Generating Revenue: What’s your Business Model?

So, you’re about to launch your startup after months of preparation. It’s an exciting time.

But have you thought about your business model?

It’s extremely important to think about how your business will generate revenue. Sure, attracting interest and users is crucial, but you can’t keep a company running if you don’t have the money to support your staff and server costs.

There are plenty of startups out there who’ve gone through multiple rounds of funding and are STILL not making any money. And these are big names. But do you really want to be in the same boat?

Or would you rather be generating money from day one?

Seems like a no-brainer, but it can be easy to lose focus when planning a launch. Here are a few different models to think about:

Trial to Paid

Trials are a great way for people to try your service free for a set amount of time.

Well then, how long should trials be? That depends on how long it takes users to reach success in your app. For some businesses, 7 day trials are best—while for others, 14 days is ideal.

Freemium

If you don’t want to offer a free trial beforehand, the freemium model is always an option.

Of course with freemium, there’s always a chance (and risk) that users will not want to upgrade to a higher membership level.

If they’re getting everything they want with their free account, why would they upgrade?

But businesses that have had success with freemium models have often found that they receive many word-of-mouth referrals, and thus their user acquisition cost goes down substantially. And that’s pretty cool. If you want to give it a go, don’t forget to check out Andrew Chen’s freemium spreadsheet.

Find what’s right for you

There is no right or wrong. Some startups swear by free trials, while others say it will kill your business. Some startups think it’s important to offer free membership levels, and others disagree.

What’s right for one business won’t always be right for you and your users—so find what works for you and stick with it.

Tags: freemium, trials,