"What are the business models for B2B apps?"
B2B apps require value created either on a recurring basis or delivering consumable value that either requires replenishment or depreciates over time (ie: data). The ