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My Top 5 Best Online Business Models

My Top 5 Best Online Business Models

Posted on March 9, 2021March 21, 2021
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I’m not an online business guru, but you could call me an online business junkie. Ever since ten-years-old when I started looking for ways to make money online, the lifestyle of working anywhere anytime has been ingrained into my heart. In this article, I will go through my top 5 best online business models you can use to make a living online.

As a small disclosure, this list is not objective and is solely formed out of my opinion. Depending on your skills, hobbies, and other attributes, you may rank various business models higher than what I have. For example, if you hate writing but love talking to people, you may put service and freelancing higher than free content and media. I am also not an expert on all of these business models and may not be able to answer all of the industry-specific questions.

I base most of my ranking decisions on various factors. These factors include the level of entry barrier, scalability, profitability, and suitability for beginners.

Table of Contents

  • 5. E-Commerce And Dropshipping
  • 4. Software Companies
  • 3. Service And Freelancing
  • 2. Online Courses And Subscription Based Media
  • 1. Free Content And Media
  • Combine Multiple Business Models Together
  • My Top 5 Best Online Business Models

5. E-Commerce And Dropshipping

e-commerce

I used to rate e-commerce, specifically dropshipping, a lot higher. I’m going to focus on dropshipping first.

There are various models of dropshipping. The most prevalent version by far, however, is dropshipping from Aliexpress. The main issue with dropshipping is that anybody can sell what you are selling and copy you. If you’re a dropshipper, you may find many people selling Aliexpress products on Amazon for the same price as Aliexpress. Dropshipping used to be a business model that was easy to get into and make money with, but that’s no longer the case with the number of e-commerce stores online.

You’re also not providing much value as a dropshipper because all buyers can directly buy products from where you’re sourcing them. A business that doesn’t offer value will never last long. If you want a few more reasons on why dropshipping from Aliexpress is dying, check out this article: “Is Dropshipping From Aliexpress Dead?”

E-Commerce as a whole, however, is a great business model if you have your own product and/or have licenses to sell products from large brands. Additionally, if you’re running something like Print-On-Demand (POD), where you hold exclusive rights to the designs you’re printing on products such as t-shirts, you can succeed as well.

If you don’t have a product to sell, finding one can be a major headache. Dropshipping has problems where anybody can copy you, creating your own physical product is quite tricky, getting sales licenses often require large sums of money, and you’ll probably find that POD provides lower than expected profit margins.

If you do find or create a great quality product to sell, then e-commerce is the future. Selling online is pretty straightforward. All you have to do is set up a store using a platform such as Shopify. Or you can directly sell on online marketplaces such as Amazon. The critical factors to your success will rely on your marketing and sales prowess which will depend on your ability to advertise and provide quality customer service, including fast shipping, easy communication, and benefits for your customers.

4. Software Companies

software companies

Sellers on Amazon sometimes make money, and sometimes they don’t. It is the same with sellers using Shopify, Wix, Squarespace, Etsy, or other platforms out there. The thing we know for sure, though, is that Amazon makes a lot of money whether you make money selling on Amazon or not.

Software companies have some of the highest profit margins in the world. In e-commerce, for every product you sell, there’s a pretty high variable cost. If you sell $100,000 worth of products and your wholesale price eats up 50%, you’re only making $50,000, and that’s not counting the advertising costs, which has a high chance of putting you in the negatives.

Software companies are different in that for each piece of software they sell, there are hardly any variable prices. So if you sell $100,000 worth of software, you’re going to pocket pretty much everything after the advertising costs.

That being said, software companies are more complicated and can be more expensive to start-up. You cannot bank on someone else’s product to succeed. You have to make your own product, and that’s when it becomes difficult and potentially expensive.

Depending on your application’s scale and complexity, as well as your experience as a programmer, you may find the need to hire software developers to build your application. This can get very expensive.

The software business models I’ve liked, though, are subscription and software-as-a-service (SaaS) models. These generate the most profit because people are paying continuously month after month. This makes it so that you don’t need to always aggressively acquire new customers and can focus on your existing customer base instead.

