Online Home Business Model (#1)

Posted by HBB Admin

November 2, 2008

Online business is the easier, faster and less expensive way to start a home business. You can run your home business with a capital as low as less $100 a month. You can start it in one day even. So, what kind of business model that suit you to give you an idea in starting your own online home business?

We have categorized all models fall into 8 categories:

1. Affiliate marketing

2. Online auction

3. Selling things in a website

your own digital product ie. ebooks, video tutorial, software
internet/web services i.e. search engine, webhosting, autorespoder, ad tracking services, etc
knowledge via webinar, e-class, e-courses (as resource center), etc
membership sites
private label rights and resell rights

4. Freelancing

5. Online job

online survey
data entry

6. Dropshipping

7. Blogging for profit

8. Providing daily information, daily tips and news

Consideration in Choosing the Right Model for you

What model you choose is important to your Online Business success. It has to be right for the type of product or service you are selling. There are several factors you have to consider in choosing the right Online Business Model for you:

Marketing strategies – the best suitable to your product or service
Profits – the higher the profit margin, the better
Costs – including product cost, shipping cost and other operating costs – the lower the costs, the better .
Delivery system – as effective as possible with a system

Business Model #1 – Affiliate Marketing

What is Affiliate Marketing?

Affiliate Marketing is a way of promoting online business through affiliate programs and advertising that pay the affiliate (or publisher) a type of commission based on the amount of business their website brings the merchant company.

It’s a form of revenue sharing or commission based advertising. The term “affiliate marketing,” however, is often associated with network marketing or multi-level marketing and therefore many companies prefer to use the term “performance marketing”. Affiliate marketing is the most cost effective sort of marketing there is, and is actually incredibly efficient. For this reason, many companies (especially those that started in the early days of e-commerce) owe a tremendous amount to affiliate marketing (amazon.com is a good example) and it has now become normal for companies to include affiliate marketing in many of their plans.

There are three types of compensation methods that are associated with affiliated marketing. The first type is Cost per Click (CPC) or Cost per Mil (CPM.) Basically, the affiliate earns by how many clicks the advertising on higher site generates, or by just having the advert published on the website. But because of click fraud and many other questionable tactics, CPC is no longer the general form used for affiliate marketing. Generally, companies now either use CPA (Cost per Action) or CPS (Cost per Sale.) The first is based on how much the advert generates interest by the clicker to actually buy or register at the advertised site, the second is based strictly on sales. In other words, an affiliate is paid if the clicker actually purchases something on the advertised site.

I will explain more about different types of affiliate marketing on our next post. So… subscribe our rss for next post notification.

The Advantages of Affiliate Marketing

Revenue sharing concept has been around for quite a while, long before the internet era. However, the idea of affiliate marketing has taken it to new levels, and become a staple form of advertising and bringing in business for all types of e-commerce.

Online merchants find affiliate marketing highly advantageous due to the fact that it presents little to no risk both for the merchant and the ‘affiliate.’ The way it works is that the affiliate earns a type of commission or fixed amount based on the number of sales the affiliate brings to the merchant, either through on-line links on the affiliates website – or through email, blogs, rss feeds and many other kinds of on-line communication. However, cost-per-click remuneration system, which simply means that the affiliate earns every time an internet searcher clicks on an advert on their site, is not preferred for merchants as it becomes too risky for fraud clicks.

Affiliate marketing also bears no cost on the merchant in the original set-up – in other words, it costs nothing to place advertising banners on affiliate’s sites, and there is only a cost if a lead or sale has been generated (which is advantageous for all.) Merchants also get to set the parameters, and decide on the incentive schemes. Thus, it is a very inexpensive (but highly efficient way) to grow a business.

More articles on Affiliate Marketing can be found in our partner site : Affiliate Marketing Information

Other Business Model will be discussed in our next post – so keep your eyes on HomeBiz Blog ….

Affiliate Marketing, Home Business Model, Online Business, Start A Home Business

Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.