It is an exciting time when you are ready to take your product to the market. At this stage, you should have found a market where your business can generate revenue. So how do you go about creating a solid revenue model?
There are several factors to take into consideration when you set out to bring your product to market, like the industry; you’re in, the best channel to reach your customer, pricing etc. This is why we have made a list of 10 effective revenue models for start-ups;
1. Freemium Model; this is one in which a company offers basic services for free and additional premium functions or services are made available at a price. By using this model, customers get a taste of your product or service, which entices them to pay for more.
2. Subscription Revenue Model; offer your customers a product or service that they can pay for over a longer period of time, usually month to month or even year to year. This is a great model for generating recurring revenue.
3. Ad-Based Revenue Model; this entails creating adverts for a specific website, service, app or other product and placing them on strategic high traffic channels. Making money from adverts is one of the simplest and easiest ways to implement a revenue model.
4. Affiliate Revenue Model; this works by promoting links to relevant products and collecting a commission on the sales of those products. If you use an affiliate revenue model, it generally makes more money than ad-based revenue models.
5. Indirect Sales Model; this consists of agents or resellers selling your products for you. The indirect sales model is ideal for companies who have products that are incremental sales for their channel and can produce an incremental profit.
6. Free Products, Paid Services; here companies give out free products but customers are required to pay for installation training or other additional services. It is a great model for building trust with customers and increasing brand awareness.
7. Transactional Revenue Model; this model is one of the most direct ways of generating revenue as it entails a company providing a service or product and customers paying for it. It is a simple method with a wider set of options.
8. Direct Sales; this model requires having a sales team of some sort, with either someone calls in to place an order or sales agent calling prospects.
9. Percentage Based Model; this model is popular for eCommerce, online platforms and affiliates where the revenue is based on a percentage of each completed transaction. According to Inc., Amazon led the way with this model; however, distributors have been using it in retail for years.
10. Lease/Rent Model; this is common where a physical asset is involved. This revenue strategy involves recurring or one-time payment for temporal use of the asset.
Now that you know some of the most popular start-up revenue models, you can figure out what kind of business model is best for you. Most important do more research and you can combine more than one model as this determines how your business makes money.