3. Service And Freelancing

freelancing

While software companies can get very expensive to create, servicing and freelancing is the lowest-cost online business model you can start provided you have a specific skill already.

One way to start freelancing for free is to go to websites such as Fiverr (affiliate link) and Upwork and create your profile. On these websites, you can post your specialties and your skills. People can look at your profile and the various services you provide and buy those services from you.

Admittedly, succeeding solely from freelancing websites is a pain. When you’re just starting and have no reviews or testimonials, nobody is going to buy from you. You’re going to have to work for very cheap costs (sometimes even for free) to get testimonials. It would help if you looked to connect with people both online and in-person and try to sell them your services.

If you have a little bit of money, you can also build your own portfolio website and have more control over your marketing campaigns. Then you don’t have to do as much connecting as other marketing strategies can often bring you clients.

The biggest problem with offering services is the scalability of the business. Suppose you’re a digital marketer. You have clients that pay you $5,000 per month for your services. At most, you can only have around five clients until it is way too much work. Then you have to start hiring people.

$25,000 per month sounds pretty amazing, though. And even if you’re hiring people, as long as you’re making a nice profit, everything is okay. Right?

Technically, you can hire people to work for you and make millions every month. But the main point to consider is if the people you are hiring can produce the same quality results you have doing the work yourself.

Let’s say you own a restaurant. You can hire other chefs, give them your recipes, and teach them how you cook. But realistically, how many of them are going to produce the exact same results you have? Is every chef trained by Gordon Ramsay capable of replicating the same results as Gordon Ramsay?

That’s the problem with service and freelancing-based jobs. Other than scalability, there’s still significant money to be made, though, and one of the best businesses to get into if you already have a skill.

2. Online Courses And Subscription Based Media

skillshareudemy

Most internet business gurus online make most of their money teaching you how to start an online business rather than their actual business. For example, most e-commerce gurus make more money teaching you how to create a dropshipping store than doing dropshipping themselves.

Similar to software companies, online course and subscription-based media businesses have significant profit margins. You can limit your expenses to a platform that hosts your online courses and advertising. Maybe you’ll pay for some design and video tools. However, the costs of selling your online courses and membership content are pretty much limited to your advertising expenses.

Before you create an online course or a membership website, you need to have valuable knowledge. You need to know something well enough to teach it to someone else and help them be successful.

The best-selling courses and membership websites are those that can help others become good at whatever you’re teaching. For example, if you want to build a course on making money online with dropshipping, you need to teach your students well enough that they can build a successful dropshipping store. That generally means you have created your own successful dropshipping store before.

If you do have something you’re comfortable teaching, then all you have to do is take a bunch of videos and/or write many articles teaching the skill you want to teach. Then you either chuck it into an online course platform or a membership site that you created.

1. Free Content And Media

bloggingyoutube

My favorite online business model is the free content/media model. The free content model includes creating your a blog and/or YouTube channel and offering free content. This content either teaches people something, entertains them, or ideally, a mix of both.

Free content business models generally make their money from ads or affiliate commissions. Business owners will put up content with ads, affiliate links, or both and make money when people interact with the ad or buy a product through the affiliate link.

Again, blogging and vlogging are businesses you can start up without very many expenses. You also have the lowest variable expenses of any business model on this list. You can start a blog by buying a domain name and website hosting, which amounts to less than a few hundred dollars, depending on your service provider.

A YouTube channel is entirely free to start. To make videos, your smartphone camera is good enough as a beginner. If you want to go the screencast route, then you may need to pay for screencasting software.

You don’t have to spend any money on promoting your content either. By posting new content regularly and using free SEO and social media marketing strategies, you can build up a business that generates a ton of profit without incurring colossal advertising expenses.

It’s a myth that free content businesses take a long time to grow. You can accelerate the growth of your company by working harder or paying for growth. In fact, if you create a blog and it’s making you $10 or $20 per day, I highly recommend you use that money to buy ads and drive more people to your blog to snowball your growth.

