Anything missing? Let us know in the comments.
See also our more recent post on Web App Business Models: User Needs and What People Pay For.
Business Models
| Model | Variation | Notes | |
|---|---|---|---|
| I | Immediate Revenue | Models for generating regular income, cash-flow (‘Self-Sufficient’ models) | |
| I.S | Subscription | Charge the end-user a regular, recurring fee. Consider:
| |
| I.S.F | Fixed | A single, fixed subscription cost (e.g. to access an online magazine or a specific service). | |
| I.S.V | Variable | A number of fixed-price subscriptions are available to the end-user; fee dictates feature/usage limitations, etc. This includes the ‘Freemium’ model; a (usually limited) ‘free’ option alongside one or more paid options. | |
| I.T | Third-Party Supported | The end-user receives the service for free; a third-party pays the fee for a returned service. | |
| I.T.A | Advertising | One or more third-parties place clearly defined adverts within the website/application. Variations of adverts include graphical banners, text, inline, pop-over, interstitial, etc. Normally charged by cost per click, cost per action, or cost per thousand impressions. | |
| I.T.S | Sponsorship | One or more third parties become the ‘official’ sponsor(s) of the website. This could include fixed (non-rotating, typically prominent) adverts, integration of third-party branding (colours, slogans) and/or licensing agreements. | |
| I.T.C | Paid Content | Advertorials: third-parties pay to include marketing-led content on the website. | |
| I.T.P | Paid Placement | Third-parties pay to be included in lists or in the application (e.g. comparisons, reviews, entertainment listings). | |
| I.T.R | Referrer | End-users are directed to third-party sites, which pay a fee to the website owner for any referred transactions (e.g. comparison sites). | |
| I.T.L | License Content | Third-Parties are given access to re-use the content from the web-site for their own purposes. | |
| I.P | Payments | The end-user makes individual, ad-hoc transactional purchases. | |
| I.P.U | Pay-per-use | Micropayments: the end-user is charged a fee to use an online service (one-off, or for a limited time). This includes the 'brokerage' model, where user(s) are charged a fixed-price or percentage per transaction (e.g. ebay). This also includes the purchase of ‘credits’ e.g. 10 uses of the service for a fixed cost. Discounts can be offered for bulk purchases. | |
| I.P.P | Physical Products | The typical e-commerce model; includes books, CDs, holidays, tickets, etc. Typically each ‘physical product’ has a non-arbitrary cost associated with its production. | |
| I.P.V | Virtual Products | The end-user purchases a ‘digital’ product that typically has a negligible cost of replication. This includes virtual gifts (e.g. Facebook), in-game items (e.g. World of Warcraft), and other virtual assets (e.g. land in Second Life). | |
| I.P.R | Related Products | The end-user has free access to the main product/service. An additional, optional charge is made for related ‘added value’ products/services, e.g. documentation, support, commercial versions, related iPhone or Android application, etc. | |
| I.P.D | Donations | The website relies on voluntary end-user donations (e.g. a ‘Tip Jar’). | |
| L | Long-Term Revenue | Strategic, ‘Invest and Reward’ models where costs are incurred initially for a longer-term ‘pay off’. | |
| L.E | Establish and Exploit | Attract a substantial audience before monetizing. | |
| L.E.R | Re-use/Re-sell | Re-sell/re-use the data/content, usually from User Generated Content websites e.g. create books, posters or other purchasable products from data/content created on site. | |
| L.E.P | Platform | Establish a platform, then charge for third parties to participate once an audience has been established e.g. iPhone. See also Facebook. | |
| L.E.B | Branding | Build a ‘personal brand’ for yourself/your company. Once awareness is raised, go on Conference/Workshop/‘Expert’ circuit, or release a book, etc. | |
| L.S | Sell/Exit | Create a popular application/website, then make it someone else’s problem to monetize e.g. YouTube | |
Meta-Models
The following business models can be applied in addition to most of the basic revenue models described above.| Model | Variation | Notes | |
|---|---|---|---|
| M.R | Revenue Share | End-users are offered a cash incentive to make the website/application generate revenue, by sharing a percentage of revenue with them (usually based on their personal referrals or popularity of their content). | |
| M.R | Re-Seller | The end-user can re-sell the online service. | |
| M.R.A | Affiliate | The end-user is paid to direct customers to the website, typically by listing/selling the products/services elsewhere. | |
| M.R.W | White Label | The end-user can brand/tailor the online service and re-sell it as their own (typically taking a percentage of the generated revenue, or paying a fixed subscription cost to the original service). |
Popular Business Models
We spent a few hours going through the Webware 100 Top Web Apps for 2008, analysing the business model(s) used by each. The chart below shows the results of this survey: 34% use Advertising, 12% a Variable Subscription model, and 8% each for Virtual Products (typically digital downloads), Related Products (typically a large software company offering a free product to attract you to their platform) and Pay-Per-Use.
No comments:
Post a Comment