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How to determine the best online business model

A business model is going to be a key factor in any business staying a float as it is the determining factor in how a company makes its profit. Making a profit is the reason most people start a business in the first place, so deciding on a business model before selling your product is going to be necessary.

The most basic of business models is the one I implemented at age six when I and my cousin teamed up to co-own a rock gathering and distributing company. The business model was simple: we provided a product, and sold it to our customers. We even added in an additional service by loading the rocks in our little red wagon and wheeling that wagon straight up to the customer's door. In this way our customers didn't even have to leave the comfort of their home to receive the goods we provided (usually collected from off the sidewalk in front of their home). This basic business model worked well for us since the product cost us nothing so we had only to sell a few rocks before earning the desired two dollars and being able to enter into a complete and very content retirement.

This oldest and simplest of the business models may be what works for you if you are providing a web based service selling directly to your customers. An example of this is companies who set up web sites for families, schools, churches, or other such groups. Their business model need not be complicated as the customer pays for their services, they provide the service and then the transaction is complete.

This simple business model of carrying a product and selling it to the consumer, will not work for everyone. For instance a large business that has opened up since the use of the internet has become so widely used and known is the information business. People use the internet for all different uses, shopping and buying products is only one of them, searching for information is another. For people who are starting an information only business they will need to gather, and sell knowledge. They will have different ways of bringing traffic to their site and will usually make their profit not through the traffic to their site but through the advertisers they allow to advertise on their site. Now of course before people are going to want to advertise with them they are going to have to show their site is of value and that they can receive a constant flow of traffic, but since opening a site consists only of paying for a host - you can open and try out an information internet business at virtually no cost to yourself.

Another business model is the commonly used broker model. In this model the broker simply acts as middle man to provide product to consumer and consumer to product. Online auctions are great examples of a broker business model. Ebay had become a common household word. Millions of consumers each day search Ebay for products, not provided by Ebay, but by other Ebay users. There have now been books written on how to use Ebay to start your online business. In this case you would be using Ebay as your broker and Ebay in turn would be providing you with a consumer. This is a common internet business model.

Another common online business model is the subscription model. In this model the company providing the service requires a weekly, monthly, or yearly charge to it's consumers to view their information or make purchase from them. In this way you make a longer lasting relationship and the profit is an upfront one time fee.

There are literally dozens of business models now used solely for the internet. Choosing which one is right for your company or product depends upon your company or product. Research must be done, and your goals must be well planned out so you can decide which one is right for you.

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