Income Models

When creating a business from an idea there are 2 main things that you should plan for - how to make money for the business and your exit strategy (preferably with the money you made).

Please note these are more income models not business models as business models take the following things into account; offers, customers, finance, expenses, revenue flows, key resources etc.

There are 3 main tried and true income models for making money:

• Customer Pays - This is the model used at clothing shops - the customer walks in a buys goods/services and leaves. This is a great model, very easy to understand from a customer point of view and easy to manage within your business. The only downside is that you have many paying customers so you need to control your financial books very well.

• Suppliers Pay - This is the model used on Txt Shopping Mall - It allows customers to pay nothing and therefore you would expect to get a greater uptake. The downside to this is that customers don't trust a free model (from their point of view). Usually this model relies on having a service to sell not a product.

• Clip the Ticket / In the Chain - Ticketek, the events ticketing agent is a great example of this model - This is used where your business makes life easier for customers and other businesses. Basically you offer other companies products / services to customers and charge a little both ways for the privilege.

There are other supplementary income models like Online Advertising that usually have specific requirements requiring a high volume of something, either online page views or SMS messages sent or similar. Please feel free to add other models that you think may be of interest, there are lots out there!! Wikipedia lists over 20 of them here http://en.wikipedia.org/wiki/Business_model .

So how do we use this information within Serendipity IT Ltd? We gather together all our ideas once a fortnight and try to figure out the 2 things mentioned above - how to make money for the business (which income model) and your exit strategy (preferably with the money you made). If you can decide these two things and they make sense, then you can progress that idea.

Hope this helps,
Simon Collings
Solutions Manager
Serendipity IT Ltd