Deck 9: Creating Revenue Models

Question 1

A business model ______.

A)is the same as a revenue model
B)describes how a venture will create,deliver,and capture value
C)determines how profits will be made
D)determines how revenue will be earned

Answer 1

B

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?

A)licensing
B)unit sales
C)copyright
D)advertising

Answer 2

A

Question 3

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?

A)intermediation
B)razor-and-razor-blade
C)intangible sales
D)subscription

Answer 3

B

Question 4

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

A)intermediation revenue model
B)licensing revenue model
C)franchising revenue model
D)freemium revenue model

Question 5

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

A)fee revenue model
B)licensing revenue model
C)intellectual property model
D)intermediation model

Question 6

Revenue can be described as which of the following?

A)all the money that a company has to work with
B)the money from loans,sales,and contributions
C)the income gained from the sale of goods or services
D)the income gained from sales minus the cost of creating the goods

Question 7

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

A)one
B)two
C)three
D)four

Question 8

Airbnb is considered an intermediation revenue model because it ______.

A)helps people in a real-estate-related industry
B)advertises on behalf of the homeowner/renter
C)charges a commission for connecting home renters with home owners
D)is purely web-based

Question 9

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

A)franchising
B)licensing
C)advertising
D)data

Question 10

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

A)subscription
B)unit sales
C)data revenue
D)intermediation

Question 11

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

A)The technique is only used by printing companies.
B)The razor blade is not used that much today,whereas printers are ubiquitous.
C)The printer is sold at a low cost,but ink or toner is priced much higher.
D)Printers are expensive,but ink is readily available.

Question 12

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

A)Brokers sell to the ultimate buyer.
B)Brokers organize transactions between buyer and seller.
C)Brokers represent the buyer in legal cases.
D)Brokers represent the seller in legal cases.

Question 13

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

A)an intermediation revenue model
B)a franchising revenue model
C)a brokerage model
D)an advertising model

Question 14

Which of the following would be considered an intangible?

A)a t-shirt
B)a gym membership
C)a refrigerator
D)an iTunes download

Question 15

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

A)a tangible revenue model
B)an intangible sale
C)a franchising revenue model
D)a licensing revenue model

Question 16

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?

A)licensing revenue
B)unit sales
C)data revenue
D)intermediation revenue

Question 17

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

A)revenue model
B)business model
C)revenue stream
D)business plan

Question 18

Which of the following is true about a revenue model?

A)It is the same as a business model.
B)It is a separate planning model from the business model.
C)It is minor component of the business model.
D)It is a key component of the business model.

Question 19

Intermediation revenue is associated with ______.

A)direct buyer-seller relationships
B)the use of third parties (or "middlemen")
C)repeat sales
D)dispute management

Question 20

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

A)includes tangible and intangible sales
B)involves offering an item at no or low-cost to encourage the sale of expensive complementary or disposable products later
C)involves the sale of a high-cost product with easy-to-replace parts
D)includes additional products as an add-on to the sale

Question 21

What is a likely reason why someone would pay money for a franchise?

A)They are not aware of basic business practices.
B)They will not have to spend the same amount of time marketing and building the brand.
C)They do not have knowledge in the industry or business model.
D)They will not have to work as hard in running the business.

Question 22

What revenue model mixes free basic services with premium or upgraded services?

A)utility and usage revenue model
B)professional revenue model
C)freemium revenue model
D)premium revenue model

Question 23

The four key revenue drivers are ______.

A)customers,frequency,selling process,price
B)profit,sales,employees,selling process
C)selling process,price,employees,profit
D)customers,revenue streams,frequency,price

Question 24

Joe owns a construction company and prices his services based on labor hours and the cost of material.Which of the following revenue models is Joe using?

A)data revenue model
B)utility and usage revenue model
C)professional revenue model
D)franchising revenue model

Question 25

What is the first key driver of revenue?

A)price
B)selling process
C)customers
D)frequency

Question 26

A cell phone company offers a promotion in which it gives away a free phone to people who purchase the highest-level data usage plan.This is an example of which of the following?

A)balance subsidies
B)promotional subsidies
C)direct cross-subsidies
D)risk reduction subsidies

Question 27

Which of the following refers to the model that gives a product away to one party but charges another party?

A)dual system
B)multiparty business
C)single-party marketing
D)double-bind pricing

Question 28

What revenue model charges customers fees based on how often goods or services are used?

