What is revenue model? Revenue model is a way to generate revenues, like charging your customers or advertising. There are few types of revenue models which are:
- sales: companies generate additional revenue from selling merchandise or services over their websites. For example: Wal-Mart sells a good online.
- transaction fees: a company will receive the commission based on the volume of transaction made. However, there is usually a fixed fee per trade.
- subscription fees: the customers will pay for a certain amount , usually monthly,to get some services. For example, AOL's access fee.
- advertising fees: companies charge the others for advertising their products and services on their sites.
- affiliate fees: companies receive the comissions by referring the customers to the other websites.
Google's Revenue Model
Google offers targeted advertising solutions and global Internet search solutions. Advertising is the major revenue model that drives Google’s growth as a business-services company. It's revenue model include Google AdWords, Google AdSense and Froogle.
Google AdWords
It is a Google’s search advertising program. AdWords ads appear on the right side (and sometimes at the top) of Google search pages which also called "sponsored links. With AdWords pay-per-click pricing, advertisers pay for their ad only when a Google user clicks on it. The AdWords program offers a quick way to place your site on a search results page without necessarily being in the Google index.
Google AdSense
AdSense is a method of making money on your site. the advertisers enter into this program to enable text, image and video advertisements on their sites instead of using the Adwords. When a visitor clicks one, the AdSense publisher shares the cost-per-click ad revenue with Google. The ads are supplied by Google, and in fact are the same AdWords you see on Google search results pages.
Froogle
Froogle is a service that consumers can search the information online about products and services. It also called" Google product Search". It is a price engine website and is different from the other price engines neither charges any fees for listings, nor accepts payment for products to show up first. It also makes no commission on sales.
Amazon.com's Revenue Model
Amazon.com is the largest online retailer in the world, perhaps the best known as well. Nearly everyone has purchased something through Amazon, and their offerings cover almost every possible retail area including books, music, housewares, movies, toys and many more. The major revenue of Amazon comes from Amazon Maketplace and affiliate fees.
Amazon Marketplace
Amazon Marketplace allows sellers to offer their goods by the Amazon's offerings . Consumers can buy the items sold directly by a third party through Amazon.com using Amazon Marketplace. This strategy is very profitable for Amazon.com. Also, it provides a means to find items for sale that are no longer in print, like certain books and CD’s that are no longer manufactured. The examples are: kelkoo.com, shopping.com and susale.com
Affiliate Fees
As the largest operating affiliate program, Amazon Associates attracts members with its huge variety of product offerings. So, it does not have to ship these used items to the affiliates in other countries. It also can boost sales at a very low cost by leveraging the thousands of affiliates they have all over the world. Today, it is among the largest and most successful online affiliate program, with over 1,000,000 members world-wide.Visitors to an Amazon affiliate site (a site that links to products for sale on Amazon) will fetch the site owner a 15 percent commission on every new item sold at a discounted price.
eBay's Revenue Model
Apart from Amazon.com, eBay is an online auction and shopping website in which people and businesses buy and sell goods and services, with more than 125 million internet users registered worldwide. The benefits provided by online trading are extensive as the consumers are and the opportunities to sell to or buy from a global market from the comfort of your home with the great flexibility in payment and transaction options.
eBay generates revenue from a number of fees. The eBay fee system is quite complex; there are fees to list a product and fees when the product sells, plus several optional fees, all based on various factors and scales. In addition, eBay now owns the PayPal payment system which an additional commission fee is charged. The vast majority of eBay’s revenue is for the listing and commission on completed sales. Advertising and other non-transaction net revenues represent a relatively small proportion of total net revenues and the strategy is that this should remain the case Advertising and other net revenues totalled $94.3 million in 2004 (just 3% of net revenue). These are some of the eBay’s revenue sources:
- Fees to list an item: for regular auctions, fees is charged according to a starting price for vehicles, fees is charged according to a type of vehicles, for real estate, fees is charged according to the properties and listing type
- Picture Service Fees: first picture is free, for the additional picture or bigger picture, fees will be charged.
- Final value fees: for regular auction, fees will be charged when met the closing bid, for vehicles, charged when the first bid over the reserve price is placed For real estate, a fixed fee for land where there is successful high bid and no fees for other type of real estates.
- Reservation Price Fees: charged only if item not sold, a function of reserve price.
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