| Key Partners | Key Activities | Value Propositions | Customer Relationships | Customer Segments | |||||
| Key Resources | Channels | ||||||||
| Cost Structures | Revenue Streams | ||||||||
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 model is part of the Business Model Patterns printed card deck.
A collection of business models that will help you understand the key drivers of business model success. The card deck will be ready for purchase in the end of 2023 and is now undergoing rigorous testing.
Reserve 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.
Trigger Questions
- Can smart incentive systems help raise the average price donated over time?
- How do you reward early customers?
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
Related plays
- How Does Wikipedia Make Money? by Aashish Pahwa
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