#6 The white labelling business model
Allowing you to widen your customer reach and potentially create additional revenue, this model lets the technology behind the brand do the talking...
Technology-led solutions such as payment apps can often be monetised on a commission basis, but that certainly isn’t the only way to generate revenue.
White labelling has always been a popular means for a technology developers to sell their products to a broad range of business customers.
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For example, a peer-to-peer or crowdfunding platform may build its product from scratch. Alternatively it can simply buy-in a ready-built white-label platform which can then be customised and branded.
In other words, the technology developer provides the functionality which might be used by a dozen or so crowdfunding platforms, each with their own brand and customer base. In the world of online dating Global Personals is a great example of a business that has made the white label offering work. Its White Label Dating™ technology platform is now behind more than 15,000 diverse dating sites with revenues exceeding $74m.
White labelling can also provide a means to augment existing revenue streams. For instance, recently established Musikki started out as a B2C app offering in-depth information on musicians, singers and bands, with money coming from advertising and affiliate commissions on sales generated by links to third parties. However, as founder Joao Afonso explains, the company went on to develop a platform that could power other music services. It’s a side of the business that has proved vital to the overall business plan. “Otherwise, we would have to rely solely on affiliates and advertising coming from the consumer apps, which would make things more difficult for us,” he says. “First, because a big chunk of the affiliates come from music downloads and, as everyone knows, they are going down. Second, these models only work with a lot of traction, which brings a classic Catch-22 problem – we need money to get traction and traction to raise the money.” Just a few months since launch the company already has around 100 developers building out services from its platform.
The development of saleable ‘white label’ platforms does not preclude the creation of an own-brand product. What it can do is allow the business to add another revenue stream by selling technology solutions. However, it is a strategy that requires clear demand for the solution in question.
This is #6 out of 10 ways to make money from your tech business idea.
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