What is the ‘revenue model’ and how will it help me?

The revenue model establishes the bridge between financial performance and the non-financial inputs of a business.

It highlights the best ways to grow and develop your business by breaking down the turnover into 2 elements:

  • Volume – the number of customers, the frequency of transactions;
  • Value – average transaction value.

Building a revenue model for each element of your business enables you to obtain meaningful information and avoid erroneous conclusions.

The effectiveness of the revenue model lies not in producing ‘the numbers’, but in how the information is interpreted and what decisions are made. When used as an ongoing method of assessing business performance, it allows you to identify important trends, and see if the action taken makes matters better or worse.

Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

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