Are you thinking about starting an online business but don’t know which type is right for you? You’re not alone.
With so many popular online business models, it can be tough to decide where to start as an entrepreneur.
In this blog post, we’ll outline nine popular types of online businesses with a brief overview of each. So whether you’re looking for ideas or just want to learn more about the different types of businesses out there, read on!
The Best Online Business Models
Of course, there are many different types of businesses to make money online. However, most of them could be classified as one of the online business models listed below.
1. Content-Based Websites Business Model
A content-based website provides visitors with written information on a specific topic, usually articles or blog posts. Whether you want to call them blogs, authority sites, niche sites, or something else, they all follow a similar business model.
Content-based websites attract visitors who arrive at the site to read the content. The site owner may make money in a few different ways, including:
- Display ads
- Affiliate marketing
- Selling digital or physical products
- Publishing sponsored content
These websites may use different methods to attract visitors, including search engine optimization (SEO), social media marketing, email marketing, and sometimes paid ads.
Websites with different monetization strategies may have very different approaches. But, in the end, all content-based websites rely heavily on written content to drive traffic that ultimately produces income.
For example, a website that uses an advertising revenue model may take a much different approach to producing content and driving traffic than a blog monetized by selling an e-book. However, the free content on the site is the cornerstone in both cases and essential for the business’s success.
Most content-based websites constantly need to produce new content to keep the traffic flowing and spark growth. As the site owner, you’ll either need to write a lot of content yourself or outsource the work to freelance writers or a content agency.
Those who drive the majority of their visitors through organic search engine traffic also need to do a lot of keyword research to find words and phrases people are searching for and create content based on those keywords.
The Pros of Content-Based Websites
The Cons of Content-Based Websites
For more, please read our Guide to Building Profitable Niche Websites.
2. Audio/Video Content Business Model
Here, we’re talking about podcasts, vlogs, and YouTube channels. Essentially, this is a content-based business, but the focus is on audio or video content instead of written articles.
With the popularity of audio and video content spiking over the past several years, this type of business presents a tremendous opportunity.
The most significant difference between an audio/video content business and a written content business is the time investment required. Producing high-quality audio or video content takes much more time than writing blog posts or articles.
But since it takes more effort, fewer people are willing to do it. As a result, you may face less competition than you would face with a content-based site that produces written content.
This business is also unique because you could publish the content on your own website, on YouTube, or popular podcasting platforms. While having a website is ideal, it’s not completely necessary.
Audio/video content can be more challenging to outsource than text-based content. This is partly because the show’s host is essentially the face of the business. Video or audio content produced by many people would likely make it more challenging to brand your business and build a following. As a result, you should be willing to create the content yourself if you choose to pursue this online business model.
Audio/Video Content Pros
Audio/Video Content Cons
3. E-Commerce Business Model
E-commerce businesses come in all shapes and sizes. For this article, we’re talking about selling products online. This can be through your own website or online store, selling on a major marketplace like Amazon, or even dropshipping (where you don’t hold any inventory).
Starting an online shop is much more involved than starting a content-based site because you’ll need to choose a product, find a manufacturer or be able to produce it yourself, order inventory, and deal with fulfilling orders and shipping the goods to customers.
You’re also likely to face cash flow challenges, especially as you attempt to grow the business and add new products. You may need to pay for inventory several months before you start to generate any revenue from that inventory, so managing cash flow is a significant part of the business.
Taking cash out of the business and putting it in your pocket is more challenging with an e-commerce business than with many other online businesses that don’t involve physical products.
The income potential for e-commerce businesses is outstanding. While content-based sites might make money in several ways, product sales will account for close to 100% of the revenue for most online stores.
Suppose you’re hiring someone to manufacture the products and use Amazon FBA or another shipping and fulfillment service. In that case, much of the day-to-day responsibility will be out of your hands. That frees you up to work on big-picture things that may help to grow the business faster.
For more, please read How to Sell on Amazon FBA.
