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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.


Computer Business Models for sale


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:

  • improving, 
  • inspiring 
  • 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.


Buying a Software Business?

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


Computer Business Models


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, 
  • platform 
  • 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


Computer Business Models


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:

  • Daily 
  • Monthly 
  • Annually


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,

a well-defined marketing strategy with proven results,

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.

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