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Why Should You Know About Different Revenue Model?

By CIOReview | Thursday, November 28, 2019

There are several revenue models, and the startups have to choose the right one that delivers the highest value for businesses.

Fremont, CA: Revenue model is the key component for every business model. It is how a startup makes money and delivers value. Businesses must choose the right one because implementing the wrong revenue model can cause failure. Some tools help firms to design the right model for them. Revenue models can be implemented easily when competition and consumer models are considered. Knowing different models helps find the right model for the customers. Here are some revenue models that every business should know.

1. Imagine a situation where a startup makes money only when the demand is fulfilled as needed or on-demand. If a problem one looking to solve is frequent but inconsistent, the on-demand models might be a feasible option. A wide range of industries like transportation, hospitality, food, and healthcare have experienced the changes in the customer solve problems on demand. Foodpanda, Foodora, and Airbnb are few known examples of on-demand startups.

2. Over the past decade, the e-commerce model has grown exponentially as more and more buyers rely on the internet for every purchase. New models, like dropshipping, are gaining popularity where retailers don’t handle the products themselves instead buy them from a third-party vendor and shipped directly to the consumers.

3. Some membership sites offer paying members certain advantages, products, or services for a fixed usually a yearly or monthly fee. Thus it is a gated part of online business where only members who subscribe can access the content behind the gates. Amazon Prime offers members the following benefits, including FREE fast shipping for eligible purchases, streaming of movies, TV shows and music, exclusive shopping deals and selection, unlimited reading, and more.

4. Many big companies like Adobe and Microsoft sell licenses. Some unique and proprietary digital products can be delivered to businesses and consumers in many ways, like licensing and software as a service (SaaS). Selecting between the right models for business is a critical task where the right model for the startup will depend on product, consumer needs, the market, and the competition.

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