100 Great Business Ideas: From Leading Companies Around the World (100 Great Ideas)

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100 GREAT BUSINESS IDEAS • 101

In practice



  • For this idea to work for your company, the incremental revenue
    generated by additional units must be less than the cost of
    producing them.

  • Administrative costs should be low so they do not use up the
    increased profi ts from the scheme.

  • If there is a high degree of price elasticity in your market, the
    lower upfront purchasing costs negotiated through revenue
    sharing should be used to lower prices, to stimulate demand.

  • Use sharp negotiating skills when deciding how much revenue
    to share with the supplier. If production costs are low, a supplier
    may accept a lower revenue share than you anticipate.

  • Employ reliable market research to gauge consumer demand
    when deciding how many units to purchase, following a revenue-
    sharing agreement. The new lower price can make it tempting
    to over-purchase.

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