Revenue Streams Description and Basic Financial Assumptions

Spring 2024
For Deliverable 3, you are asked to provide a written description of the revenue stream(s) associated with the concept, to identify your primary assumptions around your revenue and cost drivers, and to develop a pro forma income statement for the first year (Y1) of your concept. Additionally, you should update your BMC, highlighting any changes over the previous iteration.
Revenue streams
In one page or less (double-spaced, 12-point font, 1” margins), describe each revenue stream you envision for your concept. Make sure this is consistent with your concept’s presentation on the BMC.

For each revenue stream, discuss the following:
· What is the revenue stream? What is the product or service being sold for each?
Ad Revenue: Income from advertisements on the app and at the physical charging locations.

EV Charging Fees: Revenue generated from customers charging their electric vehicles.

Subscriptions: Recurring income from charging subscriptions and coffee shop memberships.

Rental Income: Monthly rent from food and retail tenants like Chick-fil-A, Freshii, etc., at the charging stations.

· Who is the target customer for that revenue stream?
Advertisement: End consumers, primarily EV owners, to build traction and maximize outreach.

EV Charging: EV drivers looking for convenient, reliable charging options with additional amenities.

Subscriptions (Charging & Amenities): EV owners and nearby residents who frequent the station for charging, coffee shops, bookstores, etc.

Rental Spaces: Franchises aiming to expand customer reach. Local consumers visiting for dining, shopping, or quick breaks.

What revenue model type does this stream employ (See Section 2 of Chapter 9)?
Our revenue model for this type is pay-per-use (PPU) they are only going to pay to charge their vehicle and nothing more in this case.
· What is your unit pricing in this revenue stream? What is your rationale for this pricing?
EV Charging Pricing: $0.30–$0.35 per kWh, aligned with market rates to stay competitive and customer-friendly.

Rental Pricing for Tenants: Priced at least $100 below local market rates to encourage long-term occupancy.

App Pricing: Free with standard ads; optional in-app purchase available for an ad-free experience at a low cost.

Subscription Pricing:

● Tiered model with three levels:

○ Bronze (base level)

○ Gold (middle tier)

○ Platinum (top tier)

● Each tier offers increasing benefits and access.

You are welcome to address this section through bulleted responses (vs. paragraphs) if you prefer to do so.
Basic financial assumptions
Conduct some preliminary research to identify and list your assumptions for your revenue and costs for the first year of your venture. These should include, at a minimum:

Revenue drivers for each revenue stream:
· How do you define a unit of sale (e.g., a single product, a month of access, an event)? EV Charging:

● Unit of Sale: Per kilowatt-hour (kWh)

● Price: $0.30–$0.35/kWh

● Cost: $0.05–$0.15/kWh + $100–$900 annually per charger (equipment)

Advertising:

● Unit of Sale: Per ad placement (in-app or on-site)

● Pricing: Based on duration and location of placement

● Cost: 10–15% of advertising revenue

Subscriptions:

● Unit of Sale: Monthly subscription

● Tiers: Bronze ($9.99), Gold, Platinum (up to $34.99)

● Cost: 20–30% of revenue for perks and platform maintenance

● Retail Rent: Unit of Sale: Monthly lease

● Pricing: Slightly below market value to attract long-term tenants

● Cost: Low overhead at 5–10% of rental income

· Price per unit: Customer Cost for Full Charge: $17–$20 depending on battery size and usage. Example: 60 kWh × $0.30–$0.35 = $18.00–$21.00

Our Cost per Full Charge: $0.05–$0.15/kWh = $3.00–$9.00 for a 60 kWh charge

Gross Margin per Full Charge: $9.00–$18.00 before fixed equipment/maintenance costs

Competitive Positioning: Pricing aligns with national averages to stay competitive while ensuring profitability

· Number of customers for Y1: Around 20,000 would be coming to just charge their cars, also if we are able to get a favorable location the number could be much higher.
· Average number of purchases per customer in Y: 20,000 for just charging their cars
Cost drivers:
· COGS (Cost of Goods Sold) as a % of revenue (for each revenue stream)
1) EV Charging Revenue:
COGS (% of Revenue): ~35–45%
● This includes the cost of electricity (~$0.10–$0.15/kWh), infrastructure depreciation, and equipment maintenance.
Key Expenses:
● Charging equipment installation and maintenance

● Utility bills (electricity usage)

● Software management for the charging system
2) Advertising Revenue:
COGS (% of Revenue): ~10–15%
● Includes costs for digital platform hosting, ad management tools, and signage maintenance.
Key Expenses:
● App development and updates

● Content moderation and ad integration

● Staff/contractors for ad sales and support

3) Subscription Revenue:
COGS (% of Revenue): ~20–30%
● Includes discounts on charging, free/discounted coffee shop items, and service perks.
Key Expenses:
● Software/backend for managing subscriptions

● Customer service and support

● Loyalty benefits or included perks (e.g., free beverages or lounge access)

4) Rental Revenue:
COGS (% of Revenue): ~5–10%
● Minimal cost other than general maintenance and utilities for common areas.

Key Expenses:
● Property management

● Insurance, cleaning, and upkeep of shared spaces

● Legal/contract costs for tenant leasing

· Operating expenses for Y1
o See Tables A.11 & A.12 in the text for helpful examples for thinking through potential operating expenses and estimating labor costs, respectively (provided below).
Please be sure to cite any sources consulted via in-text citations and a reference list in APA-style.
https://afdc.energy.gov/files/u/publication/evse_cost_report_2015.pdf
https://www.tesla.com/support/charging