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Revenue Models and Its Strategies
Introduction:
A process of generating Revenue Streams from its products and services can be termed as Revenue model. In other words Selling Goods and Services on Web is called Revenue Models on Web. There are various types of Revenue Models. Indeed, every Company creates their own exclusive Revenue Model. However, For Startups a Strong and Cutting edge Revenue Model is very important as their investors are conscious of monetization and Return of their investment. Existing Businesses revive their Revenue Model to spread to new areas or adjust to a new Generation of Customers. Different Revenue models Deployed on web are 1. Subscription Model 2. Advertising Model 3. Transaction Model 4. Licensing Model
Subscription Model: A common and best Revenue Model in this digital era. Based on some iterative Charge on continual basis This Model offers a product or a service. This recurring charges can occur annually, monthly, weekly or even daily. Overtime, with this model companies look through maximize their cash flow through automatic payments. “Mequoda has identified nine discreet models for subscription websites. These include six premium (paid) models and three affinity (free) models. Two archetypes are usually needed for success: a portal or blog to drive traffic, and a premium subscription website to use as a primary monetization factor.” paid Subscription website models:
1. Membership Subscription Model This model is content based and user driven. It provides lots of information on a particular topic of interest for paid members. Its business goal is to generate business from paid user access fees by acquiring and retaining members. 2. Newsletter Subscription Model This model generally has a free area and subscriber area. This free are mainly focuses in the user to become a subscriber to a related publication or conversion where a user can pay and become a subscriber. The paid person can now have a separate username and password to access private content. He can view an HTML version of the current issue or download the PDF or print the digital content of the newsletter.

3. Reference Subscription Model The subscribers have an extended access to the library of contents updated continuously with new information. These are mainly a replacement for printed reference books, printed directories and catalogs that are updated quarterly. 4. Periodical Subscription Model This model offers constantly updated content that is used online, mostly HTML. It is an online on-demand reference source that is accessed randomly and selectively. Every article is tagged with authors, keyword and topics for easy content retrieval. 5. Magazine Subscription Model It is set up to sell all the subscriptions for a digital magazine and proves a secure access to the magazine. This website has HTML pages and Downloadable Content life PDF or CDF (Closed Document Format). 6. Application Subscription Model This model allows access to particular online software i.e. app that allows users to interact with the software online and get appropriate results. The subscriber can use the combined user data and publisher data to get the added values. free Subscription website models:
7. Community Subscription Model It is best known for networking tool that primarily focus on user created content. Members can meet and share data based on their own interest. They can upload data, download data and post content. They can even make friends. Registration is required but not the payment.
8. Portal Subscription Model They generate value from both users and sponsors. Users spend time viewing information in various sites thus creating advertising inventory that can be used to sell publishers products. 9. Blog Subscription Model This model merge publishers and user generated content which is frequently updated with articles from different authors and readers comment.
Successful and Unsuccessful Subscription Strategies:
Recurring frequency: this is the common pricing technique used in subscription model. Simplicity and limitation in subscription of service is a main consequence for this form. In other words “Pay As You Go”.
Variant Pricing: Customizing the products to suit the budget or requirement.
Usage Metering: Charges will be calculated based on actual usage for example – storage Kilobyte, GB, MB. Time – years, months, days, minutes, seconds. It can be termed as “pay per use”.
Discounts: Discounts offered on particular Subscription on a particular occasion and special discounts for old customers etc.
Term Based: offers Recurring prices for a particular term. Example – “30% discount on one year subscription”
Freemium: when a user starts subscription he gets a freemium subscription later on he has to pay for premium services if required. Example – LinkedIn Even though subscription model offers benefits, financial pressures are posed on the customers creating possible negative revenue for subscription model. Limited usage of Service may also cause a negative impact on this model. A possible Downtime of websites may cause difficulties to the customer even after he has being paid. Bad Service will have negative impact on customers and results in bad revenue. Here if the Buyer is not satisfied with the web services provided then he will leave the subscription to expire and find another seller.
