1. What to Include in the Business Model Section
This document explains how your business makes money and how you deliver value to your users. You should include:
- Revenue Streams (e.g., subscription, service fees, commissions)
- Pricing Structure (fixed, tiered, per-service, etc.)
- Customer Segments and Target Market
- Acquisition Channels (e.g., paid ads, referral programs, partnerships)
- Distribution Channels (e.g., mobile app, web platform, B2B integration)
- Key Partners (e.g., payment processors, contractors, suppliers)
- Cost Structure (fixed vs. variable costs)
- Unit Economics (CPA, LTV, margins)
2. Where to Source the Information
- Your own business plan assumptions
- Competitor pricing and monetization models
- Customer interviews or surveys
- Investor pitch examples in similar markets
- Benchmarks from industry reports (e.g., CB Insights, Crunchbase, Statista)
3. How to Analyze and Validate
a. Revenue Model
- Write out your assumptions clearly: e.g., 10% of homeowners use the app once/month at an average of $X/job.
- Break down each revenue stream and define what drives it (volume x price).
- Consider recurring vs. one-time revenue.
b. Customer Acquisition
- Define acquisition channels and estimate cost per acquisition (CPA).
- Use existing ad cost benchmarks or results from small-scale pilot campaigns.
c. Customer Lifetime Value (LTV)
- Calculate average revenue per customer x average retention period.
- Use this to compare with CPA to ensure sustainability (LTV > 3× CPA is a good benchmark).
d. Cost Structure
- Break down your costs into:
- Fixed (salaries, subscriptions, infrastructure)
- Variable (marketing, support per user, contractor payouts)
e. Breakeven
- Define your monthly burn rate.
- Calculate how many users/revenue needed to break even.
4. Recommended Format
Use a combination of narrative, tables, and diagrams:
Narrative Summary:
Our business generates revenue by charging a 10% service fee on completed jobs between homeowners and contractors. Additionally, we offer a premium subscription tier for providers with advanced scheduling and visibility features. Our model is designed to scale with minimal operational overhead.
Revenue Stream Table:
| Revenue Source | Description | % of Total Revenue (Yr 1) |
|---|---|---|
| Job Service Fee | 10% fee per completed job | 70% |
| Premium Provider Subscription | $29/mo for added visibility + tools | 20% |
| Homeowner Urgent Job Fee | $5 rush service fee | 10% |
Pricing Model Diagram:
Visual chart showing basic vs. premium plan for providers, plus optional services for homeowners.
Unit Economics Table:
| Metric | Value |
|---|---|
| Avg. Job Revenue | $125 |
| Platform Fee (10%) | $12.50 |
| Acquisition Cost (CPA) | $25 |
| LTV | $150 |
| Gross Margin per User | 80% |
Would you like me to turn this into a pre-filled document (with placeholders where you can plug in your own numbers), or continue with the next section (e.g., Competitive Analysis)?