Facebook Revenue Model

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FACEBOOK

SUBMITTED BY:

NEHA CHOUDHARY

ABOUT FACEBOOK:

This is the era where technology leads to innovation and internet serves as the lifeline of various business processes across the world .Facebook today has become a synonym for people across the world to connect with others and share their thoughts and ideas.

THE CASE:

Shareholders passed a resolution asking to generate revenues from the increasing user base. The charge could be some monthly fee or from a new unit being added. The latest revenue of Facebook is quoted as $1.6 billion and net income of $500 million. The company is planning to go for an IPO in near future and also the valuation of the company is $100 billion.

THE APPROACH:

To formulate a plan the following factors have to be kept in mind:

• The demography of the users and the time spent on Facebook

• Utility derived by the users from Facebook

• What factors or features would justify charging a user

THE CURRENT REVENUE MODEL:

Facebook currently earns its revenue from the following sources:

• Brand ads
• Facebook's ad deal with Microsoft
• Virtual goods
• Self-service ads

THE PLAN:

Charging customers for something which they have been habituated to using for free is a challenge in itself. The most immediate and instant reaction which comes is that they repent from availing the facility. In a world of cut throat competition losing customers may bring a halt or downturn to the growth path of a company. In this case the most critical factor to be considered and thought of is that when a customer is availing a service free of charge why would they suddenly start paying for it until and unless they are provided with some facilities with added benefits to them and...
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