Techmall Case Analysis

Topics: Revenue, Income statement, Fee Pages: 4 (1135 words) Published: July 8, 2011
1. What are the revenue streams for TechMall?

TechMall’s revenue streams are rather simplistic. They receive a $750 one time set-up fee from all new merchants added into the TechMall system and a $50 statement fee, or maintenance fee, per month from all members. In addition, they receive a fee on each sales transaction, which is variable based on the dollar volume of the merchant’s transactions. TechMall’s standard pricing schedule indicates this revenue stream to be in the form of a 2% commission on all items sold by member merchants with a maximum commission receivable of $200.

2. What drives or causes each of the revenue streams and how much does Tech Mall expect to earn from an additional “sale” in each stream?

The drivers or causes of each revenue stream are as follows:

|Revenue Stream |Driver |Fee Revenue | |1- SetUp Fee |Merchant Setups |$750 | |2 - Statement Fee |TechMall System Merchants |$50/Month | |3 - Transaction Fee |Total Number of Transactions and Transaction |2% of sales, capped at $200 | | |Dollar Amount | |

Simply put, TechMall expects to earn from additional sales in each stream by overall growth. TechMall must continue to grow their business and add additional merchants to the system in order to continue to earn revenues form the setup fee revenue stream. The same is true for the statement fee, as they must continue to add additional merchants in order to experience growth from this revenue stream. In regards to the transaction fee revenue, TechMall can help grow this revenue stream by increasing advertising and increasing the...
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