Building or launched a web site/application? Check out the choices below on how to generate money from your hard work. Note that these are not mutually exclusive: consider mixed hybrid models too.
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Models for generating regular income, cash-flow (‘Self-Sufficient’ models)
I.S
Subscription
Charge the end-user a regular, recurring fee. Consider: Minimum contract lengths Buy X (days/months/weeks) get Y (d/m/w) free First X (d/m/w) free (‘Trial period’) Discount periods Pay to remove adverts Pay for additional (‘premium’) content Pay for API/advanced features Pay for support subscription
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.
As Head of Ecommerce, Allie oversees every aspect of ecommerce strategy at Box UK, shaping and strengthening our offering to support the delivery of high-quality and high-performance ecommerce solutions for our clients.
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