Big tech firms have proved over and over again that technology is a worthy investment. Year in, year out, they continue to make news with billion-dollar revenue records. Among the areas they have ventured into include e-commerce, social media, hardware, online search, entertainment and app development.
It is undeniable that the revenue records originate from amazing products coupled with exceptional services. Below are ways through which big firms generate revenue.
With the rise of knowledge in industry science, people can transact from different parts of the world. As a result, tech companies invest in e-commerce businesses where they sell products and services via the web.
They also embrace different e-commerce models, which include:
- B2B (Business to Business) – In this case, one business sells merchandise to another for resale or use.
- B2C (Business to Consumer) – where a business sells goods or services to the end-user.
When businesses and individuals use the platform to sell their merchandise, tech firms take a portion of the sales.
Businesses exist to provide services in exchange for profit. However, the market competition has forced companies to employ strategies that influence the purchasing behavior of individuals. Tech companies take advantage of this opportunity and provide a platform through which other companies can upsell their products.
They display ads on their websites, social networking sites and mobile applications. Advertisements may appeal to consumers leading to an increase in sales. Marketers who wish to make advertisements through these platforms pay the tech companies depending on the number of clicks, impressions and actions made by users.
Developing and Selling Products
Technology companies make a lot of money by developing a wide range of products for personal and professional use. The products vary from advanced hardware equipment, software, product solutions and home appliances. In addition, some tech companies make money by selling physical products.
These commodities include mobile communication gadgets such as smartphones and tablets. Others specialize in the manufacture of computers, digital watches, computer peripherals, and communication-related products. Some companies concentrate on making home appliances and electronics.
Intangible products include games, computer programs, cloud services, consulting services, product solutions, and mobile apps.
Freemium is a model for business where tech companies offer basic services for free and advanced features at a cost. Some of the freemium models include:
- Time limitation: Here, a product or service is available for a specified duration. Once the duration has elapsed, you have to pay to continue enjoying the service.
- Storage limit: In this model, a company offers you limited storage capacity. To exceed the set limit, you need to pay for it.
- Advertisement limit: The basic product has ads and you pay a monthly fee to take them away (course, they can also make a profit off serving ads.
- Usage limit: In this scenario, the free model has very limited features. The higher you pay, the more access you get to the given product.
While there are myriad ways tech firms make money, big companies can decide to use one or a combination of ways to attain huge profits. Start-up tech firms could use these strategies to grow and establish themselves in the industry.