A)data revenue model
B)utility and usage revenue model
C)professional revenue model
D)franchising revenue model

Question 29

A popular restaurant offers a free meal.At the restaurant,it turns out that drinks are not included.The drinks sell for above market rates.This is an example of which of the following?

A)direct cross-subsidies
B)multiparty markets
C)price gouging
D)distributed pricing

Question 30

How do free newspapers like Metro gain revenue from free products under the freemium model?

A)They operate as nonprofits.
B)They are sponsored by wealthy patrons.
C)They are paid to feature advertisements.
D)They get donations from users.

Question 31

Clinton owns a popular coffee shop in downtown Seattle.Rather than open up a second shop,he allows another business owner to use his company name and follow the same operations.The second business owner,in turn,pays him an initial monthly fee for operational support and the use of the company name.What revenue model does this represent?

A)intermediation revenue model
B)franchising revenue model
C)licensing revenue model
D)professional revenue model

Question 32

What is the primary source of revenue for Skype,the company that offers online video and phone service?

A)the fees it charges for a connection
B)the fees it charges for Skypeout,the service that calls land lines and cell phones
C)the fees it charges for long-distance communications
D)its monthly subscription fee

Question 33

The revenue driver that is addressed when a company offers a frequent shopper award is ______.

A)frequency
B)price
C)selling process
D)customers

Question 34

What revenue model provides professional services on a time and materials contract?

A)data revenue model
B)utility and usage revenue model
C)professional revenue model
D)franchising revenue model

Question 35

What revenue model involves charging customers to gain continuous access to a product or service?

A)licensing revenue model
B)franchising revenue model
C)revolving revenue model
D)subscription revenue model

Question 36

What is the main reason customers are attracted to direct cross-subsidies?

A)They get two products for the price of one.
B)It eliminates or reduces the upfront cost of a product or service.
C)It is the most cost-effective model.
D)They rarely calculate the true costs.

Question 37

Which of the following refers to pricing a product or service above its market value to pay for the loss of giving a product away for free or below its market value?

A)direct cross-subsidies
B)price plus
C)freemium plus
D)BOGO pricing

Question 38

Myhours.com offers a free individual time reporting system.However,it charges for additional users and services.This is an example of what revenue model?

A)utility and usage revenue model
B)professional revenue model
C)freemium revenue model
D)premium revenue model

Question 39

A mobile telephone company charges a base fee plus additional minutes for data usage.What revenue model is demonstrated in this example?

A)data revenue model
B)utility and usage revenue model
C)professional revenue model
D)franchising revenue model

Question 40

When Sally placed cookies along the side counter of her coffee shop,which revenue driver was she addressing?

A)frequency
B)price
C)selling process
D)customers

Question 41

What are the two types of costs that should be taken into consideration when understanding cost drivers?

A)cost of goods sold and operating expenses
B)cost of startup and cost of operations
C)cost of pre-startup and cost of operations
D)employee costs and infrastructure costs

Question 42

What pricing strategy packages goods together at a lower price than if they were sold separately?

A)bundled pricing
B)discount pricing
C)fair pricing
D)introductory offer

Question 43

A grocery store offers cans of vegetables at 10 for $10.This is most likely which of the following pricing strategies?

A)skimming
B)fair pricing
C)psychological pricing
D)customer-led pricing

Question 44

Another term for an income statement is ______.

A)profit and loss statement
B)income tax statement
C)balance sheet
D)credit report

Question 45

In what pricing strategy a new product is offered for a heavily discounted price (or free)to attract more customers?

A)introductory offer
B)skimming
C)customer-led pricing
D)psychological pricing

Question 46

Kelly charges a premium price for her marketing services.In her sales pitch,she makes sure that she distinguishes key elements of quality not offered by her competitors.What key revenue driver is Kelly addressing by doing this?

A)frequency
B)price
C)selling process
D)customers

Question 47

The cost of running the business,including rent,utilities,administration,salaries,marketing,etc.,is referred to as which of the following?

A)cost of goods sold
B)operating expenses
C)infrastructure costs
D)nonsales costs

Question 48

In what pricing strategy customers are asked how much they would pay for the product?

A)skimming
B)loss-leader pricing
C)customer-led pricing
D)competition-led pricing

Question 49

A form of pricing high,what strategy is used for new products that have no competition?