Factors Considered to choose a strategy: * Constructing and maintaining Relationships with Customer: In subscription Model Relationship with customer is the lifeblood of the company and therefore this task requires a great deal of attention. * Continuous support for Subscriptions: Constant information about demand and customer Acceptance must be considered in Subscription Management. * Growth: Subscription businesses will grow by adding more and monetizing them. You can check the growth by Subscription management system. We need to check for losses in short term basis and annual basis. Subscription business grow when the existing customers stay put. * Pay as you go pricing plans.

Advertising Model: The most significant revenue for web based businesses is based on online advertising. The consumers are directly driven to the web based sellers using online advertising so that they can browse the products and make purchases. The Web based Advertising tending to grow day by day with new online media called Social Networking. Each Advertising Model has its own strengths and weaknesses. There is no “best” way of Advertising. It depends on what method of advertising is used and the kind of site it is been run on and its audience.
Successful and Unsuccessful Advertising Strategies: The main strategy of advertising on web is the marketing message from the publisher should reach the targeted user personally while browsing. This kind of strategy is mainly used in Search Marketing. Another strategy is to make payment on a particular impression or click and make payment on particular action performed. Google ad sense is one of the best advertising strategy for displaying original ads and reduce the presence of fake ads. This will direct more audience to the intended site using AdSense. Some more are listed below.
Sponsorships: The Advertiser sponsors the entire site or some part of it or a page in it. The Sponsorship will be exclusive for some given amount of time. This kind is used mainly for branding or introducing a new product. Since the visitors will watch same ad constantly so that it will sink in with their minds.
Successful Criteria: The primary strength of this strategy is that as long as the sponsorship runs the advertiser is well known that the same message is delivered over and over. However, the advertiser hopes the audience to get linked to the site they are sponsoring. For the publisher he can gain the stability so that he can expect to sell the sponsorship for much higher rate.
Unsuccessful criteria: If the site has less audience the sponsorship can become a waste. There isn’t any guarantee that how much traffic will be their site will actually get.
Web Banner Advertising: there are the graphical ads displayed with in a web page. This method of advertising is a biggest success in the recent past.
Successful Criteria: As this kind of ads are normally based on clicks and impressions is has less effective than new advertising methods.
Unsuccessful criteria: This kind of ads are easily ignored in particular site. The biggest problem here is if the user misses the ad on a page while navigation of a website he could not find it again.
Pay-per-click: Generally the publisher is paid by the advertiser for each click on an ad. This ads are links shown as a part of search results or some content of a site. Example – Google AdSense.
Successful Criteria: the advertiser don’t have to pay much to the publishers. Clickthroughs are more valuable because it can make more money.
Unsuccessful criteria: this works only when users clicks the ads. If the audience ignore it is just a wasted space on a web site. For a Search Based PPC (page per click) the clicks are expensive and if no one clicks the link after a search then money is unnecessarily paid.
Search Engine Advertising: it involves purchasing sponsored links for particular keywords. Once the user search a purchased keyword an additional list will be displayed above or side by the search results.
Successful Criteria: if the user is searching a keyword purchased by and advertiser then is means he is interested in the advertisers product.
Unsuccessful Criteria: it is very expensive and time consuming process for small advertisers.
Social Network Advertising: the ability to harness the power of relationships can be achieved by social networking. This can be done by promoting and informing consumers about their products.
Successful Criteria: the execution of social networking advertising can be achieved by setting up a profile and creating a page on the site. Then promoting a particular product and connect with users who like the product specifically.
Unsuccessful Criteria: all the users in social networking sites will not respond favorably to the advertisements on these sites. Analyzing the competitors before using this kind of advertising will be very helpful.
Email Advertising: it is a direct way to advertise and communicate with the customers efficiently who already shown their interest in your product.
Successful Criteria: sending Emails to users who have agreed and obeyed in receiving promotional mails is a solid approaches however it is also a challenging task. Unsuccessful Criteria: when an intended user is upset with the frequent Emails from the advertiser he will unsubscribe to receiving an email.
