Revenue Model Archives - Diggiecorp Blog

Which Revenue Model Will Be Ideal For Your Online Business?

Diggiecorp Chef — Wed, 13 Dec 2017 09:49:53 +0000

Once you are confident about investing in certain business, the first thing to decide is its revenue model. When it comes to online business, the alternatives are immense ranging from freemium to subscription. Many entrepreneurs do not understand initially, but the implication of choosing a revenue model is huge and can basically establish your brand image, and long-term business viability.

The fact of the matter is that you just cannot switch your revenue model at a drop of a hat. You need to be systematic in your approach and ensure that all the parties affected by that revenue model are on board.

One key step in determining the revenue model revolves around identifying the source of your revenue. You can stick to one or choose various revenue streams like,

-Product sales

-Service fees

-Advertising sales

-Data access fees

-License fees or commission

And, more.

Various factors are taken into account when deciding on the most ideal revenue model for an online business.

Another important aspect to keep in mind is that the revenue model that you choose, will eventually affect your business strategy and will be paramount in achieving your financial objectives (profits). There have been several cases in the past where startups have been unable to attain profitability despite having an innovative business model. In most cases, their revenue model was screwed or they did not choose the right one.

Most entrepreneurs believe that a startup should always follow KISS (keep it super simple) principle as consumers are typically wary of complex and artificial pricing. By doing this they tend to hurt their future prospects as well as financial growth. The challenge is to tread the fine line between a simple and complex revenue model that not only offers a fair ROI to you but also is acceptable by the consumer. During the early stages, you need to keep it simple and add multiple channels as you grow.

How to structure your revenue model?

There are different scenarios that you need to take into account when deciding which revenue model you should incorporate. These scenarios are directly related to your business model.

If you are acting as intermediary connecting buyers as well as sellers, then would you charge a commission on the resulting sale?
Will you charge for access to the content or community online in the form of subscription?
Will you provide most of the services for free and charge advertisers and marketers who want to target the users?
Will you provide your services and products to be used in the exchange of a license fee?
Will you use a combination of these revenue models?

Is your online business far from expected revenue?

Talk to experts

Let us take into account each and every scenario where a revenue model would be successful:

When to choose Global commission type revenue model

This is one of the most widely used revenue models, where marketplace owner charges a commission on every sale made. Aspiring entrepreneurs must opt for such a revenue model when the size of their marketplace is small and the sale is identical across all the categories. Although such a revenue model is most widely used in online retail, yet any other business can can incorporate this revenue model with ease. This is also known as a basic revenue model for online businesses that connect buyers with sellers.

When to choose Category/product commission type revenue model

This is a spinoff of global commission type revenue model, where website owner can individually assign commission based on each category. This type of revenue model is advised in scenarios where some of the categories on your marketplace are doing extremely good, while others are not returning many sales. Normally such a revenue model is applicable for high volume or high-value products or services.

For example, most ecommerce websites have high commission rate of items like electronics and mobiles, and commission rate for household products is low. Such a revenue model is not advised for online businesses like online food ordering and delivery, online care services, or online travel activity marketplace, where there are not high-value categories. The easiest way to implement this revenue model is to determine which categories are most popular on your website and put a higher slab of commission for those categories.

When to choose subscription-based revenue model

There are often scenarios where entrepreneurs tweak their business model in order to stand out of the competition. This is where the subscription based business model comes into play. Online businesses which work on recurring purchases are most suitable for this type of revenue model. One popular example is online cosmetic store or food ordering website.

This revenue model can also be added to any other business model in addition to the commission-based revenue model. For example, an online marketplace can charge sellers subscription fees for the opening of an online store in addition to commission fees on every sale. Also, a peer-to-peer marketplace can work on a subscription-based revenue model for connecting sellers and buyers.

When to choose advertising based revenue model

Although seldom used in ecommerce, this revenue model is the backbone of most of the websites. In the recent past, online businesses have started to test this revenue model to increase the income of their website.

You can offer featured listings for products and services on your platform to sellers on the front page, search and other areas of listing for more traction. However, such a revenue model is only recommended when you have a strong user base and ample sales. For example, you can charge restaurants advertising fees for featuring their outlet on the homepage or as a feature listing.

When to choose hybrid revenue model

All the above-mentioned revenue models have their own perks in terms of the amount of income being generated. However, as your online business grows, there is a need for a multiple channel approach. This is where a hybrid model comes into action. Such a revenue model is a collaboration of revenue models mentioned above. For example – an ecommerce marketplace can have a subscription revenue model in place where it charges sellers fees for listing products. In addition to it, the website can also charge a commission rate based on categories or products for every sale made. The website can even add a third revenue channel for offering features listings on the website for more traction. It is crucial to note that such an approach is only advised once you have strong hold over the market. Charging sellers at multiple points (subscription, commission, and advertisement) can often alienate them, which is not recommended for a new business. However, once you have captured a good share of the market and have a substantial user base, sellers would be more than welcome for any form of revenue model.