The only real problem with the free content model is the competition you’re facing. There are a ton of unsuccessful blogs and YouTube channels because of the low barrier of entry. Everybody can start a YouTube channel, so everybody does it.

To become successful blogging or vlogging, you have to create very useful and entertaining content. Producing content that people like requires a significant amount of learning, experimenting, and practicing. Be prepared to put the work in.

Combine Multiple Business Models Together

One more thing that I love about the free content business model is that you can easily use it in combination with other business models. Instead of using Google Adsense or affiliate links, why not promote your own product?

I love the free content business model because if you don’t have a product yet, but want to start a business, you can start by blogging or vlogging. As you create an audience and get ideas for a product, you already have a list of people you can sell to. You can also work with your audience to create products that they would actually buy. Plus, if your blog or vlog is making money, you can use those funds to fund a new business venture.

An example is combining the free content model with a membership site by making some of your content free and other content locked. With this strategy, people can get a taste of what they would be paying for, which will help you get more customers in many situations.

You can also have a blog that promotes products from your e-commerce store or your software business. Or you can use your blog as a lead generation tool for your freelancing business.

You don’t have to always have a blog or vlog either. You can combine the software business model and the service model. An example would be making a website. You can build a website for someone and then get them to pay for the website hosting and other costs to keep their website online.

The only reason I’m talking about combining various business models is to tell you that business models are flexible, especially on the internet. The key is to find something that works well for you. Be as creative as you would like.

My Top 5 Best Online Business Models

That’s about it for my top 5 best online business models! Again, I want to emphasize that it’s my top 5 best online business models. My rankings are subjective to my opinion and experiences. None of these business models are objectively better than one or the other.

That being said, feel free to share and discuss your favorite online business models in the comment section below. Agree or disagree with me? Let me know!

Affiliate Disclosure: All links marked with (affiliate link) are affiliate links where I will earn a commission if you buy through the link. Please read our affiliate disclosure for more detail.


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48 thoughts on “My Top 5 Best Online Business Models”

  1. Rachel says:
    March 9, 2021 at 8:24 pm

    This is a great guide to help those who are thinking about getting into the world of online money earning know exactly what types of business models they can get into. I do agree that the free content and media is very easy and inexpensive to start. However, it does take quite a bit of time to grow if you aren’t paying for traffic. Paid traffic is the best way to accelerate your growth and put you ahead of the competition. For those who cannot afford to purchase traffic, free organic traffic is still a powerful traffic source. It just takes more time. 

    Reply
    1. Kevin says:
      March 9, 2021 at 8:33 pm

      Yep, you’re absolutely correct. But you can definitely still grow fast without paying for any traffic. You just have to spend time and energy instead. An example is by reaching out to hundreds of influencers, asking for interviews, and asking them to send out the interview to their audience. While you’re not going to find very many people willing to do this in the beginning, any little bit of traffic will help.

      Reply
  2. Cogito says:
    March 10, 2021 at 11:21 am

    Very interesting article. Im just starting my adventure with digital marketing and posts like this are extremely useful. I created my own blog few months ago and every day Im learning something new. I knew about some of points you mentioned yet to be fair I have never thought about creating my own online courses. For sure it will take some time and will required lot of work, but it seems a great idea to make blog more attractive. Thank you for inspiration, looking forward to test your recommendations in practice.

    Reply
    1. Kevin says:
      March 10, 2021 at 5:36 pm

      For sure. Good luck growing your business!

      Reply
  3. Kokontala says:
    March 11, 2021 at 9:22 am

    Hi, I’ve just gone through your article about the top 5 best online business models. I find this post very educative and helpful. I am new to online business, and I did not even realize that there is more than one way to make a living online. I will be visiting your website more often to learn more about how to make money online. Thank you so much for sharing such useful information with us, I promise to share it further to spread the word.

    Reply
    1. Kevin says:
      March 11, 2021 at 2:32 pm

      Thanks! You’ll be surprised at how many different ways you can make a living online as you go through your online business journey. Best of luck!

