Selling On The Web: Revenue Models and Building A Web Presence

Selling on the web: revenue
models and
building a web presence
A business model (BM) is a broad term outlining everything
concerning the main aspects of the business, all of which are
contained in the answers to the following questions.
• What value will we create?

• How will we deliver it?
• How will we bring in revenue?
• How will we earn profit?
• A revenue model is a part of the business model that explains
different mechanisms of income generation and its sources. This is a
high level answer to the question that asks how we will generate
revenue from the value we bring to a certain customer group.
• The simplest example of a revenue model is a high traffic blog that
places ads to earn profit. Web resources that generate content for the
public, e.g. news (value), will make use of its traffic (audience), to
place ads. The ads in turn will generate revenue that a website will
use to cover its maintenance costs and staff salaries, leaving the
profit.
Revenue model vs revenue stream
• A revenue model is used to manage a company’s revenue streams,

predict income, and modify revenue strategy. The revenue itself is
one of the main KPIs for a business. Measuring it annually or
quarterly, we are able to understand how our business operates in
general, and whether we should change the way we sell the products
or charge for them.
Revenue model types
• Any start-up, tech company, or digital business may operate with

multiple revenue sources and, consequently, with different revenue
models. Depending on the industry and the product/service type, the
revenue model will look differently.
• Here we will pay more attention to the most common revenue
models used in the software industry and online business.
Transaction-based model
• A transaction-based model is a classic way a business can earn money.

The revenue is generated by directly selling an item or a service to a
customer. The customer can be another company (B2B) or a consumer
(B2C). The price of the product or service constitutes the production
costs and margin. Increasing the margin, the business is able to
generate more income from sales.
• Selling products or services entails using different pricing tactics. While
some of them may be considered a separate revenue model, these are
often used in pairs. Because pricing tactics can be seen as pricing plans
in a software business, we can clearly define the following types.
pricing plans in a software business
• Licensing/one-time purchase. This entails selling a software product
by license that can be used by a single user or a group of users. The
general idea is to offer a product that requires making only one
payment for it, e.g. Microsoft Windows, Apache Server, a majority of
video games.
• Subscription/recurring payment. Unlike licensing, a user receives
access to the software by paying a subscription fee on a
monthly/annual basis, e.g. Netflix, Spotify, Adobe products.
• Pay-per-use. This pricing tactic is mostly used by different cloud-based
products and services that charge you for the computing
powers/memory/resources/time used. Examples are Amazon Web
Services, and Google Cloud Platform
• Freemium/upselling. Freemium is a type of app monetization in
which a user may access the main product for free, but will be
charged for additional functions, services, bonuses, plugins, or
extensions, e.g. Skype, Evernote, some video games.
• Hybrid pricing
Sometimes pricing plans are a mixture of more than one. So that
freemium plan might morph into some form of pay-per-use tiered plan.
After passing some limit in computation or resources, a user can be
forced or offered to use another type of pricing, for example
Mailchimp, Amazon Web Services, and SalesForce.
• The pros: Full control over the pricing strategy.
• The cons: The cons will depend on the industry/product type and
pricing tactics, as the model itself imposes constant generation of
sales with the help of advertising and marketing strategies. The only
con we might mention here is the financial burden connected with
sales you will carry on your own.
Advertisement-based model
• The advertisement-based revenue model is valid both for online and offline businesses.
It’s often used by websites/applications/marketplaces or any other web resource that
attracts huge amounts of traffic. Revenue is generated by selling ad space. This is one of
the most standard methods of gaining revenue.
• The pros: Having a high-traffic resource allows you to monetize the ad space nearly
instantly. Often, there is a high demand on advertising space, especially with organic
traffic and platforms with the target audience.
• The cons: Running advertising campaigns to gain web visibility on social networks is a
standard marketing activity with targeting instruments more precise than ever.
However, advertisements are everywhere, so you might think twice whether you want
to distract a user by placing an ad in your app – even if it is a secondary revenue stream.
• Examples: YouTube, Instagram, Facebook, Forbes, Google.
• Definition: E-wallet is a type of electronic card which is used for transactions made online
through a computer or a smartphone. Its utility is same as a credit or debit card. An E-wallet
needs to be linked with the individual’s bank account to make payments.
Descriptions: E-wallet is a type of pre-paid account in which a user can store his/her money
for any future online transaction. An E-wallet is protected with a password. With the help of
an E-wallet, one can make payments for groceries, online purchases, and flight tickets,
among others.
E-wallet has mainly two components, software and information. The software component
stores personal information and provides security and encryption of the data. The
information component is a database of details provided by the user which includes their
name, shipping address, payment method, amount to be paid, credit or debit card details,
etc.
For setting up an E-wallet account, the user needs to install the software on his/her device,
and enter the relevant information required. After shopping online, the E-wallet
automatically fills in the user’s information on the payment form. To activate the E-wallet,
the user needs to enter his password. Once the online payment is made, the consumer is

Selling On The Web: Revenue Models and Building A Web Presence

Uploaded by

Copyright:

Available Formats

Selling On The Web: Revenue Models and Building A Web Presence

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Selling On The Web: Revenue Models and Building A Web Presence

Uploaded by

Copyright:

Available Formats

Selling on the web: revenue

• What value will we create?

• A revenue model is used to manage a company’s revenue streams,

• Any start-up, tech company, or digital business may operate with

• A transaction-based model is a classic way a business can earn money.

You might also like