1. BUSINESS & REVENUE
MODELS

2. BUSINESS MODELS
business model involves the following choices:
1. Value proposition – how to deliver value to the
customer
2. Market offering – what will sell, where, …
3. Resource system – what facilities, …
4. Financial model – how will you charge for
your product or service

3. Value Proposition
 Choice of target segment
 Choice of what benefits you will offer
 Choice of capabilities

4. Market Offering
 Identify scope of the offering
 Address customer decision process
 Match product/services to customer decision
process:

5. What resources to deploy ?
 Resource system shows how a co must
align its internal “systems” and partners to
deliver the benefits of the value proposition

6. Financial Models
 Revenue Model
 Shareholder value models
 Growth models

7. Revenue Models
 P roduct/service information (infomediary)
 A dvertising (Google Adwords, Adsense)
 S ale/transaction (eCommerce – buy/sell)
 S ubscription (to a service – Bloomberg, Dunn &
Bradstreet, Prowess DB, …)

8. Shareholder Value Models
User Derived:
 Metamarket- hub for many buyers/sellers, multiple
categories; e.g., BabyCenter.com
 Auctions- competitive bid hub: eBay, Freemarket
 Category switchboard- aggreg brands: PlanetRX
Company Derived:
 Best Information- Zagat, NYTimes
 Wildest assortment- Secondspin.com
 Lowest Price- Buy.com, Lowestfares.com
 Most Personalized- Reflect.com

9. Revenue Growth Models
 Deeper penetration into current market
(existing product)
 New product development (existing market)
 New market development (existing product)
 New products and new markets
On-line and off-line space

10. Types of e-business models
generally they are classified on the following
basis :-
1. 2.
Parties connected transaction types
e.g B2B, B2C etc

11. business models : transaction
types
Aggregator Brokerage Value chain
CONTROL
Manufacturer Info-mediary Advertising
High
Low
Subscription Affiliate Community
Low VALUE INTEGRATION

12. Agregator Model
 Virtual Merchant – Pure Play e-tailers
(Amazon)
 Catalog Merchant – Levenger
 Bit Vendor – Avast
 Surf-and-turf

13. Brokerage Model
 Buy/Sell Fulfillment  Market Exchange
(eTrade,TradeIndia) (ChemConnect)
 Trading Community  Buyer Aggregator
(VerticalNet,Goozex  Virtual Mall
) (Yahoo!Store)
 Distributor  Auction Broker
(ConvergeTrade) (eBay)
 Metamediary  Classifieds
(Zshops)  Search Agent
 Reverse Auctions (DealTime)
(priceline.com)

14. Value Chain Model
Value chain moves business away from discrete
streams of data about the product being made to
one unified pool of information

15. Infomediary Model
 Recommender System – ePinions
 Registration Model – NYTimes.com

16. Advertising Model
 Generalized Portal – AOL
 Personalized Portal – MyMSN
 Specialized Portal / Vortal
 Attention/Incentive Marketing – CyberGold
 Free Model – Blue Mountain
 Bargain Discounter – Buy.com

17. Other Models
 Manufacturer Model – Intel, Apple
 Affiliate Model
-Banner Exchange, Pay-per-click,
-Revenue Sharing
 Community Model:
- Voluntary contributor model (NPR)
- Knowledge Networks (Deja, Guru, ..)
 Subscription Model (WSJ)
 Utility Model – use based

18. business models: parties
involved
 B2B (Business-to-Business)
 B2C (Business-to-Consumer)
 C2B (Consumer-to-Business)
 C2C (Consumer-to-Consumer)

19. Revenue Model
 Revenue Is the amount of money that a
company actually receives during a specific
period, including discounts and deductions
for returned merchandise. It is the "top
line" or "gross income" figure from which costs
are subtracted to determine net income.
Revenue = Price of goods and services X no. of
units

20. Five Cases revenue models:
 Advertising model
 Subscription model
 Transaction fee model
 Sales model
 Affiliate model

21. Advertising model
 Simply you have website and provides a
contents and forum for advertisements and get
fees from advertisers.
 The advertising model is an addition of the
traditional media model. The web site,
provides content which always free and
services like email, IM, blogs and users
accepts advertising messages in the form of
banner ads.

22.  To attract users to its site, leading Web portal
Yahoo! offers things like free e-mail, extensive
content, and travel services. The firm got its
start in early 1995 when founders Jerry Yang
and David Filo put together a simple list of
favorite Web sites.

23. Subscription model
 A company offers it users content or services
and charges a subscription fee for access to
some or all of it offerings.
 where a customer must pay a subscription
price to have access to the product/service.
The model was pioneered by magazines and
newspapers, but is now used by many
businesses and website.

24.  Industries that use this model include mail
order book sales clubs and music sales clubs,
cable television, satellite television providers
with pay-TV channels, satellite radio,
telephone companies, cell phone companies,
internet providers, software providers,
business solutions providers, financial services
firms, fitness clubs, and pharmaceuticals, as
well as the traditional newspapers, magazines
and academic journals.

25. Transaction fee model
 There are businesses offering services for
which they charge a fee based on the number
or size of transactions they process. The
business provides information to the
customers which is required to complete a
transaction and revenue is purely earned on
that basis.

26.  For example, online travel agents receive a
fee for facilitating a transaction that includes
the making of travel arrangement for their
clients, as well as, advising them about
lodging, transportation etc. Stock brokerage
firms also use this model as they charge their
customers a commission for each transaction
of stocks/shares executed through them.

27. Sales model
 A company derives revenue by selling
goods, information, or services.
 Here the merchants provide goods and
services online but based on list prices or via
auction.
 Examples: wwww.1800flowers.com
 This site sells the flowers online, and deliver
your order almost everywhere in US.

28. Affiliate model
 A company steers business to an affiliate
and receives a referral fee or percentage of
the revenue from any resulting sales.
 Example: www.movies.com
 This site uses Amazon Associates Web
Services to deliver a complete marketplace of
DVDs.