Factors Considered to choose a strategy: * Search: Customers use mobiles to search and find location information such as Hotels, Stores, shopping malls and gas stations. Click-to-call by Google provide a best solution for this kind of GPS search. Here Google gets paid whenever user clicks the call button from mobile. * Location: this has three categories mainly targeting users- Geofencing, DMA and Audience. Advertisers use geofencing to connect to the customers when they are around a store or restaurant. * Shopping: Customers whenever use credit cards or debit cards there is a small extra charge on it. It will benefit the advertisers who posted it as an ad. * Social: advertisers are using the social networking sites to advertise in a most efficient manner. Whenever a user browse through the ad they will get paid. * Data protection and Privacy: most sensitive thing in computing world. When it comes to personal data protection and privacy are most important. * Some other factors to be considered are page views, unique clicks, state or countries of visitors, Search Engine keywords and Time Spent on a web page. Transaction Model: Enabling and executing online transactions fetch revenues to the companies. This revenue is generated by customers who pay a transaction fee for the transaction made to the operator of the platform. The company provide a best platform for customers to make online transaction. To participate in such transaction model the customer must register, so that the transaction will be identified. The customers can act as buyers as well as sellers. The amount of transaction is calculated based on both fixed and percentage calculated. Examples: eBay, amazon
Merchant Acquiring: In an online Transaction model it is best understood in the context of card use. Transaction flow involves card holders and their banks, merchants and their banks on the other. The payment network is a middle tier.
Successful Criteria: four steps for a successful criteria 1.signing up the card 2. Authorization 3. Settlement and Clearing 4. Settlement and Information Services.
Unsuccessful Criteria: if the user provides a fake or invalid card details then the transaction will fail. Failure In any of the four steps leads to a failure in transaction.

Intermediary: Two trending parting make business through a third party that provide intermediation services. The Intermediary add some value that we could not find in a direct transaction. This kind of transaction is used in insurance, brokerage and financial services. A contract can be established between two parties in intermediary transaction process.
Successful Criteria: A third person stores something to trade when the other two parties are needed. These other two parties have some space to store the product when they need.
Unsuccessful Criteria: trust between all parties is required. If the trust is lost then this transaction will fail. Some of the most common transaction models are Bank Transfer: this might be of any kind example: online payment, Bank Depositary offering.
Factors Considered to choose a strategy:
Trust: this plays a main role in transaction processing. Only if the two parties have trust on the third party then any kind on transaction will succeed.
Website profile: Before making a web site a transaction based website the customer must have a good profile
Security and privacy: whenever the card details are given to make a transaction the website must provide Security and privacy of the card data.
Shopping process: the process to make a transaction must be simple so that each and every customer can easily use the transaction model
Technical support: this plays an important role in online transaction model. If there is any transaction failure but the money is deducted the customer can call the support team and solve the issue.
Licensing Model: Licensing is defined as an agreement between two parties, where one party has full proprietary rights over some information, process, website, software or technology protected by a patent, trademark or copyright. It is the best marketing strategy for new entrepreneurs in a business.
Per Seat Licensing: the access of a particular website is given to certain number of users. These users can access the program any ware any time. The users are connected through a network to the servers.
Successful Criteria: if there are 50 users using concurrent license and logged to a website, then the 51st user can’t log in. he have to wait till one of the 50 users logoff. Then he can login once the user is logged off. This supports concurrent computing. Unsuccessful Criteria: it often imposes restrictions to the users based on how he is logged on to the website.
Per Server licensing: the License is purchased for each server based on the traffic or no. of concurrent connections of a server. The successful and Unsuccessful criteria is same as the above.
Site licensing: the Customer has full right to use a software at a given facility.
Successful Criteria: if a university bought a site license then it has every right to install software or login to a website any number of times.
Unsuccessful Criteria: this needs to be closely monitored by the software or website vendors. There is a possibility of using the service illegally. This kind of license is only desirable if the number of users are constant.
Factors Considered to choose a strategy:
Relationship: the relationship between the vendor and customer plays an important role.
Terms and Conditions: based on some particular conditions the two parties can sign up an agreement and use the desired product.
High lever Security: the best reason to obtain a software license is for security. It must be a number one priority.
Reputation of the Company: the Company reputation and brand must be well known. They must be a trusted brad in that field.
