Final Concept – Business Model

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As described in this post my final design is a speaker rental service. Behind the concept is a a business model with multiple revenue streams. For the business model development I used Osterwalders business model canvas. The result can be seen below.

Circular Spealers - Business model canvas version 1

 

The most interesting thing to notice here is the different revenue streams.

Renting

There will obviously be revenue generated from speaker rental. I propose that the price will be between €4-6 a day depending on duration of the festival. Today it is common to pay for a battery service to charge your phone. This cost €3-4/day. Since the speakers are not an individual purchase (but one shared between the people in a camp) the price mentioned seems reasonable.

 

Sponsorship

Another revenue stream can come from advertisement on the speakers. The obvious think would be that this is from the festivals main sponsors (often beer companies). Heineken recently launched a marketing campaign where users could buy a cheap Heineken wireless speaker. Tuborg is main sponsor for Roskilde festival and a speaker for that festival could like the one shown below. Participants at music festivals spend a lot, so it is attractive for companies to promote their brands to these consumers.

 

Tuborg advertisement

Strategic partnerships 

A third option is to engage in strategic partnerships. At the moment there is a lot of competition in the music streaming market, so it could be obvious to partner up with a new streaming service like Tidal, that could offer free streaming to the users in the period they rent the speakers. Participants at music festivals are especially attractive for music streaming companies as they have an interest for music and have already showed that they are willing to pay for it (buy buying the ticket).

Tidal promotion

 

 

Is it profitable?
The price for the speakers are highly dependent on the numbers produced since there are several injection-molded parts that requires expensive molds to manufacture. The ramp-up costs are therefore high. I estimate that with a run of 5000 speakers it is realistic to keep the production price per unit below €50.

Besides the manufacturing of the speakers that there are a number of other costs associated with offering the service. There is cost for the setup of the salespoint, rental and admission fee to the festival, etc. The good thing about offering such a service at festivals is that it is possible to get people to work “voluntary” in exchange for a festival ticket. I estimate that it will cost around €1700 per day in running cost. So if only revenue from rent is considered 340 speakers need to be rented out to break even. This is before depreciation of the speakers. But as the big festivals have more than 100.000 participants only a fraction need to rent the speakers for the business to be interesting.

 

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