What are the different business models a technology company can have? Here is my pick
- Freemium business model: A mix of free and paid services, the freemium model is mostly used by tech companies in the Software as a Service (SaaS) or apps business model. To grow business and acquire customers, companies offer free (lite) versions to customers but for a limited time or with limited features. To unlock the upgraded features, the customer has to opt for paid services. Examples: Zoom, Dropbox, MailChimp, Evernote etc.
- Subscription business model: This model allows the customer to get services by paying a fixed amount every month or year. In this case, the company has to provide enough value to its customer, so they visit the website over and over again. It allows companies to segment the market and offer a specific number of items in its content under different plans and prices known as tiered offerings. For example, Netflix offers monthly subscriptions under the Basic plan for $8.99/month, Standard plan for $12.99/month, and Premium plan for $15.99/month
- Consulting business model: Companies that provide consulting services by hiring experienced and qualified people and having them assigned on client’s projects follow the consulting business model. These companies tend to charge on the hourly basis and/or they take a percentage share based on the successful completion of the project (cost reduction project). Examples: Deloitte, Mckinsey, BCG, software or website development firms
- Agency-based business model: This is a project-based business model, where an outside firm is hired to complete a specific task. Traditionally, businesses that lack internal expertise hire agencies to get a customizable solution for their needs. Some niche agencies are digital marketing, design & architecture, survey, promotion, media, public relationship, branding, website development, social media, etc.
- Data licensing business model: A business model of ‘data’ has gained a new meaning in this modern world, especially in the technology sector. Data is a critical component in web technology where companies require critical information to carry out operations and earn revenue. Example: Twitter sells real-time data to its partners
- API licensing Business Model: API stands for application programming interface (API). It is basically a set of subroutine definitions, communication setups, and tools for developing software. API licensing business model provides licensing protocols which allow developers’ community to create third-party plugin/add-on apps for well-known platforms. And developers pay a fee to get API access. Example: Microsoft, Apple, LinkedIn, and Twitter, they all provide API license services.
- Low Touch Business Model: Low touch business model is, of course, the opposite of high touch business model where the product or service is delivered by minimum customer interaction. Low touch is good for low price software tools where acquiring customers is easier. Example: Companies like Amazon, Zendesk, SurveyMonkey uses low touch business model.
My recommendation is not to dabble between different business models and different pricing models. It will split your companies energy, attention and priorities. It will be equivalent to running many nano companies within your tiny companies and resulting in a flat line growth with no leverage of repeatability, scalability or auto mode operations. Each day, month and year will be almost like starting fresh.
Even I am not able to run our company like this because it takes a log of courage, risk appetite, sheer drive to put your foot on the ground and inspire your team towards the new future. I have become complacent, conflict avoider and mediocre action taker. I don’t have the energy or girt to swim upstream right now and take up the challenge head-on. Especially when the team has distributed focus and surprising client demands. There needs an overall change with a lot of sacrifices and almost vision-driven leadership. It has to be channelled top-down with each department designed to do one thing. Thus removing all the clutter and friction out of the company.
Here are my excuses to not create a remarkable business model
- Team with more open minded
- Team that can get things done from external agenies
- Loves to run experiments
- Genuinely treat failure as learning expereince
- A little bit of calculated risk takers
- Flexible in switching multiple roles
- Ability to solve problems resourcefully
Here is a small hint for my team member, Can they click the tweet button below?
Vikram, you are wrong our team can pull this off.Tweet