Types of Computer Business Models – Which to Buy?
Types of Computer Business Models – Which to Buy? –
Choosing the right computer business model is the first step to acquiring an online business.
If you have narrowed your search to that of the “Software Business Model”, you are not alone.
Many Software and Software as a Service or (SaaS) Businesses
are extremely popular with investors. These investors are typically
involved with an operation of a recurring revenue model.
According to Mashable, 5 reason recurring revenue works are as followed:
- Traditional Businesses profiting, not just Tech Startups
- IP Entry is Lowered
- Built to Scale
- Possibility for Collaboration
- and Shared Revenue Models
Having said that, let’s examine what exactly is a Software business, and why
you should buy one if you are in the position to do so.
History of Software Business
Before we dive into some of the most common reasons software companies
are a great investment to consider, let’s look at the backbone of how and what makes up a software business.
This will help frame your decision in buying or selling, a software company and choosing the
best model. Spend a little time on the internet, and you might have
seen new and relevant products. Some of these products are created to enhance
and simplify the user experience. This type of technology allows for
certain niche markets to expand on their already existing technology.
Or, it can be an opportunity to bring a new product or software to the marketplace.
Online Retailer Computer Business
For example, ClickBank, an established partner network, is used to sell such
niche software product. ClickBank, for example, has provided the transfer
of lifestyle products to their customer base. According to their company website,
this practice has been going on for over 17 years, with a company mission of:
- and coaching the lives of their customers.
Aside from their mission statement, they are one of the largest online retailers.
Pretty impressive to say the least. This is done through 6 million unique
products according to ClickBank, that reach over 200 million worldwide customers.
This provides an illustration of how this business dynamic operates in the real world.
Depending on the type of product and customer base, the software business can
set up either a one-time fee or a subscription payment plan.
If you are looking to buy a software business, then you should focus on the
business’s marketing strategy and business model. This marketing strategy will
include several factors that should be determined in the sale.
For example, traffic sources. You want to ensure you are buying a platform or software program,
with legitimate verifiable traffic sources. These traffic channels should provide growth
from reputable and relevant industry topic sites.
Backend Quality of Software Company
Make sure that the traffic supply did not just increased a month or so prior to you
buying the business model. Always insist on a historical performance sheet
showing user activity and conversion rates. This is the backend analysis of the computer software.
It will provide the quality and integrity of the software’s source, along with a technical
overview. In this technical overview, requirements for future upgrades are noted in this process.
Software Model – Software-as-a-Service (SaaS)
In the software business, there exist several types of computer model’s businesses.
These computer business models, are important to examine regardless of if you
are thinking of buying or selling a software company. So, let’s start out with
the first computer software model, the Software as a Service.
What is a Software-as-a-Service business?
This is a great question if you’re in search of buying a specific type of computer software business.
According to QuickBooks, the business of software or SaaS, is the defined as the delivery
model for software. The next step in this procedure
has to do with the hosting of the business applications.
A few of the applications are listed below:
- CRM – Customer Relationship Management Services
- HR – Human Resource management systems
- CMS – Content management systems
- Accounting services – on cloud computing – on most occasions
You can see the many advantages of this type of software business model.
You have little upfront costs, which is a huge selling point for many
investors, or even new buyers to the market.
The cloud computing feature can help deliver virtual services, so you never miss a beat.
This helps with customer service reduction in costs since the virtual services can
now have automated systems for user help. Another advantage of this type
of model is, the reduced cost compared to traditional hosting platforms.
Computer Technology – Improvements to the Base
For example, physical servers and machines, yes, you remember those days,
they would take up so much space in the office. You may even still be operating under
these working conditions, but that all may change in the near feature,
if not already. This is because of the new online trends, and with an increased
number of users going on online, a greater capacity for data storage will eventually be mandatory.
Online users will continue to search online for data, therefore data will continue to grow,
and the data volume only increases, and as you see, the entire cycle repeats.
So, be ready with a computer software platform that can handle the insatiable
the desire to consume large amounts of data online.
Subscription Based Software Company
You might already understand or are just learning about the subscription computer software business model.
This business model in computer software is where online users pay a subscription
for a service or borrowed product. For example, Netflix and rented movies.
The movies are in the intangible form, and not the traditional tangible form.
In some cases, this paid subscription is to rent software hosted online.
This is in comparison to buying it as an individual product,
hosting it, and installing it on your local computer.
Software Companies as a Service?
Software as a Service is the core of the centralized or cloud computing.
