What is your revenue model?

So you want to build a website and you’ve put together the cash to hire a local web design firm, and you’ve started searching for the perfect person to help you with Search Engine Optimization, you’ve even found a great writer, a strong photographer and a killer web designer to put it all together

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So you want to build a website and you’ve put together the cash to hire a local web design firm, and you’ve started searching for the perfect person to help you with Search Engine Optimization, you’ve even found a great writer, a strong photographer and a killer web designer to put it all together. There’s only one thing remaining and it’s a Twitter of a problem … how do you make money?

See, I say Twitter because I personally think Twitter is a funny story. As I pointed out last week, I’m addicted to Twitter and love the service but as Andy Beal pointed out, there’s no revenue model for the service yet which means that they’re losing money to offer the service. No biggy for now, I’m sure they have a plan but what’s yours?

There are, as far as I can tell only three ways to make money on a website. Perhaps a fourth but we’ll get into that later. The three methods for making money that I can think of are:

Sell a product from your website which people are willing to buy.
Sell content on your website which people are willing to pay for.
Sell advertising on your website.
The first model is pretty straight forward. Sell something which people will pay to either download or order online. This works great for selling everything from books (electronic or otherwise) to music, movies or pope bobble head dolls.

The second model, well … we call it porn. Actually I’m sure there’s something else people would be willing to pay for online but I’ll be damned if I can think of it right now. Premium memberships to websites is a tough business model but lucrative if you can get it right.

The final model is to sell advertisements to companies who in turn sell products and/or services to people. This is pretty common these days and it’s how I keep the lights on here at thisismyurl.com, those ads you see at the top and bottom of the website make me money every time you visit one of my sponsors.

I mentioned that there’s a fourth model, but it’s not really a direct model so I’m reluctant to include it in the three methods above. The model is to use your website as a marketing tool, this is the most common use of a traditional website. Take for example a bed and breakfast or camp ground, their website may (or may not) offer online bookings but it’s true purpose is to promote information to people who are going to spend money in the real world. While I envy guys like Jeremy who can pay their bills by selling Facebook ads, my website is a lot like a hotel’s site … I pay my bills by building websites for clients who often first learn about me through my website.

So before you hire the web deign team and get started, ask yourself the honest questions and figure out how you plan to make money online.

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