We have already discovered six directions on the value proposition side and in this video, we will explore the seventh and last direction on this side. In this direction, I will show you how modifying the revenue stream can generate very innovative value propositions. Generally speaking, a company’s income is a result of the price paid by the final user or by a distributor. This is the revenue stream. Price is definitely a key factor in a client’s decision to buy. Attempts to change the way this price is charged have an impact on the client’s costs and therefore, his decision making. Thus, modifying the revenue stream leads the way to innovative value propositions. There are three types of possible changes in the revenue stream: get the user to pay in a different way, make a third-party pay and finally, pay yourself from the savings of your customer. The first type is to get the user to pay in a different way. In this type, you have several options. The first option is to consider a subscription or a fixed fee, rather than a payment per unit. This is how telecom operators have built the end consumer market. Rather than asking the customer to pay per minute, they have offered a flat fee per month. Another more recent example is a café in Paris, called the Anticafé. The owner of this café realized that more and more students or young entrepreneurs are using cafés as a place to work. So rather than charging them per coffee, he decided to charge them by the hour. For €4 per hour, you have access to as many coffees and cakes as you want. Besides the free wifi, you can also opt for printing as an additional service. The café becomes a very convenient and fun place to stay and to meet with other people, transforming the whole value proposition. Then, you can charge the customer according to the use, rather than the simple sale of a product or service, as in the Michelin Fleet Solutions example that we saw previously. In this case, Michelin doesn’t charge a price for the tire, but a price per kilometer. You can also opt for a freemium offer, in which you offer free access to your basic product or service and then charge a premium from customers eager to get more functionalities. Skype, for example, is famous for its freemium offer, and mobile apps are also very often freemium. Of course, you can also mix those different payment means. I suggest that you watch the video available through this link on how theaters in Spain have reinvented their revenue stream. I’m sure you will enjoy it! While watching, please try to find out which ones of the three different payment methods they have used. I hope you had fun watching this example. Here you could see that the revenue stream comes from a mix of a freemium and a pay-per-use model. The second possible type of change in the revenue stream is to make a third party pay. This is, of course, strongly linked to our previous direction, called "Introduce a third party". The idea here is that a third party may accept to pay for all or a part of your product or service used by the other side of the platform. In this case, there is a decoupling of the paying customer and the using customer. This is an interesting way to think about your value proposition. Google, of course, is an obvious example. We use our Gmail for free or Google for free, we are the using customer and Google gets its revenue from the ads. Disconnecting the using and the paying customer is very often seen in the Internet world, but it existed before. Remember our JCDecaux example, where the company posting the ad is paying for the bus stop that is given to the transportation company for free. Another example includes social security or insurance companies, that pay for all or a portion of the price of your drugs. Finally, there is a third way to change the revenue stream. You can pay yourself from the savings or earnings of your customer. This is another very interesting avenue for innovation. Let me give an example. Let’s suppose you are a facility manager of a big office building in Paris or New York or wherever. Every year, you spend €100 on energy, like electricity, heating and so on. You know that if you invest in energy devices such as this one that regulates temperature or turns off the light when people leave the room, sold by companies such as Schneider Electric or Honeywell, you will save money. Let’s say that for €40 of investment, these devices will generate €15 of savings every year, that is, €45 in 3 years. The return on investment is interesting. However, as a facility manager, you might face two problems. First, you must trust the ability of the device to actually generate the savings and second, you need to have €40 to invest. This is why companies such as Honeywell and Schneider Electric have launched energy performance contracts. Through those contracts, they install the device for free and in exchange, they pay themselves from the savings that those devices generate. In this value proposition, all the risk is taken by the company producing the device, which means that they guarantee that this device is actually working. So for you as a facility manager, there is no risk anymore. In addition, you don’t have to make the upfront investment, so the benefits for the customer are very high. Of course, the implementation of this type of business model can often be a problem. For example, you have to determine how you are going to measure the savings. However, this way of generating a revenue is very interesting, since it takes out all the risk for the customer and this facilitates his decision making. As a recap, the three ways to modify the revenue stream are: Get the user to pay in a different way. Make a third party pay. Pay yourself with the savings or earnings of your customer. This leads to the following questions that you can ask yourself when exploring this direction number seven. Could you invoice your clients differently? What third parties could be interested in financing all or part of your offer? Does your offer allow your clients to save money or generate extra income? This was our seventh and last direction on the value proposition side. In our next module, we will discover the seven directions on the value architecture side.