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What is revenue model and it's 20 types

Introduction |
What is revenue model ? We asked ourselves this question many times.

    How this multinational companies like apple and Amazon are making revenue of billions and billions of dollars.

    Revenue model
    20 Types to collect profit

    And how you can generate millions of dollars sometimes it's billions of dollars from your business or startup? all this questions comes at one thing revenue model.
    So read this full article up to end. Then you will understand what is revenue model and it's types which you can implement in your startup or business.

    Now the first question in your mind can be

    Why revenue model is important ? 

    The simple answer I can give to this question is because revenue model helps us in identifying monetization strategy as well as how we can generate revenue for our business or startup. 

    I had met to lots of entrepreneurs, CEO's and businessman's who had initially ignored monetization model and latter on struggled to get sustainable profitable revenue for their further operations. 

    Do you know:-
    90% of businesses and startups fail within their first 5 years out of which 30% fails because of not having proper revenue model.

    So you have know the importance of revenue model now it's time to learn.

    What is revenue model in business

    Revenue model is the blueprint by which your business will make profit by generating revenue. There are many types of revenue model by which you can make profit. 

    You can't run your business all time with funding and investment you have to make proper profitable revenue model to generate profit.

    So that's why revenue model is important.

    Factors affecting revenue model

    There are many factors which affects revenue model out of which some main factors are

    • Market. 
    • Competitors. 
    • Value proposition. 
    • Product positioning. 
    • Cost structure. 

    one company can have multiple types of revenue models depending on above factors. 

    Visualise this more by watching this video on revenue model

    Revenue model types

    There are many different revenue model types. You can learn all of them carefully and implement one, multiple or all if possible then.

    • Production method
    In this method your business produces physical products or digital downloadable products and sell them directly in the market.

    • Rental based
    In this method business creates some rental properties and get recurring revenue it can be Realestate rent or any other rent.

    • Advertising or content marketing
    In this method you run ads on your products and generate profit. 
    Ex. Blogging.

    • Commission or brockrage
    In this type your business or you can sell others product to costumers and generate sales.
    This method is widely used by stock market or real estate agents.

    • Affiliate program
    Using affiliate you can sell any products by giving some affiliate commition to affiliate marketer. In this method you do not have to spend money on advertising and Sellsman you just need to give some commition to affiliate marketers only when they make sales. 
    You can add your products to click bank or commiton junction.

    • Subscription method
    This subscription field can give you monthly recurring income. According to research of US based company in 2020 subscription method will be worth of 500 billion dollars. 
    This method is widely used by Netflix and Amazon Prime.

    • Transaction fee based method
    Transaction fee gives you active type of income 24 hours. In this some one sending money from one account to other bank account and you getting money. 
    Ex. Paypal uses this.

    • Shared servicing model
    Shared servicing can be used but it is not effective as others.

    • Licence distribution
    In this method you have legal access to your idea or product you can give it to use to someone. 
    They will pay you royalty.

    • Cost plus model
    Cost + service.

    • Hourly rate model
    Hourly rate model is used by Freezing you can use it for hiring Freeliencers or sell your employees on hourly based model. 
    This method is best for students.

    • Upfront and maintenance or free for service. 
    In this method you give some discount to buyer, so he/she can buy and after that you can approach them for service or maintaining.

    • Auction model
    In this method other can sell there products on your site by auction this method is used by ebay.
    Auction based method can only give you highest price of your product or service. This is used in the products which are limited in number.

    • Consumable product
    You have to make a product or service which can be consumed by buyer. He has to come back again to you for more.
    Example to this is your monthly grossery. You consume it and then go to grossary shop you are repeating this method day after day.

    • Usage based model
    Usage based model is best model used by Amazon Web services. It is best for buyers as well as sellers.
    Advantage of this is you can probably get more costumers in this model.
    This is used by many hosting companies and telecom companies.

    • Distribution
    This is traditional method in this 
    Product first comes to wholesaler then distributor after thet seller and finally to buyer. In this the cost of product increases and marine decreases.

    • Franchise selling
    You can sell franchise of your business and take 20-30% profit for branding. Plus 1000 to 100000 dollars for initial investment.

    • Donation taking
    In this method your business is almost free there is no guarantee of revenue. If your business is online then you can use paypal donation button simply.

    • Marketplace
    You can have your own store at market by buying or on rent.

    • Free premium based
    In this method you give your two types of services one is free and another is premium. The aim of free is to get more costumers on premium method. With the help of free method you can generate more sales. 
    Ubersuggest use this method.

    • Deta sales model
    Deta sell model is used by many companies they sell some information to buyers with the permission of user audience.

    So this were some types of revenue model. Choose some of this and apply them to your startup and generate profit to survive.

    Worlds best business method

    World's best business model

    Worlds best business method is the method used by Amazon. Look at there method you will understand how they are generating billions and billions of dollars. 

    Suppose you are seller on Amazon and you selling for example books and if you are writer. You will get money only on sales of your book, but Amazon will also get 30% of that. And think about that they are selling tons of other books also. 
    Not books only they are selling every thing and making profit on it. They are also solving buyers problems and getting blessings from them. 

    Now the next think about apple. They are not selling their phone. They are also charging costumers for their brand name. So they have one blue ocean strategy advantage. They also have security advantage. 

    So the world's best business method to generate revenue is contains three main things. 
    1. They have competitive advantage. 
    2. They are making profit with making advantage to sellers and buyers. 
    3. They have made their brand name. 


    There are many types of revenue model. I had tell you that you can use this method. Understanding profit method is very important for any company. So use this multiple fields in your business and start making profit.

    Tell me in comment Section that how many models you are going to apply in your business?

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    And it's importance