Tech Project Business Model Selection: 2022 Review
The realization of any unique, newly started project cannot take place without building the right and correct strategy. A detailed plan increases profitability and rentability, reducing the distance between the startup and the site of one of the thriving market players.
This post will describe the process of selecting the most suitable business model for your technical project and correctly performing its implementation steps.
How to Choose a Business Model for a Software Startup
Selecting a Correct Model for Your Tech Project
The primary aim of the digital product’s strategy creation is to outline how your future software will bring you profit. The task of any business is to make a profit, and your startup is no exception. You need to understand which monetization of the idea will be better at the startup and which one after the first thousand users will help to develop the project efficiently.
The fundamental details included in the roadmap should cover such essential details as commodities as well as services offered by the enterprise, the industry it is aimed at, and all of the arising outgoings. Having the tech plan in hands, you should be able to reply to queries as follows:
- Which purposes does my software fulfill?
- In which ways do we ensure the solutions?
- What are the monetization models?
- How to raise the profit?
Such questions also assist in understanding how to build a minimum viable product correctly for your specific case and infiltrate faster into the market. The crucial section of the entire roadmap is a method of how the entity will gain income. To illustrate, Facebook guarantees the opportunity for the audience to keep in touch as well as cooperate with promotional providers by serving as an intermediary for the deal.
The driving objective of Uber Eats is to supply the order by taking it away from one of the food spots and eateries and transporting it to the customer. The income is obtained by taking the fee from customers as well as available eating spots and restaurants.
Prior to selecting the most appropriate model reflecting your company’s needs, you should outline the points as follows:
- Market structure (size and segmentation); current and projected dynamics.
- The most important consumer segments
- Key finding on structure
- Forecast by target market segments
- Problems and needs of the market, the relationship between the major market players
- Key conclusion on the situation in the target market
To understand whether your solution will be in demand, you must conduct the analysis of the current market conditions in your sector and define the two key points:
- Portrait of the target audience
- Characteristics of the target market of similar products/services
The first item allows you to define more accurately and clearly the description of the future users of your product, and the second item allows you to conduct a survey among your competitors to understand with what features they have engaged and retained their client base.
Delve deeper into the description of your perfect customer and develop the utter portrait. This process helps get acquainted with the audience closer and determine which demands they have to meet successfully, and turn newly attracted clients into devoted ones.
Besides, it is worth outlining the channels of interaction that represent how you interact with the consumer and the methods you provide your value proposition to them. You should also perform user segmentation to cover the requirements of each.
The illustration has ensured a picture of customers for the product that enables ordering food. The mutual characteristic among each of the potential clients is the unavailability of sufficient time for home food preparation or visiting eating spots.
Successful projects from your niche
Rivals review is an integral part of market research. It helps you understand what solutions are priced for your audience, as well as the best way to deliver those solutions. You should highlight the key features and characteristics that motivate users to go to the most thriving providers in your industry and what makes them popular. It will also be helpful to research their pricing, benchmarking, and business trends and expansions.
Identify your competitors’ portfolios and compare them to your company’s portfolio. Be sure to note the key areas of each player’s entity. We highly recommend ranking the competitors by the level of solidity and rivalry.
The most potent and prosperous projects comprise a range of income-obtaining models. Among real examples, Amazon has a row of such streams and revenue flows incorporated:
The most widely-used models to gain profit are as follows:
- Platform (Uber, Airnb, Delivery Club, etc.)
- Marketplace (Amazon, Wildberries, Ozon, etc.)
- Advertising (TV, newspapers, Google, etc.)
We’ll dive into their peculiarities later in this article.
Canvas Model Value and Benefits
For higher transparency and structurization, you may make use of Business Model Canvas, which helps define the suitable model for your case.
There are the following indispensable parts:
- Audience part
- Crucial cooperation
- Integral actions and methods
- Income flows
- Essential offers
- Client interactions
- Crucial resources
- Pricing organization
You may observe how to complete each part correctly in the following illustration of the Uber solution model.
Popular Business Models to Select
Let’s observe the most widely-used business models. As was previously mentioned, you can implement several of them to obtain income:
- Freemium. Delivering free-of-charge fundamental services and extra ones for a fee.
- Subscription. Regular payments (the time period and frequency may vary) for services’ utilization.
- Promotions. Presenting and advertising the product to the platform’s audience on a paid basis.
- Intermediary. The platform serves as a service connecting providers with the audience (e.g., eBay, Amazon, etc.)
The choice of a business model has a key impact on the success of a startup. In order to decide on the appropriate business model template, it would be useful to work with Canvas – to “run” the future project through nine points devoted to various business processes. The detailed information will eventually help to choose the main and auxiliary business models for the startup.
Yuliya Melnik is a technical writer at Cleveroad. It is a web and mobile app development company in Ukraine. She is passionate about innovative technologies that make the world a better place and loves creating content that evokes vivid emotions.