Signal vs. Noise had a nice post about ways to make money with software. They discussed:
- advertising
- subscriptions
- support fees
- combination
They liked subscription fees the best.
They conspicuously left out licensing to other companies. A few astute commenters pointed this out.
For web-based applications, licensing is a great way to make money through co-brand and private-label relationships. The partner might use any of the models listed above to make money from your application or they might use it as a draw to get people to buy related products or services of their own.
Partnership models can include
- sharing revenue
- paying per use
- paying a fixed licensing fee
Avoid the temptation to do an exclusive deal with a major player. Exclusives are not the way to go because you’re stuck with one partner that may or may not continue to invest in the relationship. If you’re working with them on a revenue sharing or per-use arrangement, this will kill you.
Looking for companies with related products or services is a great place to start for seeking out these types of partnerships. Don’t underestimate the value of business development.
