Yogyakarta, 1 August 2020—Having successfully organized its first episode, Centang Biru by Kewirausahaan Sosial UGM came with another episode of Stories about Business and Freshest Insights themed “Revenue Model Beauty and the Beast”. Present in the discussion were Andy Fajar Handika, founder of Kulina and Chief Revenue Officer of Cookpad, and Bayu Dardias, a lecturer delivering the subject of social entrepreneurship, as the moderator.
The discussion mainly revolved around the revenue generated from start-ups. Before jumping into the topic, Andy explained that revenue is understood as a sustainable source of income. Hence, income generated from a VC or a start-up competition prize doesn’t count as revenue.
Andy began his presentation by elaborating on four types of revenue. First, revenues come from advertisements. To make this type of revenue-generating activity work out, a start-up needs to gather plenty of users beforehand. Meanwhile, for start-ups in forms of marketplaces, revenue might be generated from charging transaction fee, premium-listing fee, and third-party-inside-platform fee. Marketplaces differ from e-commerce, in which e-commerce platforms gain revenue from sales profit.
Other kinds of revenue were generated through software as a service/SaaS model. SaaS manifests in three models varying in access of the services given, including subscription (i.e. Netflix), metered/usage-based, and freemium, which distributes basic services for free and charge users for premium ones. Cookpad applies the freemium system, in which recipes in basic service can be accessed for free and will be arranged in order of recency. Recipes in premium service will be arranged in order of rating.
Andy reckoned that the only way to set an appropriate price is through trial. Setting a price, for Andy, is not about being too low or too high. “What we need to know is how much we can get out of one customer in average compared to how much getting one customer costs. As long as the former is greater than the latter, it’s all good,” he added.
Responding to participant’s questions, Andy explained that a start-up might utilize more than one type of revenue model at once. Spotify, for example, uses both advertisement and freemium system in their services.
Before applying one type of revenue model, a start-up needs to pay attention to network effect, which is the increase of start-up users. Network effect is necessary to observe traffic which generates revenue.
“It is better to fix a revenue and business model since the beginning of forming a start-up, rather than establishing it first and not having a clue on how to monetize it,” Andy remarked as he wrapped up the live session at 4.00 pm. Viewers are able to re-run the second episode of Centang biru via Kewirausahaan Sosial UGM Youtube channel.