How companies make money!

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Presentation transcript:

How companies make money! Revenue Streams How companies make money!

Advertising Revenue Typically, fees are generated from advertisers in exchange for advertisements, which is ultimately the classic principal among the revenue models besides sales. Examples: Google, Twitter, New York Times, Turner http://en.ecommercewiki.info/fundamentals/revenue_models

Transaction fees A company receives commissions based on volume for enabling or executing transactions. The revenue is generated through transaction fees by the customer paying a fee for a transaction to the operator of a platform. Examples: Amazon, EBay http://en.ecommercewiki.info/fundamentals/revenue_models

Franchise and Royalties Franchisees pay a fee to the fanchisor to purchase the right to use its brand name, logos and trademarks. The franchisee also pays royalty payments based on sales revenue. Royalties are received by the holder of patents and copyrights from others who are granted the use of their inventions or creations.

Sponsorship Revenue This is a form of below-the-line promotion in which the companies pay to be associated with certain events or people. Examples: Nike/Michael Jordan Coca-Cola/World Cup

Subscription Fees Users are charged a periodic (daily, monthly or annual) fee to subscribe to a service. Many sites combine free content with premium membership. Subscribers use the content whenever they want. Examples: Wall Street Journal, Netflix

Merchandise When companies rely on selling merchandise in addition or to compliment their product. Examples: Disney sells plush toys that are in the form of the characters in their movies. Movie theatres sell popcorn and sodas in addition to their movie tickets.

Dividends Being a shareholder of other companies entitles a business to payments of dividends. Example: VW owns shares in Porshe and Suzuki.

Donations Financial gifts from individuals or other organization to a business. Charities and non-profits rely heavily on donations. (This doesn’t usually happen in private sector businesses.)

Interest Earnings Businesses can earn interest on their cash deposits in the bank. Example: Apple in 2013 had a cash balance of $137.1 billion.