After you’ve come up with a profitable idea for your software startup, the first thing to do is to start looking for the appropriate business model.
A business model defines how a company will generate value for its customers and takes into account many factors, such as defining your customers, their problems, and ways to solve them. In short, it is a strategy for managing your business. Here are a few examples of business models that are in high demand:
1. Freemium Model
The freemium business model (free + premium) is one of the most popular ones. The thing is that this model offers its consumers basic functions for free while getting more advanced services (premium features) for an additional fee.
The companies that use this business model include LinkedIn, Vimeo, Dropbox, Evernote, Skype, MailChimp, Gmail for Businesses, and Adobe PDF Reader.
2. Subscription-Based Model
This model is one of the most convenient options for client-service interaction. The essence of the subscription-based model is that a product or service sells on a subscription basis rather than on a one-off basis.
It’s more convenient for users because most people will make a decision to invest $10 a month more easily than investing $100 on the spot. And the lower the prices are, the more people will be able to use your services. Another advantage is the ability to quickly and easily gather information about consumer preferences.
The companies that use this business model include Netflix, SkillShare, BirchBox, Adobe, New York Times, Salesforce, Google Apps, and Spotify.
3. Reseller Model
In this case, you don’t produce or even own any of the products that you sell to your customer. Instead, you’re representing a company or a brand and getting a profit by promoting their offers to your target audience.
The pros of the reseller model are its lower inventory risk and a reduced cost because it needs fewer salespeople.
Examples of the companies using this business model are Amazon, eBay, Avon, Amway, Godaddy, and Bluehost.
4. Ad-Based Model
At the core of this model lies a free product or service. The ad-based model requires you to have a large customer base or audience. The larger your audience is, the higher your profits will be. As you understand, the profits in this model come from advertising services you provide to other companies/brands.
The best examples are Facebook and Google.
Each of the startup business model examples we’ve mentioned above is good in its own way. Nevertheless, the best idea may be to combine a few models together or create your own one.
Of course, the technical component of your business model is important. If you want to build an effective business model, you also need high-quality custom software. If you are looking for a good software development company, please don’t hesitate to get in touch with Onix.