Smarter Revenue Models

The most precious resource you have, is time, yet we often trade our time for money in a way that suggests we either don’t value our time or that we are disconnected with just how finite our supply of time is. 

he majority of people trade their time for money in a very linear and transactional way; of course, some people trade their time for much more money than others but the mathematical principle remains the same.

This is an inherently limited revenue model, as your income is restricted to the amount of hours you work. Furthermore, there are only so many hour in a day, and a ceiling to how much a person can charge for each unit of their time.

This article therefore encourages you to think a little differently about earning money, and suggests a smarter revenue model to leverage your developer skills, particularly in a world where so many non-tech entrepreneurs are currently asking how much does it cost to make an app, there are all sort of opportunities to make money in a smarter way that trading time for money.

If we look at the career of a programmer, for example, they can earn quite a lot of money each hour, yet they invest a heap of time and creative energy into investing an app - coming out with a decent check at the end of it, but that’s it. Their effort is not being leveraged; at the end of the project, that’s the end of their income aside from any ongoing maintenance contract.

The developer has limited themselves, in financial terms, as a result of swapping their time for a fixed amount of money… that said, they do at least have the certainty and guarantee of being paid for their effort, which is unlike the entrepreneur funding the app that will only get paid if the app is a massive success.

There is, therefore an argument of risk and reward to be had.

Let’s assume you work on an app that is successful, however. Would you prefer to be paid $1,000 an hour for 100 hours work ($100,000) or zero, at first, but then share a percentage of the profits of an app in perpetuity that uses a subscription model such as Netflix to generate revenue each and every month!

Again, there is the risk of it not working out, which is why so many people prefer to play it safe and swap their time for money - but if an app has a user base of jus 10,000 people each paying $10 per month… that would amount to $100k revenue; let’s say $80k profit. If you had a 10% share, then that’s $8,000 going into your bank account each month, which will grow as the app develops its user base. 

Therein lies the intelligence behind this revenue model. Apps are scalable. Imagine you created Spotify or Netflix - and had just a 1% revenue share!

This is the power of financial leverage, which is what happens when we stop trading our time for money and start leveraging systems and processes to generate money in a more passive way where we are rewarded multiple times over for initial effort.

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Walter Guevara

Walter G. is a software engineer with over 10 years of professional experience. When he isn't blogging or being a CTO he enjoys coding randomly complex things that he hopes many people will get a chance to use one day.

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