ENTR 2030 QUIZ 4 QUESTIONS & ANSWERS
Revenue - Answers -the income gained from sales of goods or services
Revenue model - Answers -a key component of the business model that identifies how
the company will earn income and make profits
Types of revenue models - Answers -Unit sale, advertising, data, intermediation,
licensing, franchising, subscription, professional, usage, freemium
Unit sales revenue model - Answers -generating revenue by the number of items
(units) sold by a company
Two different types of unit sales - Answers -Physical goods and intangibles
Variation of the unit sales revenue model - Answers -Razor-and-razor-blade model
(also known as the printers-and-ink model)
Advertising revenue model - Answers -generating revenue by advertising products and
services
Cost-per-click - Answers -charges the advertiser a fee every time a user clicks on the
ad
Cost-per-action - Answers -advertisers pay only when the click converts to an actual
sale of a product or service
Data revenue model - Answers -generating revenue by selling high-quality, exclusive,
valuable information to other parties
Intermediation revenue model - Answers -the different methods by which third parties
such as brokers (or "middlemen") can generate money. It is the amount of revenue
generated by facilitating exchange between two parties
Brokers - Answers -the people who organize transactions between buyers and sellers
Licensing revenue model - Answers -earning revenue by giving permission to other
parties to use protected intellectual property (patents, copyrights, trademarks) in
exchange for fees
Franchising revenue model - Answers -the process whereby the owner of an existing
business (known as the franchisor) sells the rights to another party (known as the
franchisee) to trade under the name of that business
, What does the franchisor do? - Answers -helps the franchisee by providing support in
marketing, operations, and financing
What does the franchisee do? - Answers -pays the franchisor royalties based on an
agreed percentage of sales
Subscription revenue model - Answers -charging customers to gain continuous access
to a product or service
Professional revenue model - Answers -earning revenue by providing professional
services on a time and materials contract
Examples of people who employ the professional revenue model - Answers -
Consultants, lawyers, and accountants. They often charge by the hour for their services
Utility and usage revenue model - Answers -a pay-as-you-go model that charges
customers fees on the basis of how often goods or services are used
Freemium revenue model - Answers -mixing free (mainly web-based) basic services
with premium or upgraded services
Types of free financial models - Answers -Direct cross-subsidies, multiparty business
Direct cross-subsidies - Answers -pricing a product or service above its market value to
pay for the loss of giving a product or service away for free or below its market value
Multiparty business - Answers -giving one party a product or service free, but charging
the other party (or parties)
Revenue drivers - Answers -customers, price, selling process, frequency
Cost drivers - Answers -cost of goods sold and operating expenses
Cost of goods sold (COGS) - Answers -the direct cost of producing a product. Occur
when a sale takes place
Operating expenses - Answers -the costs of running your business, including your rent,
utilities, administration, marketing/advertising, employee salaries, and so on
What can cutting operating expenses do? - Answers -It can yield beneficial short-term
gains, but does not always work in the long term
Income statement (or profit and loss statement) - Answers -a financial report that
shows revenue, expenses, and profit for a period of time, typically a month, quarter, or
year
Revenue - Answers -the income gained from sales of goods or services
Revenue model - Answers -a key component of the business model that identifies how
the company will earn income and make profits
Types of revenue models - Answers -Unit sale, advertising, data, intermediation,
licensing, franchising, subscription, professional, usage, freemium
Unit sales revenue model - Answers -generating revenue by the number of items
(units) sold by a company
Two different types of unit sales - Answers -Physical goods and intangibles
Variation of the unit sales revenue model - Answers -Razor-and-razor-blade model
(also known as the printers-and-ink model)
Advertising revenue model - Answers -generating revenue by advertising products and
services
Cost-per-click - Answers -charges the advertiser a fee every time a user clicks on the
ad
Cost-per-action - Answers -advertisers pay only when the click converts to an actual
sale of a product or service
Data revenue model - Answers -generating revenue by selling high-quality, exclusive,
valuable information to other parties
Intermediation revenue model - Answers -the different methods by which third parties
such as brokers (or "middlemen") can generate money. It is the amount of revenue
generated by facilitating exchange between two parties
Brokers - Answers -the people who organize transactions between buyers and sellers
Licensing revenue model - Answers -earning revenue by giving permission to other
parties to use protected intellectual property (patents, copyrights, trademarks) in
exchange for fees
Franchising revenue model - Answers -the process whereby the owner of an existing
business (known as the franchisor) sells the rights to another party (known as the
franchisee) to trade under the name of that business
, What does the franchisor do? - Answers -helps the franchisee by providing support in
marketing, operations, and financing
What does the franchisee do? - Answers -pays the franchisor royalties based on an
agreed percentage of sales
Subscription revenue model - Answers -charging customers to gain continuous access
to a product or service
Professional revenue model - Answers -earning revenue by providing professional
services on a time and materials contract
Examples of people who employ the professional revenue model - Answers -
Consultants, lawyers, and accountants. They often charge by the hour for their services
Utility and usage revenue model - Answers -a pay-as-you-go model that charges
customers fees on the basis of how often goods or services are used
Freemium revenue model - Answers -mixing free (mainly web-based) basic services
with premium or upgraded services
Types of free financial models - Answers -Direct cross-subsidies, multiparty business
Direct cross-subsidies - Answers -pricing a product or service above its market value to
pay for the loss of giving a product or service away for free or below its market value
Multiparty business - Answers -giving one party a product or service free, but charging
the other party (or parties)
Revenue drivers - Answers -customers, price, selling process, frequency
Cost drivers - Answers -cost of goods sold and operating expenses
Cost of goods sold (COGS) - Answers -the direct cost of producing a product. Occur
when a sale takes place
Operating expenses - Answers -the costs of running your business, including your rent,
utilities, administration, marketing/advertising, employee salaries, and so on
What can cutting operating expenses do? - Answers -It can yield beneficial short-term
gains, but does not always work in the long term
Income statement (or profit and loss statement) - Answers -a financial report that
shows revenue, expenses, and profit for a period of time, typically a month, quarter, or
year
