Earning More: An Exploration of Revenue Models for Your Business
Whether you're a freshman freelancer just getting started with your first client, or an established agency with a shelf full of awards, you're likely seeking ways to grow your business. Naturally, your growth is heavily rooted in your ability to acquire new clients and customers.
But that growth doesn't have to be limited to simply adding more customers to your existing offerings. It’s more than just a game of increasing leads.
Many freelancers and agencies have yet to explore alternative ways of generating revenue beyond their current business model. Not to sound like an infomercial, but there is an entire world of money-making opportunities for talented folks in the creative industry.
These opportunities are rooted in understanding what it is that you actually sell. The funny thing is that it's likely not what you’ve advertised on your own website. It's not web design. It's not themes. What you're really selling is one of three things: your time, your technology, or your thinking.
Get your free copy of Grow Vol. 3
From pricing projects to invoicing clients, this comprehensive guide will show you everything you need to know to drive sales, get paid, and ensure your finances are in order so your agency is as profitable as it can be.
Download today to access all 12 chapters and three bonus project management templates!
What is it that you’re really selling?
At first, it might not seem as though there is a big difference between these three things. After all, wouldn't any good agency incorporate time, technology, and thinking into the work they do? What's different is that an agency focused on selling custom websites to their clients is really in the business of selling their time, while an agency focused on selling pre-built themes is selling their technology.
These are fundamentally two totally different businesses that require unique approaches to marketing and management.
These are fundamentally two totally different businesses that require unique approaches to marketing and management. This chapter will investigate these differences, and expose new potential opportunities for freelancers and agencies to grow their practices.
Selling your time
Certainly the most common 'product' for any freelancer or agency is selling time. When people hire you to perform design, development, or marketing work, they're primarily buying your time and allocating it to their project.
This would be considered 'active income,' where you're only getting paid when work is actively being done. In the world of selling time, there are a variety of pricing models to consider, such as pricing based on cost, hourly rate, packages, or value. These options were covered in detail earlier in this guide. Outside of how you price your time, however, there are a few other factors to consider, including alternative business models, diversifying your sales channels, and strategies in scaling your time.
Alternative business models
It's important to understand that you have more flexibility with how you charge your clients than you think. When it comes to selling your time, you could offer a few different business models to your clients. These go beyond alternative ways of pricing, and instead look at fundamentally different ways of working with them.
The traditional model is to offer project-based work. This is where a client's requirements are predefined, and you offer to meet these requirements in one of the previously-discussed pricing models.
Another model is to work entirely on a subscription-basis, also known as retainer work. Similar to software, you could offer your services on a recurring subscription, where the client is charged a set amount over a set period of time. This is particularly effective for support and maintenance-based work, or marketing work where results are produced over time, given continual effort.
A third model is to put some of your own skin in the game and offer equity-based work. In this situation, you're forgoing short-term cash for long-term potential by getting a piece of equity, revenue, or profitability from the client. There are some obvious drawbacks to this model, but finding a niche where your services could be the driving factor behind their success just might make the risk worth taking.
Diversifying your sales channels
In the client-service business of running a freelance or agency practice, it's easy to become very 'client-centric.' They are, after all, the ones that pay the bills. However, they don't have to be the only ones that pay the bills. In addition to the traditional sales channel of deriving work directly from clients, there are two other models to consider that can be equally as lucrative.
The first is working through other service providers as a subcontractor. In this model, you'd collaborate with another freelancer and/or agency by owning a part of the project and working through them. They would 'own' the client relationship, and would in turn serve as your 'client' where your portion of the project is concerned.
This model works really well as you begin to establish a more concrete relationship with other agencies and learn their communication and work style. You can leverage their sales force and mainly focus on maintaining a good relationship with them, allowing for a consistent sales pipeline of your own with minimal sales effort.
The other model to consider is one where you build similar relationships with specific technology vendors. Modern websites serve as a central node to larger business infrastructure, composed of a variety of platforms.
Often, businesses make decisions regarding their website based on the needs of those other platforms. By building relationships directly with those platform vendors, and demonstrating the value you can add to their customers, you might have the opportunity to become a preferred partner of theirs and derive work from their own customers.
Strategies in scaling your time
When it comes to selling your time, it's important to realize the limitations of this model. No matter how you price your services or the model you use to sell them, they'll always depend on someone, at some point, spending time on delivering those services. Every new client will require some amount of time invested by you or one of your team members. Understanding that these difficulties exist, there are a few ways of coping with them more effectively.
