Which model is used to define profit allowed per transaction after covering the costs?

The transaction fee model is appropriate for defining the profit allowed per transaction after covering the costs. This model focuses on the fees charged for each transaction, subtracting associated costs to determine the profit made from that particular transaction. It is commonly used in industries such as e-commerce, finance, and online services, where each interaction or transaction can be precisely measured and priced.

In this model, the business sets a fee that accounts for costs like processing and service fees. Once these expenses are covered, the remaining amount constitutes profit. The effectiveness of this model hinges on accurately estimating transaction costs and strategically setting fee structures to ensure profitability.

Understanding this model is crucial as it allows businesses to maximize profits by evaluating transaction costs and setting appropriate pricing, directly linking costs to each transaction and driving strategic pricing decisions. Other models may deal with pricing strategy or budgeting approaches but do not specifically focus on per-transaction profitability.