      Reply
  4. Gaurav Gaur says:
    March 12, 2021 at 6:03 am

    Hi Kevin
    Thanks for sharing the review of Top 5 business models .I would personally like to go with free content and media as there’s a lot of option to explore the Talent within us. Moreover as you correctly said, the initial expense to start the business is very economical. However I would also like to go with different streams as suggested by you .  
    Thanks and regards,
    Gaurav Gaur

    Reply
    1. Kevin says:
      March 12, 2021 at 2:24 pm

      Best of luck!

      Reply
  5. Ann says:
    March 13, 2021 at 5:30 am

    This post has opened my eyes to alternatives I hadn’t thought of before. I have some time running my own blog. And up until now, I have been using the free content and media model. But I would like to implement online courses and subscription-based media. I feel I have published enough content to move on to this next step.

    Reply
    1. Kevin says:
      March 13, 2021 at 3:05 pm

      Awesome, that’s exactly what I wanted for this blog post – opening up perspectives of people and helping them get creative with their businesses. Good luck building your course/membership site!

      Reply
  6. Boi says:
    March 13, 2021 at 8:44 am

    Hello online business junkie.

    I am new to this online business thing, but I just want to thank you for Your Top 5 Best Online Business Models. Very informative indeed. I have been very much interested in Freelancing but still lacking knowledge on the concept. I also did not know if it is worth going into. I am very much happy that you included it on your top 5 models. It is good to know that it is the lowest-cost online business model you can start provided you have a specific skill already. Despite its many challenges when you are new, I think it is worth starting.

    Thank you once more for a great article

    Reply
    1. Kevin says:
      March 13, 2021 at 3:04 pm

      No problem. If you’re thinking about doing freelancing, jump right in! It is challenging for beginners to get clients, but you can’t lose much compared to some other business models.

      Reply
  7. Aparna says:
    March 14, 2021 at 7:04 am

    Hi, 

    I loved your informative article about business models online. I myself find Online Courses And Subscription Based Media as a really cool way to make money online. However, your idea of having multiple models is worth considering. After all, there’s danger in following only a single model. 

    Thank u for this piece. I will check out the others in detail too. 

    Regards,

    Aps

    Reply
    1. Kevin says:
      March 14, 2021 at 1:13 pm

      All the best to you!

      Reply
  8. Joseph Stasaitis says:
    March 14, 2021 at 2:32 pm

    I appreciate you sharing your personal insights based on your experience and opinions. The factors that you used to rank these various business models such as barrier, scalability, profitability and suitability for beginners all are essential in evaluating any opportunity. I like the idea of combining multiple business models. You have provided sufficient information on each model in order to make a sound decision.

    Reply
    1. Kevin says:
      March 14, 2021 at 2:52 pm

      Thank you!

      Reply
  9. Geoff says:
    March 15, 2021 at 2:33 pm

    Thanks for bringing us these 5 great opportunities.

    I think the thing to remember is that starting a business takes time.  So if you want to freelance then expect to earn very little at the beginning.  Do it well and with all your heart and it will grow and customers will come looking for you.

    Likewise, if you choose to go down the free content and media route, you have to have great patience to build your traffic.

    There is no golden bullet, it takes work.

    I think you give good advice when you say that a mix is probably a good idea.  Certainly until you find which one you are best at and performs best.

    Reply
    1. Kevin says:
      March 15, 2021 at 3:03 pm

      Absolutely. It all comes down to whatever works best for you.

      Reply
  10. NguyenHue says:
    March 16, 2021 at 7:11 am

    I have some of my own blog runtime. And so far, I’m still using the free content and media model. This post opened up for me with alternatives that I have never thought of before. You have provided complete information for each model to make the right decision. Thanks for your post.

    Reply
    1. Kevin says:
      March 16, 2021 at 2:35 pm

      No problem!

