Revenue Model

1. Revenue Model • Revenue=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 is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold. • Assess the potential sources of revenue • franchise/co-branding/referral fees • focussed advertising • specific content sales • fees from e-commerce transactions, etc. • direct sales

2. Revenue Model • Pricing strategy for each source of revenue • What is the pricing strategy of the direct or indirect competitors? • What level of gross margins هامش الربح الاجمالي(revenue less cost of the product/service) would be reasonable? هامش مجمل الربح = مجمل الربح ÷ صافى المبيعاتوتوضح هذه النسبة العلاقة بين صافى إيراد المبيعات وتكلفة البضاعة المباعة • How should the pricing of the competitors be monitored? • How does the pricing reflect the brand image of the product/service?

5. For new products, the pricing objective often is either to maximize profit margin or to maximize quantity ( market share). To meet these objectives, skim pricing and penetration pricing strategies often are employed.

7. The pricing objective depends on many factors including cost, existence of economic of scale, barriers to entry, product differentiation, rate of product diffusion, the firm’s resources, and the product’s anticipated price elasticity of demand • price elasticity of demand=an important aspect of a product’s demand curve and it is how much the quantity demanded changes when the price changes. The economic measure of this response is the price elasticity of demand.