Revenue model for Google, Amazon.com and EBay

Revenue model is a description of how the organization will earn revenue, produce profits, and produce a superior return on invested capital. The major revenue models are:

Sales revenue model: A company gets the revenue by selling goods, information or services.

Transaction fee revenue model: A company receives a commission for enabling or executing a transaction. It is based on the volume of transactions made.

Advertising revenue model: A company provides a forum for advertisements and receives fees from the companies that advertise their products.

Subscription revenue model: A company charges a subscription fee for the users that access to the content and services offered.

Affiliate revenue model: A company receives commissions for referring customers to others web sites.


Google’s Revenue Model
A major percentage of Google yearly income is generated by the advertising revenue model. Google advertising revenue model includes Google AdWords, Google AdSense and Froogle.

Google AdWords is pay per click advertising program of Google designed to allow the advertisers to present advertisement to people are looking for information related to what the advertiser has to offer. Google generate most of the revenue from Google AdWords.

Google AdSense is an ad serving program. Website owners can enroll in this program to enable text, image and, video advertisements on their sites. These ads can generate revenue on either a per-click or per-thousand-impressions basis.

Froogle is a price engine website launched by Google Inc. It is a service from Google that makes it easy to find information about products for sale online.

Besides, Google is currently testing a new advertising program that pays site owners based on a Cost-Per-Click model, called Cost-Per-Action. It differ from AdSense ads in that a site owner gets paid whenever a visitor clicks on an ad and performs a specific action, such as purchasing a product from the advertiser.


Amazon.com Revenue Model
Next to Ebay, the best known name on the Web is Amazon. It was one of the first major companies to sell goods by Internet. Amazon generates revenue primarily by selling books, videos, electronics, and kitchen equipment on domestic and international Web sites, such as Amazon Marketplace.

Amazon Marketplace is Amazon.com’s fixed price online marketplace that allows sellers to offer their goods alongside Amazon’s offerings. Buyers can buy new and used items sold directly by a third party through Amazon.com using Amazon Marketplace. This sales strategy and program has been very profitable for Amazon.com. Amazon charges a commission rate based on the sale price, a transaction fee, and a variable closing fee. Which are sales revenue model and transaction fee revenue model.

Moreover, Amazon.com also generates revenue by Affiliate revenue model. Amazon was one of the first online businesses to set up an affiliate marketing program. AStore is an Amazon.com affiliate product which website owners can use to create an online store on their site. The store does not allow website owners to sell their own products directly. Website owners pick products from Amazon’s store and earn referral fees on the products purchased by their readers. The fee structure is currently the same as for the other affiliate links and ranges from 4% to 10% of the product price.

Ebay Revenue Model
Ebay is an online auction and shopping website in which people and businesses buy and sell goods and services worldwide. Millions of collectibles, appliances, computers, furniture, equipment, vehicles, and other miscellaneous items are listed, bought, and sold daily. EBay generates revenue from a number of fees such as insertion fees, promotional fees, and final value fees.

Insertion fees: When an item listed on Ebay, this nonrefundable fee is charged.

Promotional fees: Fees that charged for additional listing options that help attract attention for an item, such as highlighted or bold listings.

Final value fees: Commission that charged to the seller at the end of the auction.

Furthermore, Ebay generate revenue by sales revenue model through its subsidiary, Half.com, offers fixed price, person-to-person selling of goods, including books, CDs, videos and games, charging a 15% commission on completed sales.

Additionally, a portion of Ebay’s revenue also comes from direct advertising on the site, as well as end to end service providers whose services increase the speed of transactions. The acquisition of PayPal, whose products allow the exchange of money over the Internet, brings additional transaction based fee revenue.