Before I begin to explain popular types of startup revenue models, revenue model meaning should be addressed. Revenue model is a framework for generating revenues. It identifies which revenue source to pursue, what value to offer, how to price the value, and who pays for the value. It is a key component of a company’s business model.It primarily identifies what product or service will be created in order to generate revenues and the ways in which the product or service will be sold.
Most popular types of revenue models are:
This startup revenue model is often used by Media Businesses which use their platforms where content is provided to the customer as an advertising space.
The affiliate (or click-through) model is a popular e-commerce relationship in which an online merchant agrees to pay an affiliate in exchange for providing an advertisement and link to merchant`s website. This model is one of the most popular types of startup revenue models.
An auction is a process of buying and selling goods or services by offering them up for bid, taking bids and the selling the item to the highest bidder. This is a traditional method which uses online tools to be a startup revenue model.
In the markup model, unlike with previous models, the business buys a product or service and increases its price before reselling it to customers. This model characterizes wholesalers and retailers, who buy products from manufacturers, mark up their prices, and resell them to end customers.
The commission revenue model for startups is similar to the markup model as it is used when a business charges a fee for a transaction that it mediates between two parties. Brokerage companies or auction companies often use it as they provide a service as intermediaries and generate revenue through commissions on the sales of either stock or products.
Data Sales Model
One of the fastest growing business model categories in startup revenue models 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.
E-Commerce Revenue Model
One of the most common startup revenue models is e-commerce model. This revenue model is the implementation of any of the other revenue models online.
Fee For Services Revenue model
In the fee-for-service startup revenue model, unlike in the subscription model, the business only charges customers for the amount of service or product they use.
Freemium works by offering a product or service free of charge (typically digital offerings such as software, content, games, web services or other) while charging a premium for advanced features, functionality, or related products and services. For example, a fully functional feature-limited (“lite”) version may be given away for free, with advanced features disabled until a license fee is paid. The word “freemium” is a portmanteau combining the two aspects of the . business model: “free” and “premium”. It has become a highly popular model, with notable success.
With the licensing model, the business that owns a particular content retains copyright while selling licenses to third parties. Software publishers sell licenses to use their programs rather than straight-out sell copies of the program.
Marketplace Revenue Model
Marketplace, a means by which the exchange of goods and services takes place as a result of buyers and sellers being in contact with one another, either directly or through mediating agents or institutions.
In the production model, the business that creates the product or service sells it to customers who value and thus pay for it.
Rental Revenue Model
Renting is an agreement where a payment is made for the temporary use of a good, service or property owned by another.
In the subscription revenue model, the business provides a product or service to a customer who in return pays a pre-determined fee at contracted periods of time to the business. The customer will be required to pay the fee until the contract with the business is terminated or expires, even if he is not using the product or service but is still adhering to the contract. Possible examples are flat-rate cellular services, magazines and newspapers.
Transaction Processing is not a “net native” startup revenue model. There have been businesses built up around processing transactions for a long time. But the Internet and Mobile present some challenges in processing transactions and therefore there are opportunities to build substantial businesses around helping companies process transactions.