4. Service-Oriented Business Model
Service-oriented businesses are often overlooked in favor of some of the other online business models, but offering a service may be the most practical and realistic way to reach a full-time income online.
There are many different services you could offer as a freelancer, and chances you, you already have some skills or experience that could be used for clients.
For example, if you’re a web designer, you could offer to build custom websites for small business clients. If you’re a graphic designer, you can offer design services or create graphics for bloggers and other content creators. If you have experience with social media, you could set up profiles and manage campaigns for clients.
The opportunities are endless.
One of the benefits of starting a service-based business is that it’s often one of the quickest ways to earn money online. You can start offering your services immediately after coming up with an idea and start making money as soon as you land your first client.
That’s much different than the other online business models we’ve looked at so far, which would take several months before generating any money.
Starting a service-oriented business is usually less capital-intensive than starting another business. In fact, you could start without spending any money at all.
Many people considering a service-based business fear they won’t be able to find clients. However, you can use many different methods to find paying clients. You may have people you already know who would be interested in hiring you. Free ads on sites like Craigslist can also be highly effective.
Paid ads on Google and Facebook may produce an excellent return on investment. And once you’ve gained momentum, word-of-mouth and referrals will probably be the best method.
Service-Based Business Pros
Service-Based Business Cons
5. Education/Course Business Model
If you have expertise in a particular subject area, you may want to consider starting an online course business. This is a great way to share your knowledge with others and generate income simultaneously (it can be one of the most lucrative business models).
Thanks to platforms like Udemy and Skillshare, creating and monetizing online courses is easier than ever. You can use one of these platforms or a platform like Teachable that allows you to create a website and sell the course on your own.
When creating an online course, it’s essential to choose a topic that you’re passionate about and that you know quite a bit about. It’s also important to ensure there’s a demand for the course before putting in the time and effort to create it.
You can do this by checking out other online courses on Udemy and Skillshare to see what’s popular or by conducting market research on Google and other search engines.
Creating an online course can be time-consuming, but once it’s complete, you can generate passive income from it for years to come. And best of all, you can offer the course to people worldwide without having to deal with geographical boundaries.
Courses aren’t the only possibility here. There are other ways to build education or information-based businesses. Of course, writing and selling e-books would be another possibility. Membership websites and hybrid products that involve an online course and a membership or subscription model are extremely popular right now.
Education/Course Business Pros
Education/Course Business Cons
For more, please read How to Make Passive Income from Online Courses
6. Software or SaaS Business Model
If you’re a tech-savvy individual, you may want to consider starting a software or SaaS (Software as a Service) business. This online business model has become increasingly popular in recent years thanks to the rise of cloud computing.
With a software or SaaS business, you create a piece of software that people can use online. This could be a desktop application, a mobile app, or even a web-based app. Alternatively, it could be a plugin or add-on for another piece of software.
The great thing about this business is that once the software is created, it can be sold to an unlimited number of customers. And since it’s delivered over the internet, there are no geographical boundaries.
The main difference between the software and software-as-a-service models is that SaaS typically involves recurring subscription payments. For example, email marketing services like ConvertKit and AWeber charge monthly fees.
As a result, a SaaS business has the potential to generate significant ongoing and recurring revenue. On the other hand, the software is often sold for a one-time upfront payment.
Because of the recurring revenue stream, SaaS businesses are fascinating to buyers or investors. Some buyers look specifically for SaaS opportunities over other profitable online business models.
Knowing details like the churn rate, a buyer can buy a SaaS business with high confidence that it will continue to generate a specific income level over the next several months and even years. As a seller, this is ideal because you may get a higher price for the business.
Software or SaaS Business Pros
Software or SaaS Business Cons
7. Affiliate Marketing Business Model
Affiliate marketing is an internet business where you promote another company’s product or service and earn a commission on each sale you generate.
Some of the business models we’ve already covered (content-based websites, audio/video content) can be monetized with affiliate programs. However, you don’t need to have your own website to make money with an affiliate business; this can be a business model of its own.
