What Is A Revenue Model? 10 Types Of Revenue Models

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A revenue model is a conceptual structure that states and explains the revenue earning strategy of the business. A revenue model includes every aspect of the revenue generation strategy of the business. A revenue model is how a business makes money. Types of Revenue Models With the advent of the internet, the revenue models of many companies now include countless income sources from the digital world.

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Nevertheless, all of the income sources, whether online or offline, can be confined to 10 types of revenue models. Markup Markup is the most common and oldest revenue model seen among the businesses.

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It involves setting up the selling price of the good by adding profits and overhead charges to its cost price. This revenue model is common among retailerswholesalersetc. However, manufacturers also use markup model to earn money by selling the good at a price which includes profits over and above the cost involved in manufacturing it.

Consistent performers: These 11 countries had prices below the affordability target in and continued to do so in These groupings are based on the affordability of data in each country and are measured on their policy performance in the latest policy survey conducted by A4AI as part of the Affordability Report. More information on the survey methodology can be found here.

Arbitrage Arbitrage internet model income model makes use of the price difference in two different markets of the same good. Licencing Licencing revenue model is common among inventors, creators, and intellectual property owners which grant a license to use their name, products or services at a predetermined or recurring cost. The revenue model is common among many software companies and legally protected intellectual property patents, trademarks, copyrights owners which grant a license limited by time, territory, distribution, volume, etc.

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It is one of the most common revenue earning strategy among the online marketplaces and aggregators where they provide a platform for selling items digitally and charge a commission as a percentage or fixed price on every item sold. Affiliatesbrokers, and auctioneers are also seen working on a commission-based revenue model.

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This revenue earning strategy involves recurring rent or one time lease payment for temporary use of the asset. Subscription A subscription model is a great example of recurring revenue strategy.

By Investopedia Updated Feb 1, It may seem contradictory that companies that operate Internet businesses are able to make substantial profits each year despite offering their services for free. Companies that operate in Internet services have grown in number consistently over the years as more consumers are utilizing the Internet to purchase products and services, connect with family and friends, search for employment, or gain access to information and news on virtually any topic. The majority of content provided through these Internet companies is offered to users at little to no cost, and consumers have grown accustomed to accessing information found on the Internet for free.

Advertising An advertising revenue model is usually adopted by media houses and information providers which usually earn money by including advertisements in the content provided. This revenue model is widespread in both offline and online businesses and the company makes money by charging the advertiser: per size of the space offered, thousand impressions or per click on the advertisement. Fee-for-service Unlike other service-based models, a fee-for-service model charges the customers for the type of and times the service is provided.

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This is pay-as-you-go or pay-per-usage revenue model where the customer pays only for the services he actually used. This revenue model is common in telecom and cloud-based services industries. Interest An interest-based revenue strategy or an investment based revenue strategy is common among banks and prepaid wallet service providers.

Income disparity and digital divide: The Internet Consumption Model and cross-country empirical research Xiaoqun Zhang Telecommunications Policy, vol. This model intended to extend the TAM by adding accessibility and affordability, two important factors that influence the Internet diffusion.

Donation Many companies provide their products and services free of cost and rely totally on donations paid to them by their customers.

These companies hardly make any profits as donations usually cover only their operating costs. Wikipedia is one such company internet model income relies on donations.

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