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Monetization Methods

How Online Businesses Get Paid

Recently I came across an article entitled “Best Online Business Ideas.”

One of the ideas was this:

Why not turn your hobby into an online business? You can monetize most hobbies in multiple ways. You can create a blog about your hobby where you sell advertising. Or you could write a book, create an online course, or provide training online.

A couple of issues with that:

  • “You can create a blog about your hobby where you sell advertising.” → Like that’s an easy thing to do. It’s kind of like saying, “You can become a basketball star and have sports companies pay you to promote their stuff!”
  • “Or you could write a book, create an online course, or provide training online.” →
    None of those are monetization methods. Those are things you can do, not ways to monetize.

Let’s make that last distinction clear.

There’s the work that you do, and there’s how you get paid for that work.

Your skills do the work, and your monetization method(s) get you paid.

There are often multiple ways to monetize a specific skill. And you don’t necessarily need to learn or develop specific skills yourself; you can hire others who already have them.

List Of Monetization Methods

To date, we’ve identified 10 direct monetization methods used by online businesses.

  • Advertising
  • Affiliate Marketing
  • Reselling
  • Crowdfunding
  • Dividends
  • Hourly Rate
  • One-Time Sale
  • Retainer
  • Salary
  • Subscription
  • Winnings

Indirect Ways To Get Paid

There are other ways to be rewarded for your work aside from money. Here are 9 indirect monetization methods:

  • Credit
  • Coupons
  • Equity
  • Experience
  • Exposure
  • Pro bono
  • Products
  • Services
  • Referrals

3 Levels Of Monetization

Not all monetization methods are created equal. For example, two businesses that monetize primarily through advertising can operate on different levels.

Our 3 Level model takes into consideration how passively revenue is generated for the business.

  • Level 1 – 80-100% active income
  • Level 2 – 20-80% active income
  • Level 3 – 80-100% passive income

Another way to think about it:

  • If you take a month off from your Level 1 business, you’re unlikely to generate any revenue that month.
  • If you take a month off from your Level 2 business, you’ll still generate revenue, but not as much as usual.
  • If you take a month off from your Level 3 business, revenue will likely stay the same or perhaps even increase.

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