It can be tough to know what business model to choose for your software company - there are so many options out there! But in this article, we'll take a look at some of the most common business models and what they entail for your startup. So whether you're looking to sell your software outright or make it available as a subscription service, you'll have everything you need to know in this article.
1. Advertisement
Advertising revenue models work by charging companies a fee for the space their company’s advertisement occupies on the site. This revenue is earned through clicks, impressions, or a combination of both. Sites that offer to advertise are constantly looking for new and exciting ways to make money, as this is one of the most reliable methods of generating traffic.
Real-world examples: Facebook, Instagram, Spotify, and This website :)
2. Software as a Service(SaaS)
One of the most common software business models is subscription-based. Customers pay a fixed price for a set period of time, which allows them to access the software without any additional fees.
Software as a Service, or SaaS, is a software delivery model in which software is delivered over the internet, rather than being installed on client machines.
One of the main advantages of SaaS is that it eliminates the need for clients to install and maintain software. Instead, SaaS providers host all the software on their own servers, and customers access it through a web browser.
Real-World Examples: Netflix, Notion, Figma, Trello
3. Affiliate Revenue Model
The affiliate revenue model is one of the most popular software business models. With this type of business, you sell a product or service and receive a commission for each sale. You don't have to create or own the product; you can use an affiliate program to find products that your customers would be interested in.
Real-World Examples: Blogging sites, Udemy, CSS-Tricks
4. Licensing Model
The most common software business model is the licensing model. Under this model, customers pay a licensing fee to use the software. The license typically comes in the form of a contract that specifies the number of users and devices that can be licensed, as well as the terms and conditions under which the software can be used.
Real-World Examples: Sendy, Windows OS
5. Freemium
Freemium software is one of the most popular business models in the software industry. It's based on the principle that users should be able to use a product or service for free, but should be offered additional features or benefits if they pay.
The Freemium model has proven to be very successful, as it allows companies to reach a wider audience while still making money. The main advantage of Freemium software is that it encourages users to continue using the product or service, as they know that they can always upgrade if necessary.
Real-World Examples: Notion, Figma, Office 365
