Best Revenue Models for Startups

All companies need a revenue model prior to presenting their product or service to the public. Although each startup has different priorities and goals there are some globally accepted and advantageous revenue model approaches. So, what are the most prominent and ideal revenue models? Why is it important to carry out a revenue model study? 

What is a Revenue Model?

A revenue model study draws a detailed frame to understand how financial income can be generated and carries out a significant part of the road map for the company’s future. In this sense, startups plan in accordance with the channels they decide on by asking the questions “Which?” and “How?” during their revenue model studies. 

Why is Revenue Model Study Important?

Without a clear and realistic revenue model study, it will not be possible to expect a startup to grow, manage its expenses or achieve sustainable success. Therefore, it is crucially important to identify the plan, framework and content of expenses and revenues. Developing a revenue model plays an important role when it comes to clearly identifying target audience or catching a specific business vision.

To sum up; the key components of the revenue model of a startup include identifying the correct form and volume of investment for its product or service, planning the marketing process or deciding how to create the capital. Correct identification and management of these content in a parallel line with needs creates the scope of a meticulous study a startup should adopt. 

What are the Best Revenue Models?

Each startup has its own goals, needs and priorities. Nonetheless there are various revenue models which proved its efficiency globally and which is now in the literature. These models can be listed as follows: 

1) Advertising-Supported Revenue Model

If you are a startup with a considerable number of visitors or subscribers, then the advertisement model is just the right model for you. Placing advertisements targeting your audience or a specific audience could be the correct area to create a revenue source for you and your team in this sense. One of the most common examples of this revenue model is Google ads. In recent years social media applications also came to the realization of the potential advertising revenue model and turned their gaze into this area. 

2) Sales Revenue Model

If your startup depends on a product or service then your revenue model would be sales revenue model. In this sense if there is a product that you are offering, we can talk about a one-time revenue. In addition, when you adopt this revenue model, we can also talk about performance commitment as well. Therefore, marketing plans should also be designed in line with this revenue model. 

3) Subscription Revenue Model

If your startup is shaping on a service center, then it is possible to talk about revenue sources with renting or subscription revenue models. While your customers/users are adopting this model where they will realize payments at times specified by you, it is also possible to offer both free and paid services together on different structures in a harmony. Broadcasts such as The New York Times create strong examples for the subscription revenue model.

4) Transaction Fee Model

Revenue earned in turn of a specific service or process can be classified as a transaction fee model. For instance; if you have a startup where you give online traveling consultancy, then you can facilitate processes such as reservation for your users/customers and in turn ask for an amount of money for the service. This model can also be called the commission fee model. 

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