Business Model Generation: Revenue streams

Donations

Supply a complete and fully operational product for an optional donation

Illustration of Donations
Run a Donations play

Element

Also called: Donationware

See also: Pay What You Want

Key Partners Key Activities Value Propositions Customer Relationships Customer Segments
Key Resources Channels
Cost Structures Revenue Streams
The business model canvas was designed by Business Model Fondry AG and distributed under a Creative Commons license.

How: Put the client in control of who gets the biggest revenue share by letting them pay what they want. Consider adding the incentive of getting bonus add-ons when donating more than the average.

Why: Involving a charitable cause and providing full transparency of where the money goes adds to the value proposition and can help sell products that would otherwise not stand a chance on regular market conditions.

This business strategy is part of the Business Model Patterns printed card deck.

Proven business models that have driven success for global leaders across industries. Rethink how your business can create, deliver, and capture value.

Get your deck!

Applying the Donations business model

Although very hard to make viable as the singular revenue stream, here are possible conditions for success inn a donation-based business modeL:

  • The product must be exceptional and indispensable to consumers.
  • The target customer base should be highly invested.
  • Customers should feel a sense of ownership over the product.
  • Operating costs should be minimal.
  • A large number of customers is necessary, as the donation rate is likely to be low (possibly around 0.1%).
  • Donating should be straightforward for the user.
  • Customers must be constantly reminded of the need for their support in maintaining and improving the product.

While it may be challenging to meet all of these requirements, it is not impossible. Wikipedia and WikiLeaks serve as examples of successful businesses operating on a donations-based model.

Examples

The Humble Bundle

Video games, music albums, and e-books are sold in bundles for a limited time at a price determined by the purchaser.

Wikipedia

The crowdsourced encyclopaedia relies on donations from millions of individuals and corporations to keep running.

4ocean

4ocean sells bracelets made from recycled materials, with a mission to clean up plastic pollution in oceans. For each bracelet sold, the company removes one pound of trash from the ocean and coastlines.

Source: 4 Oceann bracelets

GoFundMe

GoFundMe is a platform that allows individuals to fundraise for a variety of events, including life celebrations, graduations, accidents, and illnesses. The service is free to use in most countries, though donors may choose to leave a voluntary tip to support the platform.

Source: GoFundMe crowfunding platform

Trigger Questions

  • Can smart incentive systems help raise the average price donated over time?
  • How do you reward early customers?

This business strategy is part of the Business Model Patterns printed card deck.

Proven business models that have driven success for global leaders across industries. Rethink how your business can create, deliver, and capture value.

Get your deck!

Related plays

Sources

Want to learn more?

Receive a hand picked list of the best reads on building products that matter every week. Curated by Anders Toxboe. Published every Tuesday.

No spam! Unsubscribe with a single click at any time.

Ice Breakers

Relieve initial group awkwardness and establish a safe space

Educate

Broaden knowledge or insight regarding the behavior or situation to inform decisions.

Demonstrate

Show practical examples or models of the desired behavior for clear guidance.

Alert

Highlight current actions and their reasons, bringing unconscious habits to awareness.

Train

Develop necessary skills and competencies to enable effective action.

Community events
Product Loop

Product Loop provides an opportunity for Product professionals and their peers to exchange ideas and experiences about Product Design, Development and Management, Business Modelling, Metrics, User Experience and all the other things that get us excited.

Join our community

Made with in Copenhagen, Denmark

Want to learn more about about good product development, then browse our product playbooks.