ch 9 Flashcards
what is
identifies how the company will earn revenue and generate profits
anwers
how much are my customers willing to pay
how many customers do i need?
revenue model
what is
measures the amount of revenue generated by the number of items or units sold by the company
unit of sales
what is
they generate revenye by selling high quaity, exclusive and valuable info
data revenue model
what is
different methods from 3rd parties such as brokers - ppl who organize transactions
intermediation revenue model
Types of revenue models
- unit sales revenue model
- advertising
- data
- Intermediation
- Licensing
- Franchising
7 Subscription - Professional
- Utility and usage
- Freemium
Gives permission to other parties to use
protected intellectual property.
licensing revenue model
Describes how the owner of an existing
business sells the rights to another party to
trade under the name of that business.
franchising revenue model
Involves charging customers to gain
continuous access to a product or service.
subscribe revenue model
Provides professional services on a time and
materials contract. (consultant, lawyers, accountant)
professional revenue model
Charges customers fees on the basis of how
often goods or services are used ( mobile phone) (bill)
utility and usage revenue model
Involves mixing free basic services with
premium or upgraded services.
– Businesses create at least two versions or tiers of
products or services
freemium revenue model
what are the revenue drivers
- customers
- frequency
- selling process
- price
testing hypothesis is the best way
Cost drivers
COGS and operating expenses
COGS- when a sale takes palce
operating expenses- costs to run your business
income statement
Report that measures the financial
performance of your business.
– Subtracts the COGS and expenses from the
total revenue.
– The pro forma income statement is a projection
of what the company could do.
– Reflects depreciation and amortization of your
company’s assets
Different types of pricing strategies
- competition led pricing: copy prices of a business
- customer led pricing
- a loss leader: offer at or below bost
- introductory offer: encourage ppl to try the new product for free
- Fair pricing
- bundle pricing
calcualte price formula
Breakeven units = Fixed costs / (sales price per
unit – variable cost per unit).
what is
Involves calculating all the costs involved in
manufacturing or delivering the product or
service.
cost led pricing
what is
Involves setting your price based on the
amount of investment.
target return pricing
what is
Involves pricing your product based on how
it benefits the customer.
– The buyers have a major influence over pricing
strategy
value based pricing
