# Don't Confuse Pricing And Revenue Strategies
*Published: 2011-08-02*
*Tags: agency-advice, business-advice, product-work*
*Source: https://chrislema.com/pricing-revenue-strategies*
---When I start talking to people about their business idea, things often move quickly to pricing - as if that's the real puzzle that has to be solved. And while it's true that there's a lot of good work that will need to go into pricing your product or service right, I don't think it's **the most important thing** you have to do.

## Pricing Is Secondary

Target markets and product definitions can't be ignored, so don't get me wrong. But those are the high level items you tackle to make sure there's even a chance for a product-market fit. After that, people regularly want to move to pricing. But I think people often confuse two related terms...

## There is a difference between Pricing and Revenue

Pricing and Revenue aren't the same thing - though they're closely related. The **price** of an item or service is what you hope to charge, and what you hope clients will pay. There are tons of [pricing strategies](https://www.marketingteacher.com/pricing-strategies/) - all of them valuable in their own context. **Revenue**, on the other hand, is all about the amount of money that comes in (over a period of time) for a product, based on it's pricing.

## Revenue is Primary

Why is Revenue key? Because whenever someone wants to talk about pricing, they're making implicit assumptions - how many units they'll sell (or hours of service, or jobs), how often people will return to purchase more, how often they'll be able to up-sell or cross-sell other products, etc. When you start talking about all that, you're not talking about pricing. You're talking about the revenue that comes from a business model.

## Why Business Models Matter

All those assumptions about how the business will work, how the customers will interact, how often they'll buy, how much you expect them to purchase over a year, or over the lifetime of the relationship they have with you - all of that is your business model, and it's far more important than the price of your product. Need to figure out your business model? Look no further than [this great book](https://www.amazon.com/Business-Model-Generation-Visionaries-Challengers/dp/0470876417?tag=chrlemsit-20)!

## There's nothing as sweet as Recurring Revenue

All that said, there's one business model I like the most. The one that I go to in just about every case when I'm helping people think about their business, and it's a model of recurring revenue. You can call it membership pricing, monthly pricing, yearly pricing, or anything else - but I call it a sure bet. That's because at the beginning of the period (month, quarter, or year), you aren't starting from zero. You already have a base of revenue that you can count on. There's nothing sweeter!

## Want to talk more about your Business Model?

Let's connect and talk more. I love chatting about business models.