Pillar 3 of 5

Commercial Model

Is the commercial model coherent and economically sensible, with no obvious weaknesses that undermine the business?

Assess whether the company has a coherent way to monetise the product, acquire customers and generate revenue that is broadly durable and commercially sensible, without undertaking a full commercial due diligence exercise.

This pillar is lighter touch to identify weaknesses that could undermine the product story or create avoidable concern in diligence.

This is one of five connected pillars used to assess a digital product’s readiness for buyer scrutiny.

Focus areas

How this pillar is examined

3.1

Pricing

Assess whether pricing and packaging provide a sensible and coherent way to convert customer value into revenue, without obvious complexity, inconsistency or misalignment.

A strong product still needs an appropriate way to capture value commercially. Pricing should be understandable, broadly aligned with the value customers receive, and free from obvious issues such as excessive discounting, highly bespoke arrangements or unnecessary pricing complexity.

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3.2

Go-to-Market

Assess whether the company has a credible and repeatable way to acquire and convert customers that is broadly appropriate for the product, target customer and contract value.

A valuable product needs a workable route to market. The audit should identify obvious weaknesses such as a sales process that is poorly matched to the product, excessive effort required to win customers, or growth that appears disproportionately dependent on increasing commercial headcount.

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3.3

Revenue Quality

Assess whether the resulting revenue base appears reasonably durable, predictable and diversified, without obvious retention, concentration or contractual weaknesses.

Headline revenue alone does not show how dependable the business is. A light-touch view of recurring revenue, retention and expansion, customer concentration and commercial commitments can reveal weaknesses that may become significant during diligence.

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