Technology Monetisation

Technology Monetisation

There are a fixed number of models that are in use today for monetisation of technology.

In the startup universe, there are several tech-based businesses. Sure, there are some product businesses that use the pure retail route such as Epigamia for example, but more of them tend of technology businesses. In technology, there are a few ways of monetising your product. Here are the various ways in which one can monetise a tech product/service.

Advertising

Of all the ways in which one can monetise a tech product. The hardest way to do so it by advertising. It works well if you have a large number of users and offer the service for free to them. Google and Facebook have both been able to build insanely profitable companies doing just this. It works well for businesses that are able to get a lot of screen time and attention. Social Networks, Content Publishers and Content Producers can use this as a means of monetisation. Having said that, few have been able to survive ONLY on ads. 

Subscription

Every business that uses advertising as a monetisation channel can also use the subscription. In addition to that, all businesses that make a product available on a recurring basis can also use subscription as a model. Content can be ad monetised or provided without ads on subscription, same is true for games, videos and other such segments. Not only content, but even delivery services which charge on a transactional basis can be provided as a subscription. For the user, this can limit the monthly spend on the service to a fixed amount while for the business this can create a predictable income stream. 

Transactional 

If you are an aggregator or enabler, then transactional models work extremely well for consumer startups. Also in a country like India where people are often not willing to pay more intangibles, you find these kinds of apps flourish. Ola, Cred, Flipkart, Zomato, etc are all examples of transactional monetisation. They enable something and take a commission in the middle to cover their costs. 

Marketplaces applications are a variant of the same method of monetisation. 

E-Commerce

For me, e-commerce are sites like Lenskart that own the product and sell it rather than enabling other sellers to sell their products through their platform. They take the entire margin on the product and monetise by doing so. Here the online piece is a via media for broader distribution rather than anything else. It’s the retail part that is really earning the money.

SaaS

Software as a service became possible with the advent of the cloud and faster internet. Essentially, instead of deploying the software on-premise or on the client system the software and the data remains on cloud servers and its rented to the user. This creates smaller but recurring income streams for the company making the product which incentivises them to keep improving the product, while at the same time pricing it as such so as to make it accessible to a larger audience. For the user, they get a product that is always under maintenance and with a lower cost of entry. 

Usage Based

A variant of the SaaS business that mostly applies to infrastructure. When it comes to renting servers or E-Mail Gateway, SMS Gateway and the likes, the user is provided at a capacity of usage for a fixed subscription. Much in the same way that you pay for your electricity or telephone. You are given a certain capacity and based on how much you use it, you get a bill accordingly. 

Enterprise Monetisation

Enterprise software requirements often tend to be very customised and also because of the volume that they have, SaaS may turn out to be really expensive for them. They prefer on-premise software or to buy licenses of the software than to pay a recurring subscription for the same. A standardised product may be slightly customised for such requirements. But be careful, go slightly overboard and you will end up a services business.

Vivek Srinivasan

Co-Founder, Startups Club Traveller, Thinker, Writer, Doer

Leave a Reply