In the digital world, businesses continually seek ways to make money from their websites and mobile apps. But how do they actually do it? Companies use different revenue models to turn online traffic into profit. These models range from showing ads, offering paid subscriptions, and selling products to using in-app purchases. In this note, we show some of the most popular web and mobile revenue models and explain how they work. Whether you’re starting your own app or just curious, understanding these strategies can help you make better business decisions.

Advertising

• Display Ads – ex. Yahoo!

• Search Ads – ex. Google

• Text Ads – ex. Google

• Video Ads – ex. Hulu

• Audio Ads – ex. Spotify

• Promoted Content – ex. X (Twitter)

• Paid content links – ex. Outbrain

• Recruitment Ads – ex. LinkedIn

• Lead Generation – ex. MoneySuperMarket, ZocDoc

• Affiliate Fees – ex. Amazon Affiliate Program

• Classifieds – ex. Craiglist

• Featured listings – e.g. Yelp, Super Pages

• Email Ads – as done by Yahoo, MSN

• Ad Retargeting – ex. Criteo

• Real-time Intent Ad Delivery

• Location-based offers – ex. Foursquare

• Sponsorships / Site Takeovers – ex. Pandora

Commerce

• Retailing – ex. Zappos

• Marketplace – ex. Etsy

• Crowdsourced Marketplace – ex. Threadless

• Excess Capacity Markets – Uber, Airbnb

• Vertically Integrated Commerce – ex. Warby Parker

• Aggregator – ex. Lastminute.com

• Flash Sales – ex. Gilt Groupe, Vente Privee

• Group buying – ex. Groupon

• Digital goods / downloads – ex. iTunes

• Virtual goods – ex. Zynga

• Training – ex. Coursera

• Pay what you want – ex. Radiohead

• Commission – ex. SharesPost

• Commission per order – ex. Seamless, GrubHub

• Auction – ex. eBay

• Reverse Auction – ex Priceline

• Barter for services – ex. SwapRight

Subscription

• Software as a Service (SAAS) – ex. Salesforce

• Service as a Service – ex. Shopify

• Content as a Service – ex: Spotify, Netflix

• Infrastructure/Platform As A Service – ex. AWS

• Freemium SAAS – ex. Dropbox

• Donations – ex. Wikipedia

• Sampling – ex Birchbox

• Membership Services – ex Amazon Prime

• Support and Maintenance – ex 10gen, Red Hat

• Paywall – ex. NYTimes

• Voice and video-conferencing – ex. Uberconference

Peer to Peer

• Peer-to-Peer Lending – ex. Lending Club

• Peer-to-Peer Gambling – ex. BetFair

• Peer-to-peer buying – ex Etsy

• Peer-to-peer insurance/home/car

• Peer-to-peer computing – CrasPlan storage, SETI@home

• Peer-to-peer service – ex. Mechanical Turk, TaskRabbit

• Peer-to-peer Mobile WiFi/Tethering

Transaction processing

• Merchant Acquiring – ex. PayPal (Online / Offline), Stripe (Online), Square (Offline)

• Intermediary – ex. IP Commerce (POS 2.0), CardSpring

• Acquiring Processing – ex. Paymentech

• Bank Transfer – ex. Dwolla

• Bank Depository Offering – ex. Simple, Movenbank (spread on average deposits)

• Bank Card Issuance – ex. Simple (interchange fee per transaction)

• Fullfilment – ex. Amazon

• Messaging – ex. Peer-to-Peer SMS, IM, Group Messaging

• Telephony – ex. termination/origination in public telephony networks (skype out/in)

• Telephony – ex. termination/origination within private telephony cloud (e.g. native skype)

• Payment Gateways: Mobile – ex. Braintree

• Platform Monetization ("Tax") – ex. AppStore 30% fee

Licensing

• Per Seat License – ex. Sencha

• Per Device/Server License – ex. QlikView

• Per Application instance – ex. Adobe Photoshop

• Per Site License – ex. Private cloud on internal infrastructure

• Patent Licensing – ex. Qualcomm

• Brand Licensing – ex. Sesame Street

• Indirect Licensing – ex. Apple Volume Purchasing

Data

• User data – ex. BlueKai

• Business data – ex. Duedil

• User intelligence – ex. Yougov

• Search Data – ex. Chango

• Real-time Consumer Intent Data – ex. Yieldbot

• Benchmarking services – ex. Comscore

• Market research – ex. GLG

Mobile

• Paid App Downloads – ex. WhatsApp

• In-app purchases – ex. Zynga Poker

• In-app subscriptions – ex. NY Times app

• Advertising – ex. Flurry, AdMob

• Digital-to-physical – ex. Red Stamp, Postagram

Gaming

• Freemium, Free to play w/ virtual currency – ex. Zynga

• Subscription – ex. World of Warcraft

• Premium – ex. xBox games

• DLC (Downloadable Content) – ex. Call of Duty

• Ad Supported – ex. addictinggames.com

Choosing the right revenue model is key to your business success. Whether you’re building a website or a mobile app, it’s important to pick the best strategy to grow your profits and keep users happy. If you’re unsure which model suits you, we’re here to help! Contact our team for expert consultation. We can help you find the perfect revenue strategy for your business.