#5 The affiliate and commission-based business model
This tried and tested revenue model lowers the barriers to adoption while making it possible for you to take a slice of the action
Affiliate marketing and commission based selling is increasingly important in the mobile app economy in particular.
For instance, a sports app might provide up-to-date information on upcoming matches while also providing its users with a means to buy sportswear from third party partners, with a commission on every sale.
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Alternatively an app might simply make it easier for the customer to buy. Restaurant app Orderella is a case in point. One of a burgeoning number of phone apps targeted at bar and restaurant customers, Orderella allows drinkers to order and pay for their drinks via mobile without having to queue at a bar. The service, which works with more than 200 venues, is free to the customer but bars who adopt the system pay a commission on sales.
It’s an approach that lowers the barriers to adoption. The end-users can download the app free from iTunes or the Play Store and there are no hidden costs. Meanwhile, the bar owner pays nothing unless sales are achieved. To do this, the company works with global brands such as Guinness and Jägermeister to run mobile digital campaigns to support offline marketing campaigns.
“A commission based model helps to prove the concept as you have skin in the game and only charge when you drive business for your partners,” says Dennis Collet, CEO of Orderella, who says he considered the marketplace model and is still considering a franchise model. “We do not believe in white labelling as it’s not consumer-friendly at all. The consumer would end up with lots of different apps and in reality won’t use any in the end.”
Instead, commission-based can be seen as a tried and trusted model, if heavily dependent on a high volume of sales traffic.
This is #5 out of 10 ways to make money from your tech business idea.
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