So you wanna be an internet entrepreneur, huh? Well, you’re not the first. Many investors and entrepreneurial minded folks have dived into the profitable online space. And I’ve got good news; now is one of the best times to start your own online business.
But where do you start? One of the first things to consider is exactly HOW you’re going to make money. Will you sell a product or service? Or make some money of advertisement clicks?
We go over the 10 most popular online business models and explain how they work.
I bet you’ve seen this before: a website serves free content, like blog posts or guides, and monetizes their platform through Google AdSense. This simply means that whenever a visitor clicks on an ad, Google pays you (the website owner) a share for bringing a visitor to the advertiser’s site.
This business model offers an easy entrance point for newbies and can be used for almost any niche. Most AdSense websites bring traffic in organically, though there are people who have been successful at paid traffic as well.
Amazon offers the largest retail affiliate program worldwide so it’s worth mentioning here. It’s pretty simple: whenever you refer a customer to Amazon through your affiliate link, Amazon gives you a cut (if that user ends up buying, of course). The percentage you get as an affiliate is quite small (somewhere between 4 and 10 percent, depending on your usual sales volume) but the browser cookie sticks, meaning you even get commission on unrelated products that people end up buying a month later.
Although the commission may seem small, many internet entrepreneurs make their full time living from Amazon checks. Amazon is a popular monetization method for review sites (product reviews) and blogs.
Just like Amazon, other products and services also have affiliate programs. Nearly every large retailer has one, as well as many information products and courses like Lynda.com. You refer your visitors through an affiliate link and receive a commission for every sale made.
Besides individual affiliate programs, there are also affiliate networks through which you can promote thousands of different offers. A famous example of this is CJ.com. For digital products, take a look at Clickbank.com or JVZoo.
If you want to sell a physical product, dropshipping might be for you. With dropshipping, you avoid having to deal with stock, shipping and large upfront costs for inventory while keeping full control over your prices and margins (in most cases).
As a dropshipper, you create the entire funnel that helps the customer buy their item. You then order from the supplier (a wholesaler or factory) who ships the item directly to the buyer’s home address.
Good suppliers will include your company details on the packaging so the package looks like it was sent by you, not the supplier. If you want to learn more about how dropshipping works, take a look at Shopify’s Ultimate Guide to Dropshipping
Amazon FBA (Fulfillment by Amazon) basically means you list your products on Amazon.com and have your own “store” there. There are many benefits to this approach, like leveraging off Amazon’s traffic, their huge userbase and the potentially hands-off approach.
Although Amazon FBA is great, it is best combined with other marketing methods of your online store. Most top selling FBAs have their own store and use Amazon as a sales channel. Not because Amazon’s traffic isn’t good, but because it is always better to have multiple revenue / traffic streams and never to rely on one single source to send you customers.
Ecommerce is simply having your own online store. Having your own ecommerce store allows you to sell your inventory, as well as dropshipping products.
Most ecommerce site owners choose to leverage paid traffic as well as organic searches. A common way to rank your ecommerce store is by targeting specific product keywords for both paid and organic searches.
Software as a Service (SaaS)
This business model involves a website that provides a service, in exchange for monthly billing. Examples of this include Buffer.com and Shopify.
SaaS companies are sprouting up left and right. It is a very lucrative business model and usually incurs recurred billing. This means that a SaaS company can invest hundreds of dollars to attract a single customer who only pays $39.99 a month, because their lifetime value is likely to be much higher. For example, if the average SaaS customer stays with you for 20 months, then a $39.99 a month client is actually a $799 client.
You’ve probably come across some info products in your lifetime. They are eBooks, video courses and all other paid information material. Although you’re probably familiar with the Make Money Online ones, Info products exist in every niche, from gardening to model train collecting.
Info products cost nothing to make. This is an important factor because it means selling a million guides costs you the same as selling 10. Once it’s created, the work is done and every customer means money (excluding marketing costs of course).
Apps are trending and the market is huge. Well known apps like Instagram and Snapchat are now worth billions of dollars. The app business model is interesting as it offers a different take on website marketing.
Once a user has downloaded your app, the thing you want is for them to keep using it. You can monetize your app using advertisements, paid upgrades (such as unlock premium features) or simply by making the entire app paid.
Lead generation is a simple business model where you refer potential clients (leads) to an existing business in exchange for a flat fee. For example: if I refer potential customers to an insurance agency, they might pay me $30 for the qualified lead.
You can do this for a countless number of businesses, from personal training clients to cleaning services or massage therapy.
Do you know of any other popular business model we’ve missed? Let us know in the comments.