Keeping in mind profit potential, what revenue(s) are you generating from each stakeholder segment for your value?
The Commercial Dimension
A company must ask itself, for what value is each customer segment truly willing to pay? Successfully answering that question allows the firm to generate one or more revenue stream from each customer segment. A business model can involve two different types of revenues streams: transaction revenues from one-time customer payments and recurring revenue from ongoing payments. There are several ways to generate revenue streams: asset sales, usage fees, subscription fees, lending/rental/leasing, licensing, brokerage fees, and advertising.
The Impact Dimension
In some ways it is important to understand the impact and commerce inside a social enterprise as two separate but symbiotic systems. The commercial business around which a social enterprise is structured needs to operate as such. At the same time, the impact systems needs to be understood in terms of the social value it is generating. We need to be able to honestly and openly assess whether this social value is actually ‘saleable’ – whether our commercial customers, or impact customer will pay for this social value and thereby generate revenue… [continued below]
Professor Sarah Soule explains the goal of the revenue streams block, and poses questions for you to consider as you think through strategic options for your venture. She will discuss the example of Equal Opportunity Schools, a national nonprofit organization with both earned income and philanthropic support. (1:40)
- Through what type of Revenue Stream are Customers, Beneficiaries or Investors paying for operations, service and/or product?
- Are the Revenue Streams based on a fixed price or are they variable based on market conditions?
- Are the Revenue Streams based on one time transactions or are they based on long-term value of recurring revenue?
- Are the Revenue Streams in small increments or large sums?
- Product sales [c]
- Grants (Shell Foundation & DFID) [i]
d.light sells solar energy solutions to populations without electricity in 60+ nations. See project description and its Impact BMC
Equal Opportunity Schools
- Consulting fees [c]
- Grants & state/local subsidies [i]
Equal Opportunity Schools helps minority and low-income high school students succeed in AP and IB courses. See project description and its Impact BMC
i = Impact dimensions, c = Commercial dimensions, b = Both dimensions
More about The Impact Dimension
About organizational structures
Explore all possible revenue streams with the hypothesis of both a nonprofit and for-profit legal structure. Now is not the time to make decisions about whether to start a nonprofit or a for-profit. The availability of sufficient revenue options will be one of several factors to take into consideration to make that decision.
- Osterwalder, A., & Pigneur, Y. (2009). Business Model Generation. New Jersey: John Wiley & Sons, Inc. See pages 30-33
- Burkett, I. Using The Business Model Canvas for Social Enterprise Design. See pages 21-23
- Calderon, J. The Social Blueprint Toolkit. See page 16
- Fruchterman, J. (2011). For Love or Lucre. SSIR
- Understanding Legal Structures and Social Enterprise, Stanford Social Entrepreneurship Hub