A)customer-led pricing
B)competition-led pricing
C)skimming
D)loss-leader pricing

Question 50

In what pricing strategy prices are guided by the price other businesses set for similar products and services?

A)customer-led pricing
B)loss-leader pricing
C)competition-led pricing
D)psychological pricing

Question 51

In target-return pricing,the price is determined by which of the following?

A)the maximum amount that your customers will pay
B)the cost of creating the product and adding a profit margin
C)how much you have invested in your business
D)what you need to charge to meet your company goals

Question 52

Cost-led pricing refers to which of the following pricing calculations?

A)calculating the cost of manufacturing and delivering the product and adding a profit margin
B)calculating the cost based on how much profit you have targeted in your business plan
C)calculating the price based on the maximum price a customer will pay
D)calculating the price based on competitive products

Question 53

The financial report that measures the financial performance of your business on a monthly or an annual basis is the ______.

A)profit and loss statement
B)income tax statement
C)balance sheet
D)credit report

Question 54

______ is the degree to which both businesses and customers believe that the pricing is reasonable.

A)Lowest-cost pricing
B)Loss-leader pricing
C)Customer-led pricing
D)Fair pricing

Question 55

The costs that include design,material,manufacturing,packaging,and other costs before a sale can be made to the customer are referred to as ______.

A)customer directed costs
B)presales costs
C)cost of goods sold
D)operating costs

Question 56

The income statement ______.

A)subtracts the cost of goods sold from the total revenue to determine net income
B)subtracts the operating expenses from the total revenue to determine net income
C)subtracts the cost of goods sold and operating expenses from the total revenue to determine net income
D)reports all income with no adjustment for cost of goods sold or operating expenses

Question 57

In what type of pricing customers are encouraged to believe that the product is less expensive than it really is?

A)skimming
B)fair pricing
C)psychological pricing
D)customer-led pricing

Question 58

Mehmet's café sells coffee for only $.50,which is less than it costs,but Mehmet hopes customers will come for the coffee and end up buying sandwiches and pastries.What sort of pricing strategy is Mehmet pursuing?

A)psychological pricing
B)loss leader
C)introductory offer
D)customer-led pricing

Question 59

What method of pricing involves pricing the product based on how it benefits the customers?

A)target-return pricing
B)customer-led pricing
C)value-based pricing
D)psychological pricing

Question 60

Depreciation can be thought of as ______.

A)the cost of wear and tear on physical assets
B)a discount placed on certain aspects of your business
C)the result of business losses
D)the value of used goods

Question 61

The income statement is a report that measures the financial performance of your business on an annual or monthly basis.

Question 62

Companies may generate revenue by giving away part of their product or service.

Question 63

In general,reducing operating costs is the most effective way of yielding long-term gains.

Question 64

The operating profit represents the amount left over from revenue once all costs and operating expenses are subtracted.

Question 65

In an income statement,taxes are the last expense item before net income.

Question 66

A company will be more profitable if it focuses on one primary revenue model.

Question 67

Regardless of the type of business,all businesses need to generate revenue.

Question 68

Skype is an example of a company generating revenue from "free."

Question 69

A business model and a revenue model are the same thing.

Question 70

Cost of goods sold includes rent expense and firm-marketing fees.

Question 71

A company prices a product at market levels but packages the product to read "introductory pricing." This would indicate which of the following pricing strategies?

A)customer-led pricing
B)psychological pricing
C)freemium pricing
D)bundled pricing

Question 72

A revenue model explains how an entrepreneur will make money from delivering on the customer value proposition.

Question 73

An advertising revenue model gets revenue through advertising products and services.

Question 74

An introductory offer is a form of high pricing,generally used for new products or services that face very little or even no competition.

Question 75

Due to an increase in online sales,the advertising revenue model has seen decreased revenues for startups.

Question 76

If a new company starts with a website offering free services for teachers and later sells classroom posters,the company is generating revenue from "free" business model.

Question 77

Real estate brokers represent an intermediation revenue model because they help manage the transaction between the home seller and the home buyer.

Question 78

An example of unit-priced sales is selling music in iTunes.

Question 79

A new company can reduce the cost of goods sold by negotiating with manufacturing source.

Question 80

The razor-and-razor-blade model is an example of an intermediation revenue model.