ECONOMICS: Economic model

Revenue Drivers

Do I have a wide variety of revenue drivers or only a few?

The Radar really only have one revenue driver, that’s advertising sales. The magazine could potentially receive some revenue from a subscription for magazine home delivery, but that would be in the future.  

Are my prices negotiable?

Yes the ad prices are negotiable.

How often do I change my prices? Is it frequently (hourly, daily, weekly, or biweekly)? Moderately frequently (monthly, bimonthly)? Or rarely (semiannually, annually or longer)?

The printed prices will not change very often – if so, on an annual basis.

Do I use bundling, market segmentation pricing, loyalty schemes, etc?

Yes there is bundling, if you purchase all four issues for the entire year, you receive a discount.

Margins

Are my margins relatively low (e.g., a grocery store) or high (e.g., a jewelry store)?

Margins are high.

Do I offer highly customized services which allow me to charge significantly higher prices?

Service is not customized in the general sense, but considering that we are placing your specific ad in our magazine. It’s customized in that sense.

Volumes

Do I have significant capacity constraints?

There are 41 pages available in the magazine for ads. At the expense of some of the other content – we could include more ads. Or we could increase the number of pages in the publication if needed to increase ad space; so, no there are no significant capacity constraints.

Am I a relatively high, medium or low volume business?

The Radar is a medium to high volume as we could decrease the number of full page ads and sell partial pages; which would increase the volume per page and total revenue.  

What is the quantity of items sold relative to the competition over a specific time period?

Since The Radar is a quarterly publication, they are selling fewer units during a one month period than the competition. Most of the competition is either a bi-monthly or a monthly publication. In the case of the newspaper – The Guardian is actually a weekly publication.

What is the average value of a transaction in my business and how does that fare against competition?

The average value of a full page ad in The Radar is more than the value of a full page ad in The Gainesville magazine. However the average value is less than the value of a full page ad in The Home magazine and The Guardian weekly newspaper.

Do I offer highly customized services which decreases the volumes I can process, or are my goods and services very standardized allowing me to increase my business’s volumes?

Print ads by their nature are customized in content, but they are standardized in size. The customization is not a hindrance for a print advertisement.

Cost Structure

What is my business’s proportion of fixed to variable costs? If you have a high fixed costs structure, you have high operating leverage which means it takes longer to reach breakeven, but once there, much more of your revenue flows straight to the bottom line. High operating leverage (high fixed costs) suggests a riskier venture, at least initially. 

The Radar magazine has high fixed costs with medium volume and high margins.

Do I outsource so as to convert certain fixed costs into variable costs?

The vast majority of my fixed costs are because of outsourcing to freelancers. Even with using freelancers those are costs that have to be paid disregarding the number of magazines that are printed or the number of ads which are sold.

Second, draw conclusions on how attractive your combination of margins, volumes, operating leverage, and revenue drivers

The Radar magazine has high fixed costs with medium volume and high margins. This is a medium flexible model. The revenue sources are flexible with medium to high margins, volumes and fixed costs.