How can you identify revenue streams with prototyping?

Prototyping is an essential tool for startups to test and validate their ideas. It involves creating a simplified and interactive version of the product or service that can be used to gather feedback from target customers. Prototyping can take many forms, ranging from low-fidelity sketches to high-fidelity minimum viable products. By experimenting with different features, designs, and value propositions, startups can identify issues early, test their assumptions, and generate feedback to improve their offering. Additionally, prototyping helps to build confidence in the startup's idea, create a shared vision, and attract investors or partners. Overall, prototyping is a critical step in the product development process and an invaluable tool.

In simple terms, your prototype is the cheapest and fastest-to-produce version of your ideal product that potential customers can interact with and find value using. Their interaction with your prototype and subsequent feedback should determine how the final version turns out, as you "build with your customers".

This is usually a great way to know if you have a marketable viable product that people are actually willing to pay for, it also help you optimise your product offerings with what your market actually need and willing to pay for so you don't end up shipping a large part of a product that no one cares about or isn't willing to pay for.

Prototyping is an ongoing process that can continue even after a product or service is launched, as startups continue to gather feedback and iterate to improve their offering.

Involve customers early: Getting feedback and input from target customers throughout the prototyping process can help ensure that the revenue streams being explored are aligned with their needs and preferences. Use data to drive decisions: Gathering data on customer behavior, preferences, and willingness to pay can help startups make more informed decisions about their revenue streams. Prioritize: With limited resources, startups need to prioritize their efforts and focus on the revenue streams with the highest potential for success. Iterate and improve: Prototyping is an ongoing process, and startups should continue to gather feedback, refine their offerings, and explore new revenue streams as their business evolves.

Don't waste time developing "nice-to-haves" and extra features at the beginning. Just build the most important features that help your customers solve their major problems. If they pay for it like that, then you may have found a gold mine. You can always improve the user interface and experience later on.

In my opinion, the best way to test/prototype your revenue streams is through Pilots with potential customers. Initially, doing free pilots can help you understand the value that your potential customers may (or may not) see in your solution. After a successful pilot, it's easier to ask the customer a Price Range that they would be interested in for the services you provided. After collecting the same information from a couple of Pilot users, you should get a clearer idea of your revenue streams and an approximate pricing range.

Prototyping helps you to focus on what matters most to your end users as you work towards achieving product-market fit, all while expending the least possible amount of time and resources during the development phase. You rapidly build a minimum viable product (MVP) that potential customers can interact with to provide feedback for future iterations and improvement.