WEEK 14 - REVENUE MODELS & FINANCING

Revenue Model

• is a conceptual structure that explains how a business generates money

• It includes where the revenue comes from and the resources needed for every aspect of the revenue generation strategy of the business.

Sources of Revenue

• Commission

• Mark-up

• Arbitrage

• Rent

• Bids

• Other types of payments

Sales Commission

• is a monetary reward businesses offer their sales officials for completing a sale.

• typically takes the form of a percentage of the revenue generated by the sale

Sales Commission

A payment made to salespeople for selling a product or service, typically calculated as a percentage of the sales revenue generated

Art Commission

When an artist is hired or requested to create a piece of artwork, such as a painting, sculpture, or illustration, based on the specifications or preferences of the client

Government Commission

A government-appointed group or committee tasked with investigating, studying, or overseeing specific issues or functions, such as a human rights commission or a commission on economic development.

Commissions in Employment

Refers to the practice of compensating employees based on their performance or the completion of specific tasks, often in addition to a base salary

Real Estate Commission

A fee paid to real estate agents or brokers for their services in facilitating the sale or purchase of property.

Mark-up

refers to the difference between the cost of a product or service and its selling price.

Cost Price

This is the price at which a product or service is acquired by a business. It includes the cost of materials, labor, overhead, and any other expenses associated with producing or acquiring the item.

Selling Price

This is the price at which the product or service is sold to customers. It's calculated by adding the mark-up to the cost price

Mark-Up

The mark-up is the difference between the selling price and the cost price, expressed either as a percentage or a fixed amount. It represents the profit margin for the business.

Arbitrage

is a financial strategy that involves exploiting price differences for the same asset or security across different markets.

Statistical Arbitrage

This type of arbitrage often involves complex mathematical algorithms and high-frequency trading strategies.

Rent

in business refers to the payment made by a business to use or occupy a physical space, such as an office, retail store, warehouse, or manufacturing facility, owned by another party.

Bids

is a common process used by organizations to solicit competitive offers from suppliers for goods, services, or projects

Commercial

This sector primarily deals with businesses that sell goods or services to other businesses. It includes wholesalers, manufacturers, distributors, and service providers catering to businesses.

Retail

involves the sale of goods or services directly to consumers. It includes brick-and-mortar stores, online retailers, supermarkets, department stores, specialty shops, and more.

Subscriptions

This model provides a specified service fee a pre-determined periodic charge

Usage fee

Utilities such as Meralco for electricity, Manila waters and Maynilad for water and Converge

Licensing

l is common among inventors, creators, and intellectual property owners who grant licenses to use their name, products, or services at a predetermined or recurring cost.

Databases

The company using this revenue model collects data and then sells them directly to a consumer or business customer.

Transactions & Intermediation

Comes from transactions that involve the main profitmaking activity of a business.