Revenue Model

Revenue Model

Value proposition and revenue model are typically the most easily identifiable aspects of a company’s business model.

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Another name for a revenue model is a financial model. A firm’s revenue model describes how a firm will produce a superior return on invested capital. It answers the question, “How will you earn money?”.

The five primary revenue models used by e-commerce firms are:

  • advertising revenue model
  • subscription revenue model
    • Freemium strategy (a company giving away a certain level of product or services without charge, but then charging a fee for premium levels of the product or service)
  • transaction fee revenue model
  • sale revenue model
  • affiliate revenue model

What revenue model do they use? What evidence (via screenshot) can you provide for that belief? Do you think this is the most effective revenue model for them to use? Why or why not? What revenue model will you use? Why? Did the choice of your competitor have an influence on the revenue model you selected? Why or why not?

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