Question 1

Google's "cost-per-click" model is a type of ______ revenue model.

Accepted Answer

Google's "cost-per-click" model is an advertising revenue model, where advertisers pay Google each time a user clicks on their ad.

Question 2

Pam developed an iPhone app and gave Apple permission to sell the app to its customers.Through what revenue model does Pam get revenue?

Accepted Answer

Pam gave permission (i.e., a license) for Apple to sell her app, thus she will receive revenue through a licensing revenue model. Choice B, unit sales, would apply if Pam sold the app directly to customers herself. Copyright (C) pertains to legal ownership of original works, while advertising (D) generates revenue through displaying ads to app users, which may not be relevant to Pam's revenue model.

Question 3

Cylle installs a unique home entertainment center.He charges a flat fee of $1,200 for the system and the installation.What revenue model does Cylle employ?

Accepted Answer

Cylle employs the unit sales revenue model as he charges a flat fee for the entertainment center and its installation. This means that the revenue is generated through the sale of a unit, which in this case is the home entertainment center.

Question 4

In which revenue model does an existing business allow another party to trade under the name of that business?

Accepted Answer

This is describing a franchising revenue model, where an existing business (the franchisor) allows another party (the franchisee) to use its name and business model in exchange for fees and royalties.

Question 5

Intermediation revenue is associated with ______.

Accepted Answer

Intermediation revenue refers to the revenue earned through the use of third parties or middlemen, who facilitate transactions between buyers and sellers. This includes services such as distribution, marketing, and sales that are performed by intermediaries. It does not necessarily involve direct buyer-seller relationships or repeat sales, although these may be influenced by the role of the intermediary. Dispute management may be a part of the services provided by intermediaries, but it is not the primary source of intermediation revenue.

Question 6

A company's plan for how it will earn income and generate profits is called the ______.

Accepted Answer

The answer of A company's plan for how it will...

Question 7

Airbnb is considered an intermediation revenue model because it ______.

Accepted Answer

Airbnb connects home renters with homeowners and charges a commission for this service, making it an intermediation revenue model. Option A is incorrect as Airbnb does not exclusively help people in the real estate industry but rather connects renters and homeowners. Option B is partially correct as Airbnb does advertise on behalf of homeowners/renters, but the commission charged is the main revenue stream. Option D is not relevant to the question as it does not describe the revenue model of Airbnb.

Question 8

Which of the following would be considered an intangible?

Accepted Answer

An iTunes download is an intangible because it is a digital product that cannot be physically touched or held.

Question 9

A business model ______.

Accepted Answer

A business model is not the same as a revenue model as it includes more than just how revenue will be earned. Instead, a business model describes how a venture will create, deliver, and capture value, including determining how profits will be made.

Question 10

Why is the razor-and-razor-blade model also known as the printer-and-ink model?

Accepted Answer

The razor-and-razor-blade model involves selling a product (razor) at a low cost, but then making a profit on the consumable items (razor blades). The printer-and-ink model operates in the same way, where the printer is sold at a low cost, but the ink or toner is priced much higher, allowing the manufacturer to make a profit on the consumable item.

Question 11

The razor-and-razor-blade revenue model ______.

Accepted Answer

The razor-and-razor-blade revenue model involves offering an item at no or low cost to encourage the sale of expensive complementary or disposable products later. This model is also known as the "bait-and-hook" model.

Question 12

In which revenue model do third parties such as brokers generate money?

Accepted Answer

In the intermediation revenue model, third parties such as brokers generate money by facilitating transactions between buyers and sellers, providing services such as matchmaking, market making, or aggregation. Therefore, the intermediaries make their profit by charging a fee, commission, spread, markup, or subscription from both sides of the market, or by controlling the access, data, or standards of the platform. In contrast, the licensing revenue model monetizes the intellectual property of a product or service by granting a permission or authorization to use it for a fee or royalty; the franchising revenue model allows a business to expand by selling its brand, system, and support to franchisees who operate under its guidelines; the freemium revenue model relies on offering a basic version of a product or service for free and charging for premium features or upgrades.

Question 13

Revenue can be described as which of the following?

Accepted Answer

Revenue is the income gained from the sale of goods or services. It does not include money from loans, contributions, or other sources of income. It is also not the same as all the money a company has to work with, as that could include assets, investments, and other forms of capital. It is also not the same as the income gained from sales minus the cost of creating the goods, which is referred to as gross profit or gross margin.

Question 14

Which of the following is the role of the broker in an intermediation revenue model?

Accepted Answer

The role of the broker in an intermediation revenue model is to organize transactions between buyer and seller. They act as a middleman between the two parties and facilitate the transaction process. They do not necessarily represent either party in legal cases nor do they sell to the ultimate buyer (that is the seller's responsibility).

Question 15

The revenue model associated with giving permission to other parties to use protected intellectual property in exchange for fees is called the ______.

Accepted Answer

The revenue model associated with giving permission to other parties to use protected intellectual property in exchange for fees is called the licensing revenue model.

Question 16

Tony owns a bicycle shop where he sells bicycles,repairs them,and sells accessories.How many revenue streams does Tony's business have?

Accepted Answer

Tony's business has three revenue streams: selling bicycles, repairing bicycles, and selling accessories.

Question 17

Carol sells a downloadable product that uses bar codes to conduct comparison shopping.Carol's product is an example of ______.

Accepted Answer

Carol's product is downloadable and does not involve physical goods or franchising/licensing. Therefore, it is an example of an intangible sale.

Question 18

Which of the following is true about a revenue model?

Accepted Answer

A revenue model is a key component of the business model as it details how the company will generate income from its products or services. It outlines the pricing strategy, sales channels, and customer segments. It is not the same as a business model, although it is a related aspect of it.

Question 19

Which revenue model measures the amount of revenue generated by the number of items sold by the company?

Accepted Answer

The unit sales revenue model measures the revenue generated by the number of items sold by the company. This model is often used by retail and e-commerce companies.

Question 20

Brent has designed a barbeque smoker that will sell for $29.99 and appeal to campers.The product uses a disposable unit that will protect the food during smoking and make cleanup easier,which customers can replace after 8-10 uses.What revenue model is Brent planning on?

Accepted Answer

Brent is using a razor-and-razor-blade revenue model where the initial smoker is sold at a lower price, but the disposable replacement units will generate long-term revenue.

Quiz 9: Creating Revenue Models