Technical support: there might be some technical issues in licensing so if anything arise there must be a support team.

References:
1."Revenue Model" by Vadim Kotelnikov, http://www.1000ventures.com/business_guide/revenue_model.html
2. "The Subscription Business Model" Posted on 29 July, 2013, accessed on 25 April, 2014, by Eric Noren, http://www.digitalbusinessmodelguru.com/2013/07/the-subscription-business-model.html 3. "The Membership Subscription Website Business Model" posted on 30 January, 2014 accessed on 25 April, 2014 by Ed Coburn, http://www.mequoda.com/articles/subscription_websites/the-membership-subscription-website-business-model 4. "25 Pricing Strategies for Subscription and Online Commerce” by onebill publications http://www.slideshare.net/onebillsoftware/25-pricing-strategies-for-subscription-and-online-commerce 5. "Best Practices for Online Business Models" by Vindicia last modified Jan 20, 2014, accessed April 25, 2014. http://www.vindicia.com/wp-content/uploads/VN_BPG_OnlineBusinessModels_F.pdf
6. "Five Key Success Factors for Subscription Vendors" by Beagle Research Group, LLC. http://www.startek.com/uploads/docs/Final_Five_Factors.pdf
7. "Success in the Subscription Economy"- Brian Bell, CMO of Zuora last modified Feb 27, 2013, accessed April 25, 2014. http://www.slideshare.net/SocialBizAtlanta/brian-bell-zuora-subscription-economy 8. David S. Evans, "The Online Advertising Industry: Economics, Evolution, and Privacy" Journal of Economic Perspectives—Volume 23, Number 3—Summer 2009—Pages 37–60 http://www.intertic.org/Policy%20Papers/EvansEOAI.pdf 9. "Guide to Online Advertising" by adjuggler last modified Jan 24, 2013, accessed April 25, 2014 http://adjuggler.com/docs/AdJuggler_guidetoonlineadv.pdf 10. "Online advertising" from wikipedia.org modified on 24 April 2014, Accessed on April 25,2014 http://en.wikipedia.org/wiki/Online_advertising#Web_banner_advertising 11. Archita Rai, "Role and Strategies of Internet Advertising in the Current Technological Scenario" (PhD, U.P.Rajarshi Tandon Open University, Allahabad, INDIA)
12. "How to Develop an Interactive Marketing Strategy" from Az.Gov http://www.azot.gov/documents/Interactive_Marketing.pdf 13. Ramesh Ramakrishnan, "Seven Factors Affecting Mobile Advertising and Payments” posted in www.business2community.com April 11, 2013 accessed April 25, 2014, http://www.business2community.com/mobile-apps/seven-factors-affecting-mobile-advertising-and-payments-0462856#!FX3nR 14. "Revenue Models" from E-Commerce Wiki last modified 3 January, 2012, accessed 25 April 2014 http://en.ecommercewiki.info/fundamentals/revenue_models 15. "Web And Mobile Revenue Models" by FRED WILSON last modified April 4, 2012 accessed April 25, 2014 https://hackpad.com/Web-And-Mobile-Revenue-Models-final-EgXuEtSibE7 16. Ann Kjos, "The Merchant-Acquiring Side of the Payment Card Industry: Structure, Operations, and Challenges". October 2007
17. "Intermediary" from wikipedia.org modified on 14 April 2014, Accessed on April 25, 2014 http://en.wikipedia.org/wiki/Intermediary 18. Lian Wei, "Success Factors for Transactional eCommerce Websites: an Investigation Focusing on Technical and Business contexts" Master of Computing 2012
19. "Per-seat license" from wikipedia.org modified on 24 February 2014, Accessed on April 25, 2014 http://en.wikipedia.org/wiki/Per-seat_license 20. Michael Rustad, Software Licensing: Principles and Practical Strategies, Oxford University Press (23 December 2010).
21. "Factors You Need to Consider When Looking for Software Licensing" by Bravo last modified may 8,2013 accessed April 25, 2014
http://www.transmodernage.com/software/factors-you-need-to-consider-when-looking-for-software-licensing/

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