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The 7 Kinds of Business Models Entrepreneurs Should Consider for their Digital Startup

Having a good product or idea is only the first step in making your entrepreneurial dreams come true. You also need a good business plan, a way or method of making money off your idea and an amazing UI/UX design for either your product, or your website. Finding good agencies such as Clay, Huge or Method is not an easy task. The good news is that if you’re going the digital route, there are a myriad of methods available for you to choose from. Here are seven kinds of digital business plans you can use to make your startup profitable:

 

  1. The Subscription Model

 

Chances are, you are subscribed to a plethora of services, from Netflix to your Internet provider. Subscriptions are everywhere, and they have been around a long time for good reason — they tend to work. Subscriptions create natural benefits, such as loyal customers, as well as predictable revenue numbers. The main concern you have is the production line. If your product is the type that can produce consistent value on a monthly basis, then a subscription business model may be right for your startup.

 

  1. Go Freemium

 

One of the biggest challenges you’ll face as an entrepreneur is convincing people to spend on a brand new product from a brand new company. The Freemium model, through which you let people use the base offering for free and offer payments for additional features, solves that problem neatly. Spotify and Dropbox are two examples of how that model can become very profitable. Startups like Taskade, a collaboration tool built for remote, distributed teams, have also adopted this model. The problem you face with that path is actually making money in a predictable manner.

 

You need to balance what the free product offers with what customers can get for paying. For example, Spotify gets rid of its advertisements and allows for unlimited song skipping. Dropbox offers greater storage space and more features. Taskade provides unlimited workspaces, templates, tags, and file storage, among other additional features. Offer too much in the free product, and people may never choose to purchase paid features. Offer too little, and the product will seem too bland or useless to ever develop a strong following.

 

  1. Open Source Software

 

Giving away software for free might seem like a mad prospect, but consider that doing so is exactly what companies like Mozilla and Google have been doing for years. The secret is to not consider the software the actual money-making part of your plan — the software is there to give you clout. Mozilla’s Firefox has a tremendous number of users, granting the company leverage when it comes to deals such as distribution. Other companies offer high-level training and other related services to help people use the software to its fullest potential.

 

  1. Give It Away for Free

 

Freemium and open source business models are not the only ones that involve simply handing value over to the user. You can also utilize the free business model, where you just give the product over to the consumer, a model best exemplified by Google’s YouTube, the search engine itself, and Facebook. The main difference between the free and freemium models is how you make money. In the latter, users pay you for extra features. In the free business model, you look to other sources for profit. In essence, the users become the “product.” Consider Google’s YouTube, a fundamentally free service, and how it can generate revenue through advertising and data access.

 

  1. E-Commerce

 

The simplest way to make money digitally is to sell your product. The ability to buy products through a mobile device is ubiquitous and relatively easy. You may not even need to open your own site, although you should still consider doing so. The startup’s products can be sold through a third party, such as Amazon or Ebay.

 

  1. On-Demand Services

 

On-demand culture is rampant. The internet has given the power of choice to the end-user. No longer do they have to wait on a network schedule. If they want to watch or play something, they can get it as quickly as their connection allows. There are many ways for a product to take advantage of that need for speed. Uber and Grab are essentially using the on-demand model, ensuring that customers don’t need to wait for public transport. They just pull up the app and off they go to their destination. If you can offer a critical solution on demand, you have the potential to make a lot of money.

 

  1. Advertisements

 

Advertisements are an ancient business model that continues to soldier on, despite the average consumer’s distaste for any sort of interruption in their media. If you can offer other entities a space where they can promote their own products, you can make money. Unfortunately, that approach is limited to a specific set of products, ones that can actually sell some form of ad space. However, if you find that what you’ve created can do so, don’t hesitate. It’s a unique and profitable space.

 

The good news when it comes to choosing a digital business model as an entrepreneur is that you do not have to strictly stick to a single one. You can combine them as you wish, until you create a plan that suits your product and your startup.

Alexandru

Alexandru is the co-owner of TopDesignMag. “If it looks easy, it's hard. If it looks hard, it's impossible. If it looks impossible, it's due tomorrow. At 8 A.M.”