      Reply
  11. Sunny says:
    March 17, 2021 at 7:53 am

    I am definitely into the service and freelancing business model and the free content and media business model. This is a great guide helping people determine what they are likely to do. It’s not that easy to decide to start something on your own. However, I imagine having clients that pay me $5000 a month, and 5 those in contract, that would be absolutely incredible for me and my job! 🙂 

    Reply
    1. Kevin says:
      March 17, 2021 at 1:44 pm

      Absolutely. All the best to you!

      Reply
  12. Richie Hai says:
    March 17, 2021 at 7:37 pm

    Thank you for amazing convent.

    This is great for people who are genuinely looking for an opportunity.

    My website is in progress but I am also providing personal development and Business opportunities helping add value to others.

    Learning-and-earning.com

    I would love to get a feedback or comment from you in regards to the progress of my website.

    Keep up the great work of adding value to others. 👍

    Reply
    1. Kevin says:
      March 17, 2021 at 9:00 pm

      Hi Richie, thank you for your kind words. I took a look at your website and I think you’re writing about some very interesting topics. The content you’re putting out is very good. I do have a few suggestions for your website design, though. Personally, I would move the water background to the sliding header. You might also want to make the website a little more consistent either by matching your menu to the curly style you have throughout your site or by making your site more blocky and straight if you know what I mean.

      Hope that helps!

      Reply
  13. Success Business Online says:
    March 17, 2021 at 11:21 pm

    Among the listed business model, I much prefer the simple and easy way which is content marketing.

    However, I do want to add that there is a limit to how much content business model and run .

    On the other hand, having an online course is always ideal as a secondary income.  It is something that I will do for a long run.

    Reply
    1. Kevin says:
      March 17, 2021 at 11:22 pm

      Good luck!

      Reply
  14. Holly Knudson says:
    March 18, 2021 at 4:59 am

    Nice review of some of the best business models on the internet. There are so many options out there that it can be confusing so what a great idea to write a post on it.

     I totally concur with you about dropshipping and E-Commerce. While I think they incorporate a business model that works, overall I think the costs associated with them doesn’t warrant the headache involved. I think that service and freelancing jobs can be hit or miss. Some people can do real well and others not so much. I’ve heard both sides of the coin. 

    I know nothing about software companies, I was happy to learn more about them. I know membership sites are quite popular right now, and many marketers are tapping into online courses. I agree with you about content creating being a great model. It’s what I do, including both written content and video via YouTube. 

    Thanks for the great article. I enjoyed reading it!

    Reply
    1. Kevin says:
      March 18, 2021 at 1:54 pm

      No problem!

      Reply
  15. Jessie says:
    March 19, 2021 at 6:00 am

    I am so glad to see someone who agrees with me that the top online business model is via free content!  This helps develop a good relationship with those who visit your website, and you can give them information that they are looking for, in exchange, they will have links to other sites for any products that they wish to purchase, which can help you gain money.  This really seems like a good model because it blossoms a sort of relationship between the two parties, and there is that trust that is often needed in any business transaction!

    Reply
    1. Kevin says:
      March 19, 2021 at 12:41 pm

      Yep, thank you for commenting!

      Reply
  16. Jason Mick Brody says:
    March 20, 2021 at 4:44 am

    Magnificent article on the top 5 online business models. I love the free blog or vlog content affiliate marketing online business model. Because you give massive value to people that are interested in your content. People get to trust you eventually as you send more value content to them, which in time they will eventually buy or click on what you have to offer that is relevant. All this mostly is based on trust and value. It takes time and effort but it’s so worth it if you keep up the hard work and never give up.

    Reply
    1. Kevin says:
      March 21, 2021 at 12:13 am

      Absolutely. Thanks for commenting!

      Reply
  17. Bogadi says:
    March 21, 2021 at 3:03 pm

    What an informative and enlightening guide. I loved the combining different models to be able to earn money online. I think I am on the right track in that regard. I am currently running a blog and have been contemplating to add something else to my online endeavors, was just not sure what, I have noted your recommendations and will be surely picking one soon. Thank you

    Reply
    1. Kevin says:
      March 21, 2021 at 5:15 pm

      No problem. Good luck with your ventures!

