Free is not for me

During our class with our Angel in Residence Barbara Clarke we discussed different types of revenue generation models. For my application I was initially inclined to make the product/service available for free to the consumer and rely on advertising as a way to generate income from the product. Barbara discussed how this model no longer was viewed as a lucrative option by firms and that ad revenue has continued to decrease for many firms who have used this as a revenue generation model. Another popular revenue model, but one that I believe has many flaws and is beginning to lose value is the membership model. Revenue is not as easily predictable because in order to encourage users to sign up you now need to make it fairly simple to allow people to cancel their subscription. The third option for evaluating is the pay per use model. 

Ben Milne of Dwalla spoke about his start up on Kahn Academy which is focused on reducing the costs of transferring funds between people using a pay per use model.  The scope of the money transfers market exceeds 30 Trillion per year. By charging customers per use instead of a percentage fee of the transaction Ben is betting that Dwala can win significant business. At .25 per transfer and free for dollar amounts less than $10.00 Dwolla is sure to put a dent in banks and merchant processors revenue forecasts.   Check out their website at https://www.dwolla.com. 

Using the pay per use revenue model combined with a now-ist philosophy constant innovation by way of existing product improvements, add ons, and complements will be central in developing my applications and products. Zach Kaplan of Inventables (https://www.inventables.com) spoke about how he first learned as an entrepreneur that it was important to understand how to sell things to people and the concept of being able to sell anything if you understand who your target market is and how to sell to them. Zach also discusses how the AI age has removed the barriers to entry in getting a product/service to market. His approach is to try it, test it, and if it does not work do something new. "Learning about something unexpected helps you to think of new concepts that may be possible." Intuit takes a similar approach in asking themselves "how are we the best in the world at problems to solve". This requires Intuit to constantly identify the major problems to solve and continue to innovate. This methodology will be part of my revenue model as I look at constantly evolving applications to meet market changes or new consumer needs. Profitability will be contingent on creating applications that will have a broad enough demand in the marketplace that will also increase demand for compliments to the application.