Many high-earning super affiliates make money by paying for ad clicks and/or promoting products to their email list.
Affiliate marketing can be highly lucrative for successful affiliates, and there’s no need to create your own product or content to get started.
As the affiliate, you’ll have no responsibility for providing customer service or support. The company that’s selling the product will be responsible for support.
The commission you’ll earn from each sale or referral will vary from one product to the next, but commissions for digital products tend to be very high. In some cases, the affiliates earn a bigger cut than the company selling the product.
Affiliate Marketing Pros
Affiliate Marketing Cons
8. Digital Products Business Model
The terms “digital product” and “info product” are sometimes used interchangeably, but there are so many other types of digital products you could create aside from info products like courses and e-books.
Printables like planners, organizers, and checklists are extremely popular and could be possible in many niches. Other possibilities include spreadsheet templates, slideshow templates, website templates, WordPress themes, WordPress plugins, icon packs, Photoshop files, add-ons for popular software, audio files, photos, and more.
Creating digital products can be enjoyable and rewarding, especially if you’re passionate about the topic. Once you’ve created the product, it can be sold an unlimited number of times with little to no additional work required.
Some products take a lot of time to create, but others can be done relatively quickly. You could also outsource the product creation by hiring freelancers at sites like Upwork and Fiverr.
If you have an existing website or blog, you could choose to create products as a way to monetize the site. Or, if you don’t have an existing site, you could build your business around downloadable products.
You can sell the products at your own site or set up a shop at marketplaces like Etsy and Creative Market. Of course, if you create a site, you’ll have complete control and won’t need to split the revenue with anyone. But existing marketplaces do make it easy to get started quickly.
Digital Products Business Pros
Digital Products Business Cons
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9. Print-On-Demand Business Model
The print-on-demand business model is similar to the digital products business model in that there’s a minimal overhead cost, and you can sell unlimited products.
The main difference is that the products are physical goods like t-shirts, mugs, tote bags, and phone cases with print-on-demand. However, you don’t need to deal with inventory since the products will be printed and shipped as they are purchased.
Numerous print-on-demand companies will handle all of the printing, packaging, and shipping for you. All you need to do is design the product and upload your artwork. With marketplaces like Redbubble and CafePress, you don’t even need your own website.
Print-on-demand is a great online business model for creative people who want to sell physical products but don’t want to deal with the hassle of manufacturing, inventory, and shipping.
In addition to the types of products listed above, you can also sell books with the print-on-demand business model. Thanks to Amazon’s Kindle Direct Publishing, anyone can become a self-published author. You’ll write the book or hire someone to ghostwrite it for you, and Amazon will print and ship the book when a customer purchases it.
Print-on-Demand Business Pros
Print-on-Demand Business Cons
For more, please read How to Start a Print-on-demand Business.
Frequently Asked Questions
There’s no exact answer to this question because there are many online business models, and the best one depends on your abilities and interests. Content-based websites are excellent for beginners. A YouTube channel or podcast could be ideal if you have an engaging personality. Freelancing may be the best online business if you have existing skills you can monetize.
The startup costs vary for different internet business models. Some businesses can be started with no money at all. For example. you could work as a freelancer or start a print-on-demand business without investing any money.
Other businesses, like a content-based website, could be started with less than $100. And some business models, like e-commerce, may require a few thousand dollars for initial inventory.
I believe a content-based business, like a blog or niche website, is the most straightforward. It’s not necessarily easy, but the process is fairly straightforward for new business owners.
Final Thoughts on Common Online Business Models
Now that you know about the different types of online businesses, it’s time to decide which model is right for you.
Of course, there’s no need to limit yourself to just one business model. You could choose to sell digital and physical products or even combine multiple business models to create a more diversified income stream. The most important thing is to choose a model that you’re passionate about and that you can see yourself doing long-term.
Once you’ve chosen one of the online business models, it’s time to start planning your business.