Revenue Model is how are you going to make Money from your Business in simple terms. 99% of traditional businesses will have some or the other revenue model as you will never open a shop unless you have something to sell. But this is not the case in Internet startups, Take the example of Facebook or Google, these companies started with a mission to connect world and revenue model was developed later on.
What is Internet Startup?
You have a Internet Startup when the platform and medium of communication with the customers is Internet. Internet startups usually makes peoples life easier, by selling the intangible services and products. By intangible i mean in literal terms “Incapable of being perceived by the senses especially the sense of touch”, examples of which include, content, Apps, software, community, news, opinions and also services which may include wide range of options.
As this kind is a new age technology and new way of building business, thus there should be new ways of revenue model. The way you measure your success in internet startup is by looking at the number of users for your product or service. Traffic to your website is whats makes you successful. How to build traffic to your site is a complete different topic and requires lot of planning Read Social media Magic but right now lets assume that you are getting a great deal of traffic to your site and want to make some money out of it.
Revenue Models for Internet Startup
1. Sell your Product or Service
If you have a cool software which does amazing stuff then by all means you should put a price for it and charge people for using it or for buying the tool itself. Providing a needed or trusted product or service is one of the most traditional and successful revenue models. Ex: Apps which is installed on mobile for doing various stuff. you can sell content or software too. Example for a service will be one time joining fee for your community.
2. Subcriptions fees
Just like we pay newspaper and magazine subscription fees, same way you can charge your user for using your product or services. The benefit of subscription revenue model is that you have a regular flow of income every month and dont have to worry about the daily fluctuations of the website traffic.
3. Affiliate Revenue
By selling the product or services of other company on your website you can make an affiliate income. There are different ways like you get commission on every product sold through your site or by just collecting the users email id and giving it to the third party will also generate income for you. Big companies like Amazon and Ebay have their own affiliate programs which you can use to make some income by putting them on your site. i.e by displaying their books on your site you get somewhere from 5%-10% of the cover price when it is sold through your site.
4. Direct Advertising
Or you can give your product or service for free and charge someone else and not your users. Just like you see advertisement in newspaper and TV serials, you can also use this model to generate revenue as many companies want to build their brand visibility and are ready to spend on advertising. you can contact a company and by showing the daily page-views and traffic you can get a monthly or yearly contract with them and sell them a real estate on your website. This requires some amount of work to find the advertisers but can be very profitable too. Ex: Facebook
5. Contextual Advertising
You can use a third party Advertising company and use their tool to put contextual(related) Ad on your sites. These tools determine the content and put the relating advertisement on your site which your user may be interested in. The commission is earn based on the click rate and by page views your site gets. Unlike Direct Advertising you don’t have to spend time in finding and selling the Ad space to the client and no worries about billing, but you have to share your commission with the service provider so you get less profit than if you had gone for Direct Advertising. Some of the service providers are Google Adsense and Info-links.
These are the most famous models people use to generate income online, but of course you can have some innovation in the revenue model but never ever neglect revenue, as it is the life blood for your startup. Experiment and find the best model for your business All the Best!