Revenue stream

A revenue stream is a form of revenue. It is considered one of the building blocks of a business model canvas, revealing the earning a business makes from all the methods by which money comes in. Revenue streams may be characterized. For example, a revenue stream has volatility, predictability, risk, and return. In sum, a revenue stream is a way of categorizing the earnings a company makes.

Revenue Streams are one of nine building blocks an organisational business model canvas combines. The other eight being Customer Segments, Value Propositions, Channels, Customer Relationships, Key Resources, Key Activities, Key Partners and the Cost structure. These nine building blocks are commonly mapped out on a pre-structured canvas, called the business model canvas. This tool can help businesses map, discuss, design and invent new business models. The revenue streams clarify how and through what pricing mechanisms a business generates earnings.

On a basic level, a revenue stream is generally made up of one of the following revenue models. Revenue models can be more or less desirable based on how much effort a business needs to invest.

Recurring revenue is a more predictable type of revenue. This means, the business has reasonable assurance, the revenue will occur at regular intervals. An example of this are monthly phone plans. Unless the contract is broken or the customer does not pay, the phone business can count with the monthly revenue. Recurring revenue streams are initially harder to implement but are more economical in the long run.

These revenues based on predictable sales of goods. Revenue is earned by a transaction from a customer. A customer in a clothing store, buying a new jacket, generates a transaction based revenue. This type of revenue is often considered less attractive than the recurring model because an action is required to attract customers.

These are revenues generated through one time projects. Companies that rely entirely or largely need to invest a lot of effort into maintaining customer relationships. In this type of model, revenue is hard to predict, because it is hard for a business to know what lies further down the road.

This is the least attractive revenue model, because while the other three models sell goods, this models essentially sells time. The service revenue model is often used in combination with one of the other models. An example of service based model are consulting firms. The offer their advice and commonly charge per hour.

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