There are many different options for how SellFire can monetize it’s services. In this blog post, I will give an overview of each of the different strategies and the pros and cons of each. Keep in mind as you read that these options are not mutually exclusive and its possible (even likely) that SellFire will employ multiple of them.
Affiliate Subscription Model
The affiliate subscription model is based on charging affiliates who use the service a monthly or annual fee to use the service. This model is used by SellFire’s two most serious competitors. SellFire could also offer different subscription levels. More expensive subscriptions would unlock additional features or allow the affiliate to setup more stores or promote more products. Competitors offer subscriptions that range from free to $100 per month.
Pros
- The affiliate subscription price model gives me the ability to increase revenue as my own costs increases. As the number of affiliates increase, hosting and support costs will also increase.
- Simple for the affiliate to understand their own cost.
- Different tiers of subscriptions gives me the ability to charge an additional amount for the features that my competitors don’t offer.
Cons
- For many affiliates, having to pay for SellFire without any guarantee that the service will generate revenue for them will prevent a lot of users from signing up. It is my assumption that the average affiliate makes very little money from their affiliate marketing efforts, so even a small monthly payment may strike them as “too expensive”. SellFire’s primary competitor offers a free subscription tier with limited features to give small affiliates a way to try the service risk free.
Merchant Subscription Model
The merchant subscription model is based on charging merchants who publish data feeds a monthly fee in order to access information gathered from the affiliates that are using SellFire’s service. For example, SellFire could charge merchant’s a fee to see how many affiliates are promoting their competitor’s products, how many “clicks” competitor’s products are getting, and where those clicks are being generated from.
Pros
- The merchant is usually an established business and has deeper pockets than the affiliate.
- The data they will access is proprietary to SellFire, they won’t be able to get it anywhere else
Cons
- Unsure of the demand. A merchant’s needs for reporting and analysis might already be being met from a variety of other services, including the affiliate networks.
- Selling data regarding the actions of the affiliates that use our service may make some merchants and affiliates unwilling to work with us, particularly merchants.
- Would presumably require a lot of active affiliates to use SellFire before the data we had to sell was valuable.
- The data they would access wouldn’t change too much over time. This may mean that subscriptions would be cancelled quickly.
Click Sharing
In the click sharing model, the affiliate does not pay a monthly fee to use SellFire’s service. Instead, they “share the clicks” that their stores receive with SellFire. For example, let’s say Bob has a store that he created using SellFire. Under the click share model, every fourth click on a product in Bob’s store from a visitor would be treated as a “SellFire click”. This means SellFire, not Bob, would receive the commission from any potential sale. Of course, the end user of Bob’s site does not know whether his click is a SellFire click or not.
Pro
- Like the affiliate subscription model, revenues would increase with usage, which helps ensure profitability.
- Affiliate doesn’t have to pay anything to use the service, which could help generate a large number of users
Cons
- Could foster distrust and conflict between SellFire and affiliates. Affiliates would have to trust that SellFire was only taking an agreed upon percentage of clicks.
- For successful affiliates, any click sharing model would make the service very expensive to use since they would be losing a percent of their revenues. This means that to attract power affiliates, SellFire would need to offer the flat subscription based model in addition to the Click Sharing model.
Ad Embedding Model
The ad embedding model is similar to the click share model. In the ad embedding model, the affiliate does not pay any monthly fee to use SellFire’s service. Instead, SellFire embeds its own advertisements into the stores that it generates for affiliates. If SellFire’s advertisements are clicked, SellFire would receive a commission. This is slightly different from the click share model because it is more transparent to the affiliate how SellFire is making money because it is linked to a particular advertisement.
Pro
- Like the affiliate subscription model, revenues would increase with usage, which helps ensure profitability.
- The affiliate doesn’t have to pay anything to use the service, which could help generate a large number of users
Cons
- Adds complexity because SellFire would have to figure out how to select advertisements to embed that were relevant to the store’s content.
- Affiliates may not like having content on their site that they do not have control over or profit from.
