Skip to content

CMA Final · Entrepreneurship and Startup · Types of New Age Business

A Bengaluru startup offers a free basic version of its accounting app to small traders and charges a monthly fee only for advanced features such as GST filing automation and multi-user access. Which revenue model is the startup using?

The startup uses the freemium model. It gives a basic app free of charge to build a wide user base and earns revenue by charging a recurring fee for advanced features. It is not a razor-and-blade or commission model, since no consumables or transaction fees are involved.

  1. AFreemium modelCorrect
  2. BRazor-and-blade model
  3. CCommission-based marketplace model
  4. DFranchise licensing model

Explanation

The basic product is free to attract a large user base, and revenue comes from converting some users to a paid premium tier. This is the freemium model. The razor-and-blade model would sell a base product cheaply and earn from repeated purchase of consumables, which is not the case here.

Did you get it right without looking?

One question tells you little. A timed set on Types of New Age Business shows your real accuracy, how long you take and where you lose marks.

Practise Types of New Age BusinessFree diagnostic mock

More Types of New Age Business questions