Question 1

How does the business Chicago Food Planet Food Tours generate revenue?

Accepted Answer

The business generates revenue through food tasting tours and business courses for entrepreneurs.

Question 2

This revenue model measures the amount of revenue generated by the number of items sold by the company.

Accepted Answer

Unit sales measure the revenue generated by the number of units/items sold by the company. This revenue model is commonly used in the retail industry where sales volume is an important metric to measure success. The other options, razor and razor blade, data revenue, and intermediation, refer to different revenue models that are based on different metrics such as recurring revenue, data usage, and commission-based revenue.

Question 3

What can be sold as unit sales?

Accepted Answer

All of these options can be sold as unit sales, as unit sales refer to the sale of individual units of a product or service, whether they are physical goods, intangible items, or services offered by the hour.

Question 4

The razor-and-razor-blade revenue model:

Accepted Answer

The razor-and-razor-blade revenue model refers to a marketing strategy where a low-cost physical product (razor) is sold to encourage the purchase of more expensive products (razor blades). This model is often used in industries where there is a high degree of product differentiation and the cost of switching between products is low.

Question 5

Which of the following would be considered an intangible?

Accepted Answer

An iTunes download is a digital product and is intangible, meaning it cannot be physically touched or seen. Clothing, food, and hardware are tangible items that can be physically handled.

Question 6

A revenue stream is best defined by which of the following?

Accepted Answer

A revenue stream is defined as the particular method or methods that a business uses to earn money from its customers or clients. It could be through sales of products or services, subscription fees, advertising revenue, licensing fees, etc.

Question 7

Different revenue streams may affect which of the following:

Accepted Answer

The answer of Different revenue streams may affect which of...

Question 8

Intermediation revenue is associated with:

Accepted Answer

Intermediation revenue is generated through the involvement of intermediary brokers who facilitate transactions between buyers and sellers. Such brokers charge a fee or commission for their services, thereby earning revenue. Direct buyer-seller relationships may not involve intermediaries and hence are not associated with intermediation revenue. Repeat sales and dispute management may be associated with intermediaries but are not directly related to intermediation revenue.

Question 9

Which of the following is true about a revenue model?

Accepted Answer

A revenue model is a key component of the business model as it outlines how a business is going to generate income or revenue.

Question 10

Knowing how many customers will be needed is important because:

Accepted Answer

Knowing how many customers are needed will help a business determine the level of effort required to generate enough revenue for success. This can inform business decisions such as pricing, marketing, and sales strategies. The other choices, such as having many customers or reselling to the same customer, are not necessarily the primary goals of a business and may not be sustainable in the long term. The number of customers may also impact profit, but this is not the only consideration for success.

Question 11

Brent has designed a barbeque smoker that will sell for $29.99 and appeal to campers.The unit includes a disposable unit that will protect the food during smoking and make cleanup easier.What revenue model is Brent planning on?

Accepted Answer

Brent's plan of including a disposable unit that needs to be replaced after each use suggests that he is using the razor and razor blade revenue model. The initial smoker unit is sold at a lower price to attract customers, and the disposable unit, which needs to be frequently replaced, is sold at a higher price to maintain a steady revenue stream.

Question 12

In spite of the type of business, all businesses need to generate:

Accepted Answer

Revenue is essential for any business to survive and grow. Without generating revenue, a business cannot sustain its operations, pay its expenses, or invest in future growth. While customers, products, and services are important, they are all means to an end - generating revenue.

Question 13

If a company has two revenue streams, what must the entrepreneur ask in relation to revenue?

Accepted Answer

The entrepreneur must ask how much each revenue stream will contribute to the total revenue to understand the significance of each stream and prioritize which stream to focus more on. The other options are also important questions, but they are not as crucial as determining the contribution of each stream to total revenue.

Question 14

A business model:

Accepted Answer

A business model focuses on how a product or service will serve a market need, outlining the value proposition, target customers, and the strategy for delivering the product or service.

Question 15

Which of these questions will not provide information for the revenue model?

Accepted Answer

While understanding how your service adds value to your customer is important, it does not directly provide information about the revenue model. The other options all relate directly to revenue generation.

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?

Accepted Answer

Cylle employs a unit sales revenue model, where he charges a flat fee for the product and installation. This means he is earning revenue based on the number of units (in this case, home entertainment centers) he sells.

Question 17

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

Accepted Answer

The razor-and-razor-blade model is based on selling a product (razor or printer) at a low cost, but then making profits by selling consumables (razor blades or ink/toner) at a higher price. The printer-and-ink model is another example of this business strategy, where printers are sold at a lower price point, but the cost of ink or toner cartridges is significantly higher.

Question 18

Revenue can be described as which of the following?

Accepted Answer

Revenue is the money a company receives from the sale of goods or services. Option A is too broad and includes money received from sources other than sales, while option B includes money from loans and contributions which are not considered revenue. Option D describes gross profit, which is revenue minus the cost of creating the goods.

Question 19

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

Accepted Answer

Tony's business has three revenue streams: selling bicycles, repairing bicycles, and selling accessories. Each of these activities generates revenue for the business, hence three separate streams.

Question 20

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

Accepted Answer

Carol's product is a downloadable item, which is not a physical good, making it an intangible sale.

Quiz 10: Creating Revenue Models