The House
The House
Nov 20, 2017 · 5 min read

One off sale

One-off selling is a win-lose approach to revenue, where building the relationship with the customer is not important. This is type of sales is often described as ‘retail selling’ and is considered to be the traditional form of generating revenue. One off revenue models, or transactional revenue models, are less attractive than recurring revenue models, because the company has to invest something new into every sale.

Subscription

The most common example of the subscription revenue model are newspapers subscriptions. Subscriptions to magazines and gym memberships also come under this category, as well as digital and other courses.

The software sector which was once dominated by the licensing model is slowly moving towards subscription based revenue model, with companies like Trello, Basecamp and others relying on it. Netflix, the reputed American on-demand Media Company also operates on the subscription based revenue model.

Sponsorship

Sponsorship is essentially a fixed promotion. It can entail putting a logo on a website or on the jerseys of a popular sports team. Sponsorships are often sold on the audience size.

Advertising is becoming more targeted towards demographic or geographical groups, or even highly targeted towards individual users (ads on social media), but sponsorship still focuses on mass broadcasting — getting noticed by as many people as possible.

Pay Per User

The pay per use model is one of the modern trends to enter the market with the introduction of Software as a Service. The concept of it implies the offer of a range of services by a third-party provider using the internet. The services offered includes SaaS, wherein the virtual server provides the usage of the software through the cloud.

Combining these two notions results in the offering of pay per use SaaS, which essentially entails paying a small subscription fee on per usage basis every time the software is being used.

White labeling

A white label product is a product or service produced by one company (the producer) that other companies (the marketers) rebrand to make it appear as if they had made it. This model is often used for mass-produced generic products including electronics, consumer products and software packages such as DVD players, televisions, and web applications.

Some websites use white labels to enable a successful brand to offer a service without having to invest in creating the technology and infrastructure itself. Many IT and modern marketing companies outsource or use white-label companies and services to provide specialist services without having to invest in developing their own product.

Brokerage fees

The brokerage fee model works based on the fact that a broker is compensated for executing a transaction. It is usually, but not always, a percentage of the transaction value. In finance, stockbrokers most often come to mind, but real estate agents and business brokers frequently charge brokerage fees.

Advertising supported

An advertising-supported revenue model is a business approach that emphasizes the sale of advertising as a major source of revenue. This structure is most prominent in traditional broadcast and print media, as well as online media. Media businesses generally earn revenue from advertising, customer subscriptions or a combination of the two.

Data sale

One of the fastest growing business model categories is the explosion of data-driven business models, defined as a company that would not be able to exist without its core underlying data asset. In this scenario, the data is collected and then sold directly to a consumer or business customer.

Some of the companies that rely on this model are financial information businesses like Bloomberg, Reuters, Standard & Poor’s, Thomson Financial, D&B Corporation, as well as market research companies like Nielsen.

Freemium

Freemium is a pricing strategy by which a product or service is provided free of charge, but a price is charged for additional features, services, or virtual goods. For example, Dropbox offers approximately 2GB of free cloud data storage, while everything above that requires payment.

Likewise, LinkedIn, the professional social media platform, encourages its users to try their premium version for a trial period 30 days. To continue with the premium version for a longer duration, the registered user has to pay an extra amount.

Licensing

In the licensing model, a developer creates an innovation and then protects that innovation through a patent, copyright, trademark, or trade secret, and thus creates intellectual property. The owner of the intellectual property then licenses the innovation or technology to a second party whose responsibility it is to commercialize the innovation. As compensation for allowing another party to use its intellectual property, the licensor will receive a royalty.

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Business Model validation 101

This collection of posts can help you turn your ideas into money so you can invent, improve and invest.

The House

Written by

The House

We are The House, a digital branding and marketing agency. We believe in business as unusual, thinking differently to help you grow.

Business Model validation 101

This collection of posts can help you turn your ideas into money so you can invent, improve and invest.

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