ONLINE EARNINGS MODELS: WHICH DO YOU CHOOSE?
You have an idea for an online revenue model: starting online business by marketing a digital product or service or digitally transforming your current business. We at Duodeka have developed the digital transformation model for the development of online revenue models.
There are various online revenue models to make your business succeed digitally. A distinction can be made between the following online revenue models: The Brokerage Model, The Utility Model, The Advertising Model, Infomediary, The Merchant Model, The Manufacturer Model, The Community Model, The Subscription Model and The Affiliate Model. We will explain the above online revenue models to you, get inspired!
THE BROKERAGE MODEL
Do you want to develop a digital platform or a digital market to allow companies and consumers to offer their products there? Then you work according to The Brokerage Model. A revenue model according to this model can be business-to-business, business-to-consumer or consumer-to-consumer. The revenue model of such a business model is usually that the platform / digital market charges a commission per transaction. Well-known examples of online revenue models based on this model are booking.com, Ebay and PayPal.
THE UTILITY MODEL
The next revenue model that we highlight is The Utility Model. This model is based on the measurement of usage, or a ‘pay as you go’ approach. A well-known example of this model is, for example, electricity and water consumption. Online revenue models according to The Utility are Google Drive and Skype. With Google Drive you pay more as you need more storage space. Skype charges users more the longer they call.
THE ADVERTISING MODEL
In the Advertising Model, a website offers content and/or services in combination with advertisements (for example, banners or sponsored content). This model can be very profitable if your website generates a lot of traffic. This makes it interesting for companies to advertise on your website, especially if you have similar target groups. So do you have a website with a lot of traffic? Then The Advertising Model is a revenue model that can certainly become profitable for you! Well-known examples are endless, for example Google and The New York Times.
An infomediary collects, analyzes and sells data about consumers or a market to other parties. These parties often aim to get to know their target group or market better. An example of an Infomediary is Nielsen. That company measures online viewing audience. If you have a passion for data collection and analysis, an Infomediary is an attractive revenue model for you.
THE MERCHANT MODEL
The Merchant Model is perhaps the best-known example of an online revenue model: e-commerce. A wholesaler or retailer sells his or her products digitally. The prices can be based on fixed amounts or on bids. On the Dutch market, Zalando is a well-known example of a company that uses The Merchant Model.
THE MANUFACTURER MODEL
Do you already sell your products to consumers, and do you often do this through intermediaries or companies? Then The Manufacturer Model offers you an opportunity to remove these steps from your business model. You can sell your products directly to your target group via the internet. An example is laptop manufacturer Lenovo. The company previously only sold their laptops through other retail or department stores. The rise of the internet has enabled Lenovo to sell their laptops directly to consumers without needing a physical store.
THE COMMUNITY MODEL
Do you sell a product or provide a service, and do you have many customers who see themselves as true fans of your brand? Customers who return to your company time and time again? Then The Community Model offers opportunities for you. This revenue model is based on consumer loyalty. Creating a community can lead to more repeat business or even customers who will work for you (Apple has a customer service team that runs entirely on Apple fans and they do it voluntarily!). Creating a strong digital brand community can drive even more repeat business and free advertising for your business.
THE SUBSCRIPTION MODEL
The next online revenue model that we highlight is The Subscription Model, in which customers are periodically charged costs in exchange for a product or service. For example, this can be daily, weekly or monthly. A good example of an online revenue model in the Netherlands based on the Subscription Model is On That Ass. Consumers can subscribe online and then receive a pair of underpants delivered to their home every month. As with many businesses according to The Subscription Model, participants first receive a trial version at home. In addition to a trial version, a freemium version or a trial period is also widely used within this revenue model. Globally known examples of this are Netflix and Spotify.
THE AFFILIATE MODEL
The last revenue model from the series of online revenue models is The Affiliate Model. In this model, the provider of a product and/or service offers resellers a certain percentage of the turnover achieved in exchange for selling his or her product. If you sell a product or service, then this model is certainly worth considering. The company Awin specializes in helping other companies to set up an affiliate marketing network.
Developing the idea of your online revenue model into an actual product? The Business Model Canvas and the Lean Startup Method are very nice tools to get your business off the ground and to keep innovating.