Techchrunch’s ways to get $10 million in revenue

A good article about online business and some of the scale issues that any online businesses face in reaching$10m in revenue.  Although US based it looks at the differing models.

The 3 Main Ways Consumer Internet Companies Make Money

As a consumer Internet company, you are trying to attract enough potential customers by providing one (or more) of three kinds of products: 1) media, 2) premium services, or 3) access to a physical good. These are not mutually exclusive—a startup can generate revenue from more than one of these sources. For example, many media companies make money off of both advertising and premium services, like LinkedIn.

1. Media:

If you are a media company, you are providing free content and collecting purchasing intent so that you can either sell ads, send leads to products or services your audience might be interested in, and/or upsell to a subscription or digital goods. This category is comprised of a large percentage of consumer Internet startups because startup costs are typically the lowest. As has been said many times before, these kinds of companies are cheap to start but expensive to achieve scale. Representative media startups are those creating applications in search, gaming, social networks, new media, video and audio, and lead generation companies.

2. Paid Service:

If you provide a paid service, you are trying to attract as many potential consumers to you as cost effectively as possible, get them to pay you for a service, and then work to keep them as paying subscribers for as long as possible. Most startups in this arena follow the “Freemium” strategy, where some content or basic service is provided for free in the hopes of converting a small portion of the free base to paying subscribers. “Freemium” is by no means the only way to acquire customers, but it can usually be the most cost effective means, especially if the service is built upon cheaply produced media or third-party infrastructure providers such as Amazon’s S3, and the variable costs to serve a new customer are minimal.

Payments and financial services companies are included here because they provide some services for free or for a fee and also charge businesses a small percentage of each transaction. Representative startups are companies that create premium subscription services, new banks or investment firms, and payment companies. These kinds of companies frequently require more capital than media startups to start, but may need not as much to scale, since they can leverage the cash paid in from consumers.

3. Physical Commerce:

If you sell a product that is fulfilled via a warehouse, can be sent via UPS, or is a coupon that can be used to purchase goods and services in the real world, you are running a commerce company. These startups generate revenue for each transaction and need to be disciplined around the efficiency of their warehousing operations, returns and customer service, and the amount spent on sales and marketing.

Its also mentions 13 differing online business models

The 13 kinds of consumer startups are (in no particular order):

  1. Search
  2. Gaming
  3. Social Network
  4. New Media
  5. Marketplace
  6. Video
  7. Commerce
  8. Retail
  9. Subscription
  10. Music
  11. Lead Generation
  12. Hardware
  13. Payments

It then reviews the first 4.

Full article here


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