Earnings model
Also called: revenue model, settlement model, revenue model, profit model or business model
The revenue model is how a business generates revenue. The simplest revenue model is that of a store, which receives revenue at a time when a customer buys and pays for an item of their choice there. However, many other revenue models are possible.
The way a company settles with the customer in exchange for services rendered is not only a practical part of business operations. The settlement model also determines how the company markets itself. The revenue model is an important part of the business model.
Do new customers need to make a large investment, or can they get in easily? Is the company going for large one-time transactions, or recurring revenue? Is the customer really the customer, or is the customer the product and the business model consists of selling ads or user data?
Examples of revenue models
Some examples of possible revenue models:
- Sale of products or services for regular (one-time) payment
- Offering free services with option to upgrade for a fee
- Paying based on content viewed(pay per view)
- Driving repeat purchases(vendor lock-in)
- Offering subscription, rental and leasing arrangements
- Selling advertising space
- Receive compensation as an affiliate for bringing in customers
- Leasing (usage) rights and patents by providing licenses
