8 Revenue Models for Startups

by Nov 11, 2021

In our last few posts in this startup help series, we’ve been talking about gathering customer insights and testing your startup idea with prototypes. As you gather more feedback, your business starts to come into focus, and it’s time to get serious about exploring revenue models for startups. How you monetize will impact how you define your business moving forward. Revenue models are fluid, and you can pivot from one or more to others as the business dictates, but it is important to define one or more early that you believe will support your startup’s growth.

8 Revenue Models

Here are eight different revenue models to consider:

  1. Unit sale. Charge a fixed, one-time price to acquire, in full, a product or service.
  2. Subscription fee. Charge a periodic recurring fee for rights to a product or service for a predetermined amount of time.
  3. Advertising fee. Charge others to display their messages on your assets.
  4. Utility fee. Charge based on the amount of time or material the customer uses.
  5. Transaction fee. Take a cut of funds going from one party to another.
  6. Licensing fee. Charge a fee for use of your intellectual property for a fixed period (perhaps for a specific geographic area).
  7. Professional services. Charge for performance of a specialized service on a time and materials basis.
  8. Franchise fee. Sell the right for someone else to invest in, grow, and manage a version of your business.

The nice thing about revenue models is that they’re malleable. So, you can apply them to almost anything, although of course some revenue models will be more successful than others for certain business types. You might think you’ve got a plan for revenue all buttoned up, but it’s worth exploring all the opportunities.

A Revenue Exercise

Take 10-15 minutes to quickly jot down how your startup could earn money following each revenue model. If you defined a customer POV, as described in an earlier post in this series, you’ll find that comes in handy when thinking about revenue. Remember, the most successful startups are human-centered. They put customers at the heart of their business. 

You might find some pretty creative ways to fit your business into a given revenue model to unlock some additional possibilities. You might also discover that your startup fits into more than one revenue model—that’s great!

In our next post, we’ll look at how you reel in that revenue using marketing and sales. Until then, subscribe, stay tuned, and keep innovating!