ITS business and revenue models Chapter | 10 121Markup
It is the most common and oldest revenue model in businesses. It involves set-
ting up the selling price of the good by adding profits and overhead charges to
its cost price. This revenue model is found among retailers, wholesalers, etc.,
who act as middlemen and buy the products from manufacturers/other parties
before selling it to others.
Commission
A commission revenue model is a transactional revenue model where a party
charges commission for every transaction/action it mediates between two par-
ties or any lead it provides to the other party. This model is the most common
revenue earning strategies among the online marketplaces where they provide
a platform for selling items digitally and charge a commission as a percentage
or fixed price on every item sold. Examples of these include affiliates, brokers,
and auctioneers.
Rent/lease
Rent/lease revenue model is common where a physical asset is involved. This
revenue earning strategy involves recurring (rent) or one-time (lease) payment
for a temporary use of the asset.
Advertising
An advertising revenue model is usually adopted by media houses and informa-
tion providers which usually earn money by including advertisements in the
content provided. This revenue model is popular in both offline and online busi-
nesses and the company makes money by charging the advertiser: per size of the
space offered, thousand impressions or per click on the advertisement.
Licensing
The licensing revenue model is common among inventors, creators, and intel-
lectual property owners which grant a license to use their name, products, or
services at a predetermined or recurring cost. It is common among many soft-
ware companies and legally protected intellectual property (patents, trademarks,
copyrights) owners which grant a license limited by time, territory, distribution,
volume, etc., to anyone who fulfils their requirements and pays for it.
Interest
An interest-based revenue strategy or an investment based revenue strategy is
common among banks and prepaid wallet service providers. Banks usually gen-
erate revenue in the form of interest on their offerings (loans) and prepaid-wallet
service providers like PayTM & PayPal generate their revenue by depositing the
money kept in their e-wallets in escrow bank accounts.