{"id":60921,"date":"2023-07-25T18:09:00","date_gmt":"2023-07-25T18:09:00","guid":{"rendered":"https:\/\/businessyield.com\/?p=60921"},"modified":"2023-08-31T15:11:15","modified_gmt":"2023-08-31T15:11:15","slug":"revenue-models","status":"publish","type":"post","link":"https:\/\/businessyield.com\/customer-relationships\/revenue-models\/","title":{"rendered":"REVENUE MODELS: Meaning, Practical Examples, Types (Detailed Guide)","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"\n
A business starts with a customer-value idea. If someone wants a table, we can make it, sell it, ship it, and collect payment. That\u2019s our business model. Revenue keeps our train running. Depending on the business model\u2019s complexity, revenue will cover manufacturing, distribution, marketing, and other costs until we profit. We\u2019ll define the revenue model and the relationship between business models and revenue streams. We\u2019ll also analyze different types of revenue models and look at examples to compare their pros and cons. Finally, we\u2019ll discuss recurring, SAAS, and subscription eCommerce revenue models and how to choose or develop one.<\/strong><\/p>\n\n\n\n Revenue models show how a startup business will earn revenue and cover operating costs and expenses. This model measures a company\u2019s pricing strategy and product sales profitability.<\/strong><\/p>\n\n\n\n A revenue model is a business model that generates customer value. However, these terms are related. A revenue model explains how a company makes, distributes, and sells products for profit.<\/strong><\/p>\n\n\n\n A revenue model manages a company\u2019s revenue streams from different demographics and locations.<\/strong><\/p>\n\n\n\n A revenue model can help a business grow and thrive. Companies use a revenue model to determine how much money they will need to target their sales and marketing, develop new goods and services for customers, and determine their place and future in their market. Without a revenue model, startups can incur unsustainable costs.<\/strong><\/p>\n\n\n\n Before we list the types of revenue models, remember this. Google \u201crevenue models\u201d and you\u2019ll find no universal list. Some of the examples of revenue models we give are different from others.<\/strong><\/p>\n\n\n\n These examples will help you choose business revenue models. Let\u2019s dive in<\/strong><\/p>\n\n\n\n Recurring subscriptions generate income (typically monthly, quarterly, bi-annually, or annually).<\/strong><\/p>\n\n\n\n As more companies realize the benefits of recurring revenue, the subscription revenue model has become popular. Despite the rise in new companies using this model, it\u2019s old. Consider gyms and country clubs. You pay a recurring fee for these services.<\/strong><\/p>\n\n\n\n How it works: You make money by selling single or multiple products.<\/strong><\/p>\n\n\n\n As shown in the three examples above, transactional revenue models cover a wide range of companies. Casper is an online-only retailer. SlideSalad sells online digital products. Target has a traditional storefront.<\/strong><\/p>\n\n\n\n How it works: Sell your time, expertise, or labor for a set price.<\/strong><\/p>\n\n\n\n Our oldest revenue model is service-based. Since humans have existed, they\u2019ve traded services. This model lets you build a business of any size.<\/strong><\/p>\n\n\n\n How it works: Selling ad space makes money.<\/strong><\/p>\n\n\n\n If you\u2019ve ever seen a company that makes a ton of money but doesn\u2019t sell anything to its users, it may be using an advertising revenue model. Long ago, many Facebook users didn\u2019t know what Facebook sold. Users realized they were Facebook\u2019s product. Facebook sells user attention.<\/strong><\/p>\n\n\n\n You earn a commission by recommending products and services.<\/strong><\/p>\n\n\n\n<\/a>What Is Revenue Models?<\/strong><\/span><\/h2>\n\n\n\n
<\/a>What Is the Purpose of Revenue Models?<\/strong><\/span><\/h3>\n\n\n\n
<\/a>Types of Revenue Models<\/strong><\/span><\/h3>\n\n\n\n
<\/a>#1. Subscription Revenue Model<\/strong><\/span><\/h3>\n\n\n\n
<\/a>Pros:<\/strong><\/span><\/h4>\n\n\n\n
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<\/a>Cons:<\/strong><\/span><\/h4>\n\n\n\n
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<\/a>Companies using subscription revenue:<\/strong><\/span><\/h4>\n\n\n\n
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<\/a>#2. Transactional Revenue Model<\/strong><\/span><\/h3>\n\n\n\n
<\/a>Pros:<\/strong><\/span><\/h4>\n\n\n\n
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<\/a>Cons:<\/strong><\/span><\/h4>\n\n\n\n
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<\/a>Companies that use the transactional revenue model:<\/strong><\/span><\/h4>\n\n\n\n
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<\/a>#3. Service-Based Revenue Model<\/strong><\/span><\/h3>\n\n\n\n
<\/a>Pros:<\/strong><\/span><\/h4>\n\n\n\n
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<\/a>Cons:<\/strong><\/span><\/h4>\n\n\n\n
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<\/a>Companies using service-based revenue:<\/strong><\/span><\/h4>\n\n\n\n
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<\/a>#4. Advertising Revenue Model<\/strong><\/span><\/h3>\n\n\n\n
<\/a>Pros:<\/strong><\/span><\/h4>\n\n\n\n
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<\/a>Companies that use the advertising revenue model:<\/strong><\/span><\/h4>\n\n\n\n
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<\/a>#5. Commission Revenue Model<\/strong><\/span><\/h3>\n\n\n\n
<\/a>Pros:<\/strong><\/span><\/h4>\n\n\n\n
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<\/a>Cons:<\/strong><\/span><\/h4>\n\n\n\n
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<\/a>Companies using commission revenue:<\/strong><\/span><\/h4>\n\n\n\n
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