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Chapter 1
Introduction to the Profit Model: Income
and Expenditure Sources and Modes
1
Our previous books, Discovering Business Models , Reconstructing Business Mod-
2 3
els , Business Model of Philanthropy , and Approaching Business Models from an
4
Economic Perspective were published between 2009 and 2012. They systematically
illustrated and analyzed the “six elements of the Wei-Zhu business model”. The
books became bestsellers, and now we feel it is necessary to introduce the principle
of the core elements in an overall theoretical business model framework and the
characteristic business models. We will begin with the Principles of Profit Models.
The profit model is one of the core elements described in the six elements of the
Wei-Zhu business model which focuses on transaction pricing by stakeholders in
the transaction structure. The analysis, innovation and design of a profit model can
usually translate into huge corporate value for key enterprises, and bring enormous
transactional value to all stakeholders.
The innovation and design of a profit model normally follows specific rules. If
the principle behind it can be mastered, you can get twice the results with half the
effort. However, without the principle, work can be wasted.
The profit model is clearly defined in itself, but many enterprises and scholars
are confused about the connotation and denotation of the profit model. They tend to
confuse the profit model with a business model or pricing.
Only in distinguishing the profit model from a business model and pricing, and
clarifying the scope of definition of profit model, can we truly grasp its meaning,
and better understand and design a profit models based on principles.
1 Wei and Wuxiang (2009)
2 Wei and Wuxiang (2010)
3 Weixian and Wei (2011)
4 Wei et al. (2012)
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