When it comes to making money, the money thing that does so perfectly is a business model. Many companies fall in the long run because of a poorly designed business model.
When it comes to an internet company, a business model is what eventually translate to revenue.
In fact, the equation is,
Web traffic + Business model is equal to revenue.
So today I am going to be showing you some of them most popular business model you can use and example of companies that already use them.
It is going to be short but informative, so hang on let’s get started.
Premium upgrade business model.
This is the model used by so many software companies and mobile application producers.
This business model involves you giving a free product to the general public and then offering them a premium package for a fee.
The premium package may contain more features or other improvements such as no ads.
Most mobile apps downloaded from the Google playstore use this model.
Free to ads business model
I got to answer this particular question a lot of time, How do Facebook generate their revenue? This question leave a lot of people who are not technologically inclined in total suspense.
Think about it, Facebook doesn’t charge you for using it’s system, yet is generates millions of dollars every single month. Do you remember what we said earlier? Business model plus web traffic always equal to revenue.
So we all know that facebook has a lot of web traffic, for God sake they got over a billion active users. So what’s their business model? They use the free to ads business model. This is a business model where you offer a product, information, software or content to the general public for free while making money from advertisers that want to get their ads in front of those eyeballs.
In fact, Facebook is not the only company utilizing this business model, blogs like techcrunch and Mashable also utilize this business model by giving out their information and contents for free while making money from ads.
Profit selling business model.
This is the traditional business model we all know and is actually favourable to those selling physical products. It is the act of buying product a product for a particular price and selling it for an higher price where the difference would be equal to your profit (only if you don’t imcure extra cost in the process of selling and delivery).
Like I said earlier, while this product may work well for a physical product, it may not work well for a digital product or software.
So I strictly recommend you don’t use it for any digital product.
Subscription business model
A lot of companies are now shifting to the subscription business model because it in one of the most profitable business model and a great way to generate recurring and predictable revenue.
A subscription business model is that where people may a fee on periodically in order to gain access to a premium or gated area of your website which will contact valuable and exclusive resources such as videos and contents.
This is the kind of business model utilize by membership website and other video streaming companies like Netflix and iroko Tv
Side sales business model
Have you noticed that sometimes when you are purchasing a product especially a software, what you are actually paying for is the support that comes with it? The main product is almost free because the cost of it is actually the cost of producin it. it is then whatever you’re paying extra for that gives them the profit. It may be a support usually an email support or live chat.
This also applies when you are buying some appliances, the main appliance is not necessary where they make a profit from. When you’re buying a SIM card it’s very cheap, they don’t make profit from selling sim cards, they make their money from selling recharge card which mandatory for the Sim card to work.
One time off payment business model
This business model is actually used by everyone selling ebooks. It is the process when you just pay once and you get the products. Subsequently as the product is being updated, you will get the updated version for free that’s why it’s called the one time off payments business model. Thiis will be good if you’re selling something like it in a plugin, theme or a software that doesn’t need your server.