Over the past decade and a half, we've witnessed an evolution of traditional revenue models. What started off as a choice (for most consumer-centric services) between a simple "pay per purchase" or "subscription" model has transitioned to a point where it's becoming difficult to keep track of the variety of models and sub-variants that seem to pop-up - and the mechanism through which you can transact.

For those of you who are curious, these are just some of the revenue models currently available.

Subscription, Commission, Ads, Affiliates, Pay-Per-View, Sponsorship, Direct Purchase, Freemium, Feature Listings, Markup, ...and the list goes on.

The list gets larger as you start looking outside traditional consumer business revenue models.

What changed?

A number of these changes can be attributed (in some part) to the following factors:

  1. The emergence of technology as a predominant medium for transactions.
  2. Better segmentation and a deeper understanding of different consumer groups.
  3. Evolution of the financial system.
  4. The emergence of start-ups and the need to either find or create opportunities in the market.
  5. The availability of venture capital.

Each of the above has resulted in some form of an impact on how businesses today look at revenue as well as the way their companies are fundamentally structured.

How it benefits consumers

  1. Technology - Whether its mobile apps, simplified transaction methods, digital wallets, customers have a wider array of services and products to choose from and decide how they want to pay.
  2. Segmentation - Facebook, Google and the like have allowed businesses to really understand their customers a lot better and target them based on their predispositions - How customers discover, consume and pay for services and products.
  3. Evolution of the financial system - Whether its existing players that have embraced 0% EMI's, low transaction fees, no transaction fees, a multitude of payment gateways and wallets (by mobile operators, E-commerce players and banks) there has been an explosion of services in the space that cater to the mechanics of the transaction itself.
  4. New Businesses - There is always some company around the corner that's looking to disrupt the status quo by offering something different.
  5. Funding - With venture capital funding under their belt, well-funded startups have the flexibility of sacrificing revenue by offering discounts, freebies in the hunt to acquire customers quickly.

All the above have a very visceral impact on the way customers perceive the ecosystem in which your business operates. So unless you have a service that has no competitor you're revenue model might be challenged when it comes time to collect.

How you can be better prepared

  1. Understand your consumer segment - It's critical to understand what your target segment needs, how and when they like to transact, what they like / dislike, etc
  2. Understand the competitive landscape - What are the other players doing, are they subsidizing purchases by offering discounts, providing lucrative EMI schemes, giving the service or product free to monetize it in some other fashion?
  3. Finding a new path to revenue - Assume for a moment the traditional path of earning revenue isn't available to you, how else could you make money? It's also worth considering more than one revenue model if it makes sense for your business.
  4. Simplifying the transaction process - How could you make it easier to get the money from the customer's pocket to yours - if your revenue is directly earned from the customer.
  5. Constantly evolve - Your revenue and transaction model doesn't need to be set in stone, just as the ecosystem and consumers have evolved so should your model.

With the pace of change we're seeing today the old adage of "Why change a tried and tested model?" might no longer be as relevant.