      Reply
  18. Stratos K says:
    March 22, 2021 at 8:53 am

    I think free content media is the single most used way of making money online. It’s relatively simple, easy to setup and you don’t need a big initial investment so there is almost zero risk. But this doesn’t mean its easy to create a successful online business. It needs time and effort to be able to distinguish yourself from the competition. And this takes a lot of time.

    Reply
    1. Kevin says:
      March 22, 2021 at 1:49 pm

      Well, it’s time or money. But all businesses are like that.

      Reply
  19. Stephanie says:
    March 23, 2021 at 5:41 am

    Really impressive to see that you had already set your mind towards what you wanted to do at the age of 10, and on top of that, you actually did it. That’s a great inspirational thing for all of those out there. I have never tried E-Commerce but I’m not really that creative to come up with something that I could profit off from. I think blogging is the best way to go – at least for me, because as you said, it all depends on each person’s points of view and perspective. 

    Reply
    1. Kevin says:
      March 23, 2021 at 2:59 pm

      Hi Stephanie, thanks for the comment. Good luck with your blogs!

      Reply
  20. LineCowley says:
    March 24, 2021 at 6:51 am

    Anybody that wants to start an online business, will find this list of online business models very helpful. My favourite online business model is affiliate marketing as there is no need to carry inventory or be involved in the actual shipment. 

    I am though working on creating an online course. It is taking a long time to create, but hopefully once I have it completed, it will provide me with ongoing earnings. 

    Reply
    1. Kevin says:
      March 24, 2021 at 1:20 pm

      All the best to you!

      Reply
  21. Kari says:
    March 24, 2021 at 7:43 am

    Hi.

    Your article is honest description this online business. It was great to read those comments below which all are positive comments to you. You remembered to remind your readers that this top 5 is your own opinion to this online business, based your own experience. 

    Like those comments of yours, i cant find anything to criticise. Topic is good, relevant for me and many others. You share your knowlidge to others. It was great to see  that people like your article what was good readable article.

    All the best for you 🙂

    K

    Reply
    1. Kevin says:
      March 24, 2021 at 1:19 pm

      Thank you!

      Reply
  22. Jas says:
    March 25, 2021 at 5:51 am

    All praise for the article and the variety of topics you’ve covered. I have to admit, my favorite is free content that’s marketed through a blog. I enjoy its creation, writing relaxes me, raises awareness among people about topics they may not have thought about, and I offer them the opportunity to buy some products. The most important thing is that we don’t feel the burden and pressure as we work, then creativity can come out and present us in the right light! I wish you many successes in your work!

    Reply
    1. Kevin says:
      March 25, 2021 at 12:58 pm

      Good luck in your venture as well!

      Reply
  23. Monique Richie says:
    March 26, 2021 at 5:04 am

    Hello, Kevin, thank you so much for sharing the review of the Top 5 business models. I have to admit my favorite online business model is also the free content/media model. I love to work alone, set my schedule, and work at my own pace. I have lots of interest and can look back on an adventure life. That means I saw a lot and learned a lot. This knowledge I like to give back to my readers. Of course, I am working as an affiliate partner too. We have to live from something. Now I am working on 28 days intermittent fasting Bootcamp. I have to learn a lot, standing for the camera and place this on YouTube is an adventure too.
    Thank you so much for this.
    Monique.

    Reply
    1. Kevin says:
      March 26, 2021 at 1:43 pm

      No problem.

      Reply
  24. Lea says:
    March 27, 2021 at 5:57 am

    What I first noticed was your friendly storytelling skills. I just had to mention it. I liked your articles, it stands out from the rest, just by your approach. I agree with you that blogging is not enough; you have to take other measures. As you mentioned above, vlogging and building your courses have to be. Otherwise, you will not get the result you are expecting.

    Reply
    1. Kevin says:
      March 27, 2021 at 1:30 pm

      Yep. Thank you for the comment!

      Reply

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