Revenue Model Innovation: Historic Example Xerox invents subscription model         Xerox Corporation's early days in the copy machine business with its Xerox Model 914 copier illustrate the importance of flexibility, business model innovation, and innovative revenue model.       In pursuit of sustainable development and cleaner production, Xerox used in its Model 914 the relatively new environment-friendly electrophotography process, which is a dry process that avoids the use of wet chemicals. While the technology was superior to earlier copy methods, the cost of the machine was six to seven times more expensive than alternative technologies.      Learn   Rapid Business Growth 10+   Teach   The model of selling the equipment below cost and making up the difference by large margins in the sale of supplies was not viable because the cost of the supplies was about the same as that of the alternatives, so there was little room to maneuver.      Xerox then decided to market the new product itself and developed a new business model to do so.   Xerox: Business Model Innovation     The new model leased the equipment to the customer at a relatively low cost and then charged a per copy fee for copies in excess of 2000 copies per month. At that time, the average business copier produced an average of only 15-20 copies per day. For this model to be profitable to Xerox, the use of copies would have to increase substantially. → Virtuoso Marketing     Fortunately for Xerox, the quality and the convenience of the new copy technology proved itself and companies began to make thousands of copies per day. As a result, Xerox sustained a compound annual growth rate of 41% over a 12 year period. Without this business model, Xerox might not have been successful in → commercializing the innovation.          → 7 Routes to High Profits