Most startups emerge from entrepreneurs’ sheer passion to develop something that satisfies their creative inquisitiveness, and therefore they are often clueless as to how to monetize their products and services – or perhaps they end up developing something that is impossible to monetize. So now the question is how these creative geniuses can reap the benefits of their inventions, or what they must keep in mind from a monetization point of view. To answer this question I have compiled list of business models that can potentially be used by startups to monetize their business propositions.
1.SAAS Pay-As-You-Go or Monthly Subscription Model
Widely used in this cloud-based share economy, the self-service subscription model has become an instant hit among startups these days. Salesforce pioneered this model when they offered CRM services online to businesses without the need to install any software on their local server. These services are mainly pay-as-you-go, where users can avail themselves of services as per their usage (e.g. iTunes). However some business offer monthly subscriptions, where the consumer has to pay a fixed monthly cost for usage. (e.g. Hootsuite, & NetFlix)
2.Pay-per-click or Call to Action Display Advertising
This is one of the very old models and is mainly used by the publishing industry or businesses who have managed to build big communities. The idea is to build huge readership (e.g. Tech blogs like TechCrunch or web portal like Yahoo) for your content or create a community (like Facebook and LinkedIn) where users can engage with their friends, families, colleagues or like-minded people, and that helps service providers to understand their users’ intent and interest and to display advertisements and earn money on pay per click or call to action. (e.g. Facebook Ads)
3.eBay-Like Marketplace Model
This is an eBay model where businesses can facilitate transactions between buyers and sellers. This model can be complicated as the startup has to act as an intermediary, which means they have to make sure smooth of payment transactions, delivery, customer service, warranties and returns.
4.Affiliation Based on Price Comparison
Price comparison sites like GoCompare.com, Comparethemarket.com, Priceline.com and Kayak.com created a relatively new model among affiliate marketers where they compare a product’s price from multiple suppliers so that the consumer can choose the best one.
5.Data Licensing Model
In this API world, Data Licensing has become a very lucrative way to monetize your businesses. Usually these kinds of businesses have access to large public data from social networks and become aggregators like Gnip, DataSift and Rapportive.
6.Uber and WhatsApp like APP Economy
This is a reincarnation of the old client-server economy where users can download pieces of software (called Apps), especially on their smartphones and tablets, to play games , watch movies, go shopping etc. Just to give you glimpse of how big this economy is getting these days, recently, Uber (Taxi Booking App) and WhatsApp (direct messaging App) are valued around $17bn+ by their respective investor and buyer.
7.Amazon like Traditional Commerce
The old ecommerce still exists, where, like Amazon, businesses can sell products online. However due to a serge in smart phones and tablets, commerce is focusing very strong around the App economy.
The gist is that if you are building something you are passionate about, you must think of how you monetize your product from day one. It could be another Facebook, Twitter or call of duty game or eBay- or Amazon-like marketplace or retail stores or It may fell across several categories, as defined above, but the sooner you have an idea of how your venture will make money, the more likely is your chance of success.
