Interactive business model chain: paying customers times price gives revenue, minus fixed and variable costs gives profit or loss
A business can take $20k a month and still be losing money
A business model is a chain. The value proposition decides who pays and how much, revenue is customers times price, and the cost structure splits the cost of serving them into a fixed part that never moves and a part that grows with every customer. Raise or lower the number of paying customers and watch revenue, costs and the profit bar move together; then switch to the premium price and watch where the break-even marker lands.
Money chain
Loss · −36% margin
Change the paying customers. Watch the cost bar and the profit bar.
Loss $7.2k on $20k revenue
Fixed costs $20k a monthVariable cost $36 a customer
Price set by the value proposition
Paying customers a month200
50break-even1000
Profit margin
−36%
Break-even customers
313
Know This
Revenue only becomes profit once it clears the fixed costs plus the variable cost of every customer served.