The truth is that I would love to be able to say that I have the magic potion to create profitable business models on the internet. Although it is not so, there are certain parameters that we can use and can indicate how interesting that model can be in terms of profitability:
1: Degree of scalability: Scalable models have no direct relationship between them. Those that can increase your income range exponentially without their costs rising at par are ideal.
2: Analysed the trends in consumption: If we want to get to sell “mass” products, we should be clear about the level of consumption or how sales behave in a particular country. To do this we either need to travel to do market research or access studies and facts.
3: Comprehensive analysis on Google: This is important to mark the business viability point. At the end of the day, you need an estimate of the CPA (cost of acquisition) that moves in the market. For this you can use the Google keyword tool to see search trends, to estimate (not 100% accurate) what will it cost you to have your ads clicked.
4: See options and recurring subscription models: In the internet now, in almost all sectors, getting sales is quite competitive. Therefore, if the business model is based on subscription (auto insurance, renewal type services and newspapers) or recurrent purchase (online supermarket style) it will have the best outlook for return on investment derived from client acquisition.
5: Logistically low complexity: Unless that is the differentiating factor, it is much more manageable if the business should not incur costs of storage type as product handling can be difficult. It is much simpler and easier to sell products as we can focus the activity of the company to sell and grow.
6: Consider offering a product demo / free service: You should not let it go unnoticed that successful companies have business models involving “fremium”(free premium) products or services. There is nothing better than the customers testing the product to gain their loyalty. Spotify is a good example.
7: Sector with interesting content: This point may seem minor but can be a key in your marketing plan. If for example you are selling diet products online, surely one of the most effective ways to approach your potential audience would be by writing articles and videos of how important it is to look after the food and how to build a balanced diet. It’s the same if you are offering superfast broadband. One great way to approach the audience would be present customer reviews or to showcase speedtests.
8: Long life cycles: This factor is often not taken into account but you need to know how often or how long from the time of purchase you will be able to expect the same customer again. This will compensate somewhat for the balance of costs and attracting investments.