Chapter 9 Flashcards
Business Model
how a company/venture creates, delivers and captures value
Revenue Model
component of business model that identifies how the company earns income and makes profit
Value Capture
generating revenue and profit from value provided to customers
Revenue
Income gained from sales of goods and services
Unit Sales Revenue Model and two types of items sold
- Generating revenue by number of items or units sold by a company.
- Tangible or Intangible items
Razor and Razor Blade Model: Gillette
Revenue from offering one product for cheap and encouraging sales of more expensive product etc razor blade and razor
Razor and Razor blade model other examples
cheap printer and expensive ink or PS4 and Controller
Advertising Revenue Model
Revenue from advertising products and services etc ratio, commercial, social media, magazine
Adwords (3)
cost per click
cost per action
promoted content/sponsored
Data Revenue Model
and what do balance
Selling quality, exclusive and valuable information to other parties.
need to balance data value with privacy of users
Intermediation Revenue Model
Third parties, brokers, or middlemen generating money though commission
Brokers and example
organize transactions between buyer and seller etc real estate or insurance
Licensing Revenue Model and example
Giving permission to other parties to use protected intellectual property in exchange for fees
example: universal studios, movies, music and themed lego
Intellectual Property
Patents, Copyrights and Trademarks
Franchising Model
selling franchise of an existing business to allow another party to trade under the name of that business.
Franchising Process
Franchisor sells to franchisee and supports though marketing, operations and financing in return for royalties from franchisee
Subscription Revenue Model
charging customers to gain continuous access to a product or service etc netflix, gym membership, disney plus, magazines
Professional Revenue Model and examples
Providing professional services on a time and materials contract etc Accounting, Investment, Consulting, Law firms
Utility and Usage Revenue Model and example
Charging customer fees on how often goods or services are used (pay-as-you-go).
Etc phone data plans, internet provider based on quantity
Freemium Revenue Model and example
Mixing Free (mainly web-based) basic services with premium or upgraded services etc spotify free, remove adds, notability free and remove adds
4 key drivers of revenue
customer, frequency, selling process and price
4 key drivers of revenue - customer questions
how many will you attract, what will they pay
4 key drivers of revenue - Frequency questions
how often people will buy, incentives provided to maintain/increase activity
4 key drivers of revenue - Selling Process questions and company example
different revenue streams, upselling or cross selling patterns etc Amazon Prime
4 key drivers of revenue - Price Questions
price per minute/product, what increases value of product
Cost Drivers (2)
Cost of Goods Sold
Operating Expenses
Cost of Goods Sold
occur when a sale takes place
Operating Expenses
Cost of running a business etc rent, utilities, salaries, marketing etc
Income Statement
Financial report displaying revenue, expenses and profit for period of time
Gross Profit =
Revenue - COGS
Operating Profit =
Gross Profit - Operating Expenses
Net Income
Operating Profit - Deductions (Tax and Interest)