Conclusion

There is no hard and fast rule when it comes to an ideal revenue model. Online businesses need to test the waters themselves and analyze market trends for an ideal revenue model- it all depends on the size of your marketplace.

Early stage online businesses can start with a global commission type and can alter their revenue model as they increase their market cap. Other factors include the type of business model and current market trends. There are several online businesses that started with a subscription-based revenue model but moved on to global commission based revenues model and vice versa. You need to factor in your end users, your hold over the market, and a number of sales being generated to incorporate a certain business model.

The bottom line is that it is not a game show, so there is no need to do any form of guesswork. You should do your research work properly and identify key areas where you can implement a viable revenue model. The fact remains that the life of your online business depends upon it.

The post Which Revenue Model Will Be Ideal For Your Online Business? appeared first on Diggiecorp Blog.

Maximize Earnings of Your Travel Booking Marketplace with These Proven Revenue Sources

Diggiecorp Chef — Fri, 21 Jul 2017 13:12:33 +0000

Traveling not only comes across as one of the most sought after activities, but it also happens to be a top passion among people. It is because of people’s love for traveling that a plethora of travel booking companies are flooding in the market.

Online travel booking & sales are on constant rise (and will continue to increase in the near future). So, it is high time to start an online travel marketplace of your own. But in order to assure a seamless growth of your business, its revenue model must be in place.

Brainstorming over the sources of revenue isn’t just about increasing the profit margins. It is also about having access to sufficient resources to continuously improve your service and customer experience to always have the upper hand over the competition.

So, once you have a great travel activity booking website ready, then it is time to work upon its revenue model to get your share of the golden egg. To assist you with that, here Diggiecorp experts share 5 sound revenue channels that your online travel booking business can make money from.

Commission on each booking

Commissions have been by far the most traditional method to generate revenue for marketplaces where they act as an intermediary between service seekers & service providers.

In a commission based pricing model, you get to enjoy lucrative revenue as the tour operators & travel activity hosts get plentiful of bookings. Implementing this pricing model works wonders when you have a lot of providers in your portfolio.

However, if you have a small number of providers in the beginning and they are not able to get enough bookings; your commissions may not be as amazing as you thought, which brings us to a subscription based pricing model.

Also Read: Business Model & Website Feature Analysis for Travel Booking Portals

Subscription Fee for business listing

Subscription based revenue model is a relatively new concept, which surfaced with the evolution of ecommerce sector.

In case of subscription model, tour operators get listed on your marketplace for a fixed period of time in exchange of a fixed fee (monthly or yearly). The benefit of this pricing model is – it doesn’t matter how tour operators are performing on your marketplace, you’ve got your back covered with a fixed monthly/yearly source of revenue through subscription fee.

So, depending on the nature and size of the participating vendors and your own venture, you can choose to go for commissions or subscription fee.

Display advertisements of related businesses

The world of advertisements needs no introduction to a business owner. We all know how effective marketing and advertising are for making people aware of your business.

Since the core of your business happens to be the travel industry, it becomes a logical choice to post ads of hotels, restaurants and other travel related businesses on your webpage.

Expert tip:Pay special attention to the placements and relevance of the ad on yourwebsite. You can’t show a Thai hotel to a person traveling to Munich. Not only would it screw the user experience for the end customer, but also affect advertisers’ trust in your platform.

On-site promotion for tour operators

As your marketplace begins to become more and more popular, some additional revenue options open up to you. With a mass of hotels and activity providers active on your website, you can easily entice them to get their listing highlighted, in exchange of an additional fee.

Implementing this revenue channel is simple as it works pretty much like the PPC advertisements on Google search results. You can create a ‘premium/featured vendors’ section for the search result pages of your website to highlight the paid listing. This section can appear in a side panel or at the bottom of the results.

Selling merchandise

Going on a trip also means that travelers may need to buy particular travel gears. It could be tent, ropes, shoes, hat, and so on.

To address this need of your website visitors, you can embed a shopping cart module with your travel activity marketplace. Now, they may need that gear just once (such as tent & ropes), or may plan to use it again and again. So, make sure that your shopping cart module also comes with a renting feature.

Traveling also brings along shopping, sometimes a lot of it. Be smart and invest in a good ecommerce plug-in.Additionally, since this method clearly needs a technological maneuver, it is suggested to consult ecommerce experts before commencing the process.

Conclusion:

Ultimately, it all boils down to this: people love to travel, and as the time moves ahead, we find ourselves on a shorter leash. So it tends to be a reasonable decision to do all the bookings and stuff before actually reaching your destination.

As a travel activity marketplace, you are at the common ground where the demand and supply chain connect.So, you need to know how to capitalize upon that fact.Try the above mentioned methods for revenue generation; use several permutations and combinations to see which works best for your business.

Go with a travel booking software that supports multiple revenue channels

Try FunAway

The post Maximize Earnings of Your Travel Booking Marketplace with These Proven Revenue Sources appeared first on Diggiecorp Blog.