The difference between having a good idea or a good business idea is the business model. For a good business idea, the entrepreneur needs to identify how to make money with a revenue model.
Invoices shed light on the company’s business model. The lines of the invoices show what customers pay for and how the company makes money. For example, the company sells products by the unit price and bills services based on an hourly basis.
The best business models combine several revenue models. There are at least 26 types of revenue models to consider. Depending on your business category, you can narrow your options. As an example, consider the t-shirt industry (See Examples below). Depending on where the revenue comes from, there are a variety of different business models.
Manufacturing Revenue Models:
- Contract Manufacturing
- Licenses Production
Manufacturing Revenue Examples:
- As a manufacturing company, the business develops, produces, and delivers the t-shirt.
- As a contract manufacturing company, one would manufacture the t-shirts for someone else to sell.
- As a licensee, the company manufacturers the designs of others and pay for the rights.
Trade Revenue Models:
- Agent representation
- Handling fees
Trade Revenue Examples:
- As a wholesale business, the company buys t-shirts from manufacturers and sells the t-shirts through dealers.
- As a retailer, the business buys t-shirts and sells the t-shirts directly to the consumer.
- A retailer could also sell consignment products and earn a commission for every product sold.
Service Revenue Models
- Sale of hours
- Sale of services
- Sale of events
- License/Member fees
Service Revenue Examples:
- As a service consultant, the company bills hours for the design, purchasing, or manufacturing.
- As a franchiser, one charges a franchise fee or a royalty as a percentage of revenue generated from t-shirt sales.
Online Revenue Models
- Sale of advertising
- Affiliate marketing
- Online shop
- Lead generation
Online Revenue Examples:
- As an advertiser, the company could sell advertising space on the t-shirt website.
- As a lead generator, one could generate leads for another company and get paid per lead.
- As an ecommerce business, the company sells products and services through an online store .
Financial Revenue Models
- Insurance Sales
- Financing business
- Rental and leasing
Financial Revenue Example:
- As a high-end retailer of expensive designer t-shirts, one could rent the t-shirt.
The best business models fit your business idea, products, customers, and market position. A combination of revenue models can help you get more streams of revenue while offering customers a better product by selling after-sale services.
For a guidance on which revenue models fits your business, schedule a consultation with a GrowthWheel adviser.