sponsorship or co-branding opportunities.

Use Revenue Modeling Instead

revenue-model-patterns — Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.

pricing-strategies — A pricing strategy or model helps companies find the pricing formula in fit with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long term financial sustainability to build a solid business model.

Read: Revenue Model, Pricing Model.

Alternatives to the Business Model Canvas

FourWeekMBA Squared Triangle Business Model

This framework has been thought for any type of business model, be it digital or not. It’s a framework to start mind mapping the key components of your business or how it might look as it grows. Here, as usual, what matters is not the framework itself (let’s prevent to fall trap of the Maslow’s Hammer), what matters is to have a framework that enables you to hold the key components of your business in your mind, and execute fast to prevent running the business on too many untested assumptions, especially about what customers really want. Any framework that helps us test fast, it’s welcomed in our business strategy.

fourweekmba-business-model-framework — An effective business model has to focus on two dimensions: the people dimension and the financial dimension. The people dimension will allow you to build a product or service that is 10X better than existing ones and a solid brand. The financial dimension will help you develop proper distribution channels by identifying the people that are willing to pay for your product or service and make it financially sustainable in the long run.

FourWeekMBA VTDF Framework For Tech Business Models

This framework is well suited for all these cases where technology plays a key role in enhancing the value proposition for the users and customers. In short, when the company you’re building, analyzing, or looking at is a tech or platform business model, the template below is perfect for the job.

business-model-template — A tech business model is made of four main components: value model (value propositions, mission, vision), technological model (R&D management), distribution model (sales and marketing organizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.

Download The VTDF Framework Template Here

FourWeekMBA VBDE Framework For Blockchain Business Models

This framework is well suited to analyze and understand blockchain-based business models. Here, the underlying blockchain protocol, and the token economics behind it play a key role in aligning incentives and also in creating disincentives for the community of developers, individual contributors, entrepreneurs, and investors that enable the whole business model. The blockchain-based model is similar to a platform-based business model, but with an important twist, decentralization should be the key element enabling both decision-making and how incentives are distributed across the network.