What’s the one reason most startups fail before they truly get off the ground? 

It’s because they have chosen a business model that is either unsustainable, or not ideal for their service or product.

Launching a startup is hard enough. Don’t make your job harder than it needs to be. 

The key to your success is being informed, and mitigating risk. 

Grab your pen and paper and let’s dive in! 

OK, pen and paper are very 1997, but you get the idea! 

There are several business models to choose from. 

BUSINESS MODELS TO CONSIDER FOR YOUR STARTUP:

• Transaction fees: Think: Uber, where they take a percentage of each transaction.
• Low Subscription: $49 or less. Think: Netflix or Spotify
• High Subscription: Over $50 a month. Think: Goldbelly or FabFitFun 
• Low One-Time / Annual Fee: $599 or less. 
• High One-Time /Annual Fee: $600 or more. 
• Free + Ads: You don’t charge money to use the app, but eventually monetize with ads.
• Bonus-- Freemium: Some free features, and pay for access to a more exclusive content.
  

Sounds good, right? Choose a business model and boom! profits galore!

Wrong!

Some of these options fall directly into what we like to call... 

*GASP*

Risky Business Models

Here are several business models which fall into a danger zone and the reasons why. 

• Transaction fees

Why?  You have to do a lot of transactions for it to be profitable. If you’re only taking 3% or 5% or each transaction, you need a whole bunch of transactions to get paid! It only works when it’s big! This model requires scale. 

• Low Subscription

Why?  Depending on the price point, you need a lot of $10 subscriptions to cover your costs and pay your team!

• Low One-Time / Annual Fee

Why? It’s important to always have new customers signing up, and keep the ones you have coming back for more, if not, POOF! your profits will disappear!

• Free + Ads

Why? The whole idea here is you have a large, engaged audience and you approach a company and offer access to your audience for profit. The catch is: if you’re just starting out, you may not have the numbers needed to attract advertisers! Alas, you have to pay the bills in the meantime. *plays tiny violin* 

The above models are risky because they fall into the “danger zone”, that area where you’re assuming a huge risk if you haven’t properly defined your business, or how you plan to scale and make profit! 

What’s the solution? Take your idea and make it premium! 

Make a product people are willing to pay either $50 a month for or $600 a year!