Business Models For Dummies

Chapter 8

Making Money with Your Business Model

In This Chapter

Building a profitable revenue model

Discovering why everyone wants recurring revenue

Creating a meaningful cost advantage

After you identify an attractive market for your product and have a plan to market it, you’re ready to figure out how to make money with it. Even with an outstanding market niche and a stellar marketing process, you have to sell your product for a handsome profit in order to have a great business model. Let’s face it: Selling something for little or no profit is easy to do, but trading dollars doesn’t make for a great model. In this chapter, I tell you how to maximize the profitability of your business model.

Building a Profitable Revenue Model

At the core of a great business model is the ability to generate superior profits. In order to generate the superior profits, you need to create a profitable revenue model. A profitable revenue model has two components:

Your revenue model should generate high gross margins.

The total gross margin generated needs to exceed your operational or overhead cost. ...