Your [[revenue model]] and [[pricing]] are not determined in a vacuum; they are heavily influenced by the market context. Key considerations include the difference between [[single-sided market]] and [[multi-sided market]], and the type of market you are entering ([[market type]]). In a [[single-sided market]], the user of the product/service is also the payer. The value exchange is direct. In a [[multi-sided market]] (or [[dual-sided market]]), there are distinct groups of users and payers. Google is a classic example: users search for free (one side), while advertisers pay to reach those users (the other side). In these markets, startups often focus on attracting a large user base first and then monetizing that base through the paying side. However, it's crucial to validate assumptions about the paying side early by talking to potential payers, not just users. [[market type|Market type]] also significantly impacts revenue expectations and strategy: * [[existing market|Existing market]]: Customers and competitors exist. Pricing must consider competitor actions. Success often involves taking market share, leading to a potentially linear revenue growth curve if executed well. Understanding competitor pricing and costs is vital. * [[new market|New market]]: No established customers or competitors for your specific solution. Revenue growth often follows a "hockey stick" curve – slow initial adoption followed by potential exponential growth if/when the market reaches a tipping point. Startups here need significant cash reserves to survive the initial flat period and must be wary of false positives from early adopters. * [[resegmented market|Resegmented market]]: Targeting a niche within an existing market or offering a low-cost alternative. The revenue curve can be a hybrid, initially drawing from the existing market before differentiating and potentially taking off as the niche or low-cost value prop becomes clear. Finally, connect your revenue projections to your overall business model. Consider your market size estimate and realistic market share. How many units can your [[distribution channel]] sell? Factor in your [[customer acquisition cost (CAC)]] and estimate your [[customer lifetime value (LTV)]]. These financial projections, grounded in the customer discovery you've done for each part of the Business Model Canvas, allow you to build a revenue forecast based on facts, not fiction. Back to: [[How Will You Generate Revenue?]]]