It aims users to run their own computer tools like online rented products,
very innovative. The computer processing work and file saving process are conducted
while on the internet. This allows users to access their computer
tools and files while using a web browser, on their own personal computer.
Advantages of Computer Software?
So, how do online users benefit from this type of computer business model?
Great question, because, it allows the resourcefulness of the product to
increase in residual revenue and value, with intangible products.
The benefit of having no large upfront cost to take ownership of a software
tool is very attractive to many. Think of all the new computer programmers
and developers hitting the information and technology industry.
Progression of New Computer Technology
This can be helpful in their quest for the next:
- advanced technological tool,
- or software discovery.
Allowing small upfront costs through SaaS, can afford new students or new
industry people, to take advantage of these services. From an investors point of view,
this means an everlasting stream of income if software and technology can continue to
match supply and demand, without any hiccups in the transfer.
Cloud Computer and Technology
Business Cloud computing has allowed for this type of technology to progress
even further in the development stages. Online users can also have quick and easy
access to these vital tools. This is because, since it is hosted on the cloud,
this function becomes even more relevant. The need to not have to worry
about computer hardware is another advantageous point to this business model
observation. This only advances the progression and new development
of SaaS. This is because now technical support can aid in better customer support.
This synergistic channel of helping and solving problems only increases the longterm
value of these new advances in computer software companies and models, long-term.
Computer Acquisition Trends in 2018
Another trend to take notice if interested in buying a software company is,
the increasing popularity of online acquisitions for subscription businesses.
These SaaS businesses can show a strong amount of recurring income for both
monthly and quarterly billing models. There are other factors that an investor should
take notice before purchasing a SaaS business. One factor to take note
of is the foundation. Make sure to focus on the strength of the base of the business,
this will provide a good foundational map for the future of the business.
Also, look for the following:
- Monthly Recurring revenue or (MVR)
- The value of the customer for the lifetime
- or (CLV) Chum
High Content Marketing for Software Subscription Companies
These type of software companies have a business model that goes after high
content marketing efforts. This is the reason, why they rely on such a high
subscription conversion rate. Without the creation of highly engageable content,
this type of business model would not succeed. They are interchangeable on each
other’s success, that is high-quality content, mixed in with subscription marketing.
This means, that the high rate of subscription users, is paralleled to the quality of content subscribing to.
Just think about it, would you provide your personal email address and
information to a subscription service, if it didn’t produce relevant high-quality
information pertaining to your search? Maybe, but most likely, not.
Buying A Subscription Software Company
Having said that, if you are in the business of buying a subscription software company,
this is something to consider. That is, having a content creation plan
in place prior to the purchase. Now, that may not necessarily mean the
actual content itself, but a marketing strategy or plan, to put in place
for new subscribers once ownership is transferred. Having a content marketing plan
in place or having prior experience and knowledge as a prospective buyer, is a plus.
This is an important decision in the choice of the software business model you ultimately
invest in, within the software industry. This is because, content marketing
and traffic, translates into increased and consistent online subscriptions
What is a Subscription based Business?
Let’s think of a common subscription business model to help answer
and understand this business model. Let’s use Netflix as one.
This is a great example of where online users watch movies for a periodic fee.
This fee can be one of the following:
Free Content and Premium Computer Service?
A lot of these paid subscription businesses have many combine free content
with their free services. This free content was included in the member only
or premium purchases. However, some of these members-only websites, do
not require any money, just your contact information. The collection of an
online users’ personal information is just as valuable in some cases more valuable than the actual dollar cost.
More Online Users, More Traffic!
This can help refer others to the subscription services that are outside of the membership.
This is because the free content is accessed online freely.
This marketing tactic by subscription software companies allows for a greater
return on investment. In this case, the investment would be
categorized as content creation, free that that is.
Bigger Mission – Online Community
So, in turn, it can help educate the online public of the brand as while as capture
new audiences. This is something to consider if you are in the position to
buy a software company with subscription services. But wait, there is
more attractive qualities to buying this type of software platform.
Why should you Buy?
For example, the most successful subscription paid software companies,
also, have a successful marketing strategy and lead channel in place.
They understand how to target their audience and convert them over to buyers.
This is an important step in the subscription software business.
Quality Lead Generation Stream
Without quality leads being generated through subscription, then quality company
assets are devalued. This is because, leads need to have a greater return on cost,
and quality is an important determinant of this factor.
So, if a successful subscription model has already in place,
this should peak your interest. This is because this strategy will show
the actual conversion funnels and placements.
This is in black and white without any guessing.