Subscription Based Revenue Models

As we saw yesterday, a “free plus ad supported” model makes most sense for consumer oriented activities; where the presence of a “non-free” offering means that most first time viewers will choose to stay away or opt for other free offerings instead. For businesses, however, the ad-supported approach may not make sense; a subscription style offering may be far better. Following the success of Salesforce.com and other web based services, a number of Web 2.0 businesses are exploring the subscription route.

One caveat – depending on how you define Web 2.0, some of these may or may not make the cut. One key element – user created content – is missing in some of these, in the sense that such content is accessible only to predefined groups and not to the community at large. On the other hand, you’ll find mashups, AJAX and other technologies that commonly denote the 2.0 paradigm.

Pure Subscription Offer

Check out 24sevenoffice and PushCRM – two sites that offer CRM and web collaboration services with a 2.0 flavor. Both have free trial offers allowing prospective users to evaluate the service for a limited period of time – beyond that, you either pay or move out. Pricing varies from a few dollars per month for small teams to a few hundred for larger teams. Offerings of this type make sense for a small to medium sized business that doesn’t have the infrastructure to manage this in house, but would benefit from having a hosted solution.

Free Plus Usage Based Offer

ZohoCRM has a tweak on this model – the first 3 users are free, but you pay from the 4th onwards. Zoho has a number of other offerings on the free model – plus two others, ZohoChallenge for online testing and Zoho Virtual Office, which operates with a similar free plus usage based model.

Free Plus Feature Based Offer

Fastpitchnetworking offers a business networking and promotion service geared more towards promoting your business. The basic service is free, but any additional services come at a price. Here, the gamble is that as users find benefits with the basic service, they would look for more; the free offer helps get the user base, and results drive the incentive to upgrade.

And you’ll notice – none of these carry any advertising. Whatsoever.