Lec 9 - Business Model & Profit Logic
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Last updated 7:39 PM on 4/6/26
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18 Terms
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What are the three components of a business model?
CVP, value delivery, profit formula
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What is value delivery?
The system of activities, resources, and processes that deliver value
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What is a revenue model?
How the firm generates income
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Types of revenue models
Subscription, freemium, advertising, licensing, intermediation
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Why can users ≠ payers?
Some models (ads, platforms) monetize indirectly
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What is freemium?
Free base product with paid upgrades
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Freemium challenge
Costs scale with all users but revenue comes from few
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Why is conversion rate critical in freemium?
It determines profitability
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What is the “cash flow curve”?
Early losses followed by potential profitability
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