No matter how you price your services or the model you use to sell them, they'll always depend on someone, at some point, spending time on delivering those services.
The first is to always focus on building process into your services. The more predictably you can manage and deliver a project, the more efficiently your time will be spent. The second is to build automation into your services. If you ever find yourself completing the same client request or piece of communication more than once, it's a sign that you could build some sort of asset to help automate the process. Save Adobe Illustrator layouts as templates; save repeat email examples in Notepad; save reusable code from your work. These minor steps in automation can be the key to reducing time and increasing margins within your projects.
Selling your technology
Given the limits in selling your time, many freelancers and agencies look to a model that can divorce their revenue from hours spent working. This idea of being able to make money while not actively working is often referred to as ‘passive income.’ One way to build passive income for your business would be to consider selling your technology.
Rather than doing the same (or similar) thing for clients repeatedly, invest your time upfront to create a piece of technology that can be resold to any number of customers with no, or minimal, time involved on your behalf once it's built.
Granted, there might be some support or maintenance associated with your technology, but the beauty is that you'll be able to make money regardless of whether you're actively working. In the world of ecommerce, there are a few specific types of technology that are highly sought by companies, and that provide excellent opportunities for generating revenue. Primarily, these include building themes, apps, and software.
These days, most content management systems (CMS) and ecommerce platforms manage the look and feel of their websites with a theme. Some companies benefit from a custom theme, but the majority of website owners are fully satisfied with a clean, professional-looking, pre-built theme that has their content and branding. The market for pre-built themes is still quite young and has plenty of room for new entrants. Although many quality pre-built themes already exist, many of them are structured to cater towards general users.
Designers and developers interested in selling pre-built themes could immediately differentiate themselves by targeting industry niches or unique use-cases. Perhaps there is a market for themes catered towards pizza shops or digital romance novels. When you begin exploring the idea of selling pre-built themes, you’ll soon find a variety of channels or marketplaces available.
There are platform-specific marketplaces, such as the Shopify Theme Store, as well as platform-agnostic marketplaces, such as the Theme Forest. Both of these channels, as well as selling directly through your own website, are great ways to start building a passive income with themes.
Pro tip: Learn how to build beautiful Shopify Themes for ecommerce by reading some of our Shopify Theme Development content and tutorials.
One thing that many agencies quickly discover is how often the same requests are made across their entire client-base. Whether it's specific functionality on their website or an integration with popular third-party platforms, many client needs are often not all that unique. As you start to observe these repeat requests, it might indicate an opportunity to develop an app that could solve that request for future clients.
Apps allow you to pre-package functionality and integrations so that deployment for future clients is as simple as a quick install. Find a use case beyond just your clients, and a publically-released app could turn into a major passive revenue stream, as other stores begin to pay for, install, and use it. Similar to themes, there are marketplaces that exist for selling apps, including the Shopify App Store and Code Canyon.
If you have an app idea in mind, verify that the idea hasn't already been built through these channels and get your coding underway for some potential passive income.
Pro tip: Learn how to build functional Shopify Apps for ecommerce by reading some of our Shopify App Development content and tutorials.
Sometimes, a simple app just isn't enough to solve a client's problem. Perhaps they need a solution with more robust content management capabilities or an externally-hosted database. Perhaps they have a problem that exists across multiple other ecommerce platforms.
In these situations, it's worth asking whether there could be an opportunity to build standalone software of your own. Larger problems, such as email marketing, customer loyalty, analytics, and content marketing are often too much to sit within the app section of a platform, and require their own unique interface. If an opportunity like this emerges, it could serve as a means to pivot towards becoming a software company, and generating revenue via a subscription model.
It's important to note that the allure of passive income associated with technology does not come without its own problems. Even if customers can purchase and use your technology without requiring your time, you can't underestimate the support requirements that will come along with your technology as it grows. Once you've figured out a support management strategy, you can shift from viewing it as a liability to becoming an asset for your business.
Customization requests for pre-built themes, installation help for apps, and integration requirements for software could all serve as lead generation for your time-based business services. Sell additional support to these customers, and allow one product to build on the other.
Selling your thinking
All of this investment in billing time and building technology requires significant thinking. Freelancers and agencies who are willing to capture and share that thinking have an entire potential revenue stream at their fingertips. Granted, publishing your thinking through blogging and social media is a baseline practice for generating leads, but many companies seem to stop their activities there.
Publishing your thinking could extend into a variety of other formats, many of which could be monetized. In general, we like to bucket thinking as a product into three segments: content, courses, and communities.
Likely the clearest way of publishing and monetizing your thinking, content could include anything from articles to books, podcasts, and video series. The idea is simply that you're creating unique and compelling content that's worth a purchase from your customers. A great way to evaluate what content is worth publishing would be to determine what questions you are often answering for clients, and what advice you are frequently giving.
The idea is simply that you're creating unique and compelling content that's worth a purchase from your customers.
Whether through strategic consulting or technical training, you likely find yourself providing the same type of insights to clients on a regular basis. Rather than just provide that information one-to-one, consider recording it in either writing, audio, or video and using that as the basis for an exclusive article series, ebook, or online video series. Not only would this allow you to more efficiently educate your existing clients, but it also creates an offering that could be sold to folks outside of your existing client base.
With LinkedIn's acquisition of Lynda, and the emergence of other major online learning platforms such as Creative Live, the opportunity for paid online courses has grown massively. Companies with content that could fit well into an interactive model are great candidates for offering courses. Adding a quiz or ‘how to’ aspect to more technical content in the realm of marketing, for example, can be a great alternative offering to training customers.
A variety of platforms exist, such as Teachable, that make it easy for you to host and manage your own online courses, similar to Lynda. Creating your own online course could serve both as a revenue stream and as a way to drive leads for your other products.
Perhaps one of the most effective means of sharing your thinking is socially, via a community-based model. The idea is to share your expertise, or the expertise of a group of people, directly through a digital or offline channel.
This is an especially popular model for consultants who run group sessions, and who want to sell their systems and frameworks to a number of potential clients at the same time. Here are a few specific types of communities you could explore creating:
- Workshop: Perhaps a bit less organic of a community, a workshop could serve as a great way to get a group of people together, where you can share your thinking via a teaching model.
- Meetup: A recurring meetup is a great way to build a physical community that shares a similar interest. Often run as 'mixers,' they tend to be more successful and provide more value when a presentation of sorts is included in the session.
- Conference: A larger production, but a very value-focused offering could be setting up a conference for your industry, where you bring thought leaders, including yourself, to educate your community.
- Online forum: A private online forum where chats and webinars can take place is a great way to run a community digitally.
- Social media group: You could open up an online forum by leveraging existing channels such as Facebook, Slack, or LinkedIn to build and manage your community.
If the idea of selling your thinking sounds appealing to you, it's worth looking more closely at what 'monetization' actually means. Whether you're building content, courses, or communities, the means by which a user pays for that thinking could include any of the following:
- One-time access: With this model, you're charging a one-time fee for users to access your thinking. This works well for standalone things that don't necessarily change much over time, such as content or courses.
- Subscription access: With this model, you're charging an ongoing fee for users to access your thinking. This works well for items that change over time, such as community.
- Sponsorship advertising: With this model, you're earning revenue from advertisers who are sponsoring or placing ads throughout your thinking assets. This works well when giving away free access to users, as you'll likely find a larger audience while not sacrificing revenue.
- Affiliate advertising: With this model, you're getting paid based on a certain action that your users are taking within your thinking assets. This works well when you're promoting external services and products, where you could earn an 'affiliate fee' for any time a user purchases them.
Once you've nailed-down your monetization method, you'll want to determine who the real audience is that you're targeting. Your thinking might appeal to your prospective or existing clients, or you might find that it's better served to peers who could learn from the best practices you've established. Don't be afraid to explore new audiences that may or may not be direct clients. You might find that a bigger market exists outside of the service niche you currently have.
Applying a new revenue model to your business
You might be excited about the prospect of passive income through selling apps or building a large audience through content, but remember that each of these products require very different strategies to be successful.
Building a lucrative service-based business by selling your time can be done entirely through a small local market. Building a successful app-based business by selling your technology would likely require national, or even global, reach. Understand that the approach you'd take to market and sell each of these three products is very different, and shouldn't be underestimated.
If you're willing to give it a shot, you might find that experimenting with new business models might work to improve your existing one. You'll find that theme subscribers can turn into service clients, and online course participants can turn into community members. There are tremendous amounts of transference that can exist across each product — and that could be the key to unlocking your company's success.
About the author
Ross Beyeler is a serial entrepreneur in the technology space with experience ranging from digital marketing to business development and strategic management. He is the founder of Growth Spark, a design and technology consultancy focused on helping ecommerce and B2B service companies become more efficient and profitable.