Online Business Models

The e-Business model, like any business model, outlines how a company operates, how it provides a product or service to their customer and ultimately,  how it will generate revenue. As such, it is crucial that a business understands what type of online business model they would wish to create in order for them to generate revenue.

As each company is different, no one business model will work effectively for every business. It is important that a company work out what business model is most effective for their given situation.

While there are many types of online business models, outlined below are two online revenue business models with examples websites using that model.

The Affiliate model

The affiliate model is simply the process of advertising another companies products on your website in exchange for a commission payment. This type of model is often referred to as a pay-per-performance ad deal in that a business rewards the ‘affiliate’ for each visitor or customer brought by the affiliate’s own marketing efforts.

Affiliate

For example ‘Amazon associates’ offers commission to the marketer on any item sold if they were sent to Amazon via an advertising link on a website.

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This model can be attractive to an individual or business because they never actually take ownership of the product, or even have to handle it. They are rewarded for simply referring customers to a retailer when they make a sale.

Subscription model

The subscription business model is a model whereby a customer must pay a subscription price to have access to the product/service. This type of model does not sell a product individually, but rather allows for periodic use (typically monthly or yearly) of a product or service. For example Netflix offers members who subscribe unlimited viewing of offered television shows and movies after an initial subscription payment is made.

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Oftentimes subscription models offer different packages according to the type of content the subscriber is allowed access to. As can be seen above, Netflix offers a basic, standard and platinum plan and the price varies according to the content available to the subscriber.

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