business model Archives - Serious Startups

How to Determine Your Startup Revenue Model

Software as a Service is a very alluring business strategy for a mobile web startup. In this model customers are dependent on the system, and tracking usage statistics is easy. It’s cheaper to add features than in the client-side model, and the all important code remains securely on private servers.

It’s also well-suited for mobile development, saving time and development costs. Responsive web design ensures service availability on a broad variety of devices, eliminating the necessity of developing apps for every device used to access the service.

As appealing as the model is, before providing even basic specifications to a team of app developers, it’s extremely important to have a well-defined startup revenue model. In order of increasing complexity, here are the most prominent revenue models for software as a service:

Advertisement is the simplest way to monetize a website. This model requires little back-end development; it’s unnecessary to keep a persistent database with personal information about customers. This method can also be used in conjunction with others to maximize return on investment.

On the other hand, advertisements can dilute branding and can distract customers from a site’s content. If there isn’t already a guaranteed user base, this may affect customer acquisition negatively.

Premium

This model allows the sale of memberships to a service. For enterprise applications with high demand, a business may be able to set the price of premium memberships at a level that will allow it to recoup costs and make a profit. In conjunction with the advertising-based model, it can provide an opportunity to expand profits by offering tiered service.
The development overhead for this model consists of a system for customers to create new accounts, a system to authenticate user identities securely, and a system for accepting payment.

Subscription

This model is essentially Premium, but with recurring payments. SaaS is very well-suited to this model, since customers need authenticated access to the service to use its features.

This model requires further back-end web development: the application database must track payment schedules and the business logic must include methods for expiry and cancellation of user accounts.

Customer acquisition will be more difficult with this model, especially for a startup, but may be more successful if the pre-launch strategy includes a well-received marketing campaign.

In-app Sales

This model allows the sale of goods or services, virtual or actual. In-app sales can be a cash cow… if that’s how the app was designed from the beginning.

In-app sales require a system for tracking what a user has purchased, and depending on what the application sells, can require additional infrastructure for new features.

Be Prepared

Choosing a revenue model should be a web entrepreneur’s top priority: putting off this crucial step or making last-minute changes can drive up costs and prolong development, miring a project in development hell. The revenue model defines how an application tracks its customers, and is therefore one of the first questions that needs to be answered.

The explosive proliferation of mobile devices and the growing demand for SaaS present a unique opportunity for mobile startups. The mobile startups that take full advantage of this opportunity maximize profits and minimize development time by choosing a revenue model before writing a single line of code.

The Difference Between Startup & Corporate Mentality

In this episode, Patrick talks about how important it is to understand the differences between startup and corporate mentalities, and why these differences exist.

4 Ways To Reevaluate Your Startup Strategy

startupsign It’s never the wrong time to de-clutter and simplify. Just as you should bring fresh air into a stuffy house, you can also breathe life into a company to achieve an improved state of success.

DUST OFF THE COBWEBS

When your marketing goes stale, so does your business. The purpose of cleaning up your online business is to stay relevant to consumers. So, what does it take to be relevant?

Stay up with the times. Take time every few months to read about new marketing tactics that can apply to your business.

Be better! Look at what your competitors are doing online, and see if you can do it better.

Be social. Don’t leave your Facebook, Twitter, or Pinterest accounts unattended for long periods of time or consumers will view you as stale, resulting in a loss of fans, followers and connections.

Appeal to the masses. Make sure the content you are posting appeals to the appropriate audience and remains cognizant of what’s trending in your industry.

STRATEGIZE AND ORGANIZE

Have you embraced the social media realm yet? Let’s face it: social media engagement is important for business success. However, you must be mindful of what you are posting and engaging in on social media. Social activity for the sake of activity is a waste of time. You want to eliminate the excess that doesn’t benefit you.

If it’s not relevant, appealing, or creating revenue for your company, it’s not working for you. At the end of the day, your social interactions should bring a return on investment. There should always be a payoff, so there must be a sound strategy behind any social initiative. Here is one strategy you can follow:

Pinpoint the ultimate goal. What do we want from our visitors? What is our call to action? Once you have a goal in mind, you can commit and act to follow through and succeed.

Look at your site’s analytics. What are you doing that’s working? What is not working? What could work better? There is always room for improvement — find out what can and should be improved.

Look at the social analytics. What do Facebook or Twitter have to offer your business that you may not be taking advantage of? Social media continues to grow, so keeping up to stay relevant is critical.

REFINE A FAMILIAR FOCUS: YOUR AUDIENCE

Whether you’re sweeping up dust bunnies or brainstorming new business strategies, you can ask yourself these questions when reviewing your online marketing:

What will people think about these efforts?

How will they make people feel?

What will people do with this information?

Your content should give your audience something to think about, something to feel good about, and something productive to do. It can appeal to urgency with a limited-time offer or appeal to kindness with a charitable campaign.

No matter what you choose to do, you must focus on how the campaign and efforts will affect your audience. Rethinking or refining your marketing plans will give your business a renewed edge.

REFRESH YOUR BRAND

If you are an extreme organizer, you won’t stop at just the kitchen or attic. You’re going to fix up the entire house, top to bottom. Consider adopting this mentality for refreshing your brand as a whole. Remember these tips for improving your online business brand:

Define what your brand currently represents. Apple, Pepsi, and McDonald’s have used a variety of different slogans over the years to tailor their brand messages and stay relevant to consumers. It’s part of what makes them so successful. You can do this, too.

Be consistent in your presentation. Don’t forget what you’ve defined from the beginning. Although your look or slogan may change, the heart of your business should remain the same.

Be willing to grow and evolve based on your vision, your audience, and your image (keeping consistency in mind).

Rinse and repeat.

Adam DeGraide is the CEO and founder of Astonish, which was recently ranked 267th on the Inc. 500 list of fastest-growing private companies in the U.S. DeGraide and his team are the driving forces behind a vision to help the insurance industry across the country grow its businesses by using the Internet. Now currently serving over 800 retail brokers in America, Adam DeGraide and his team at Astonish are encouraging the insurance industry across the country to “join the Internet marketing revolution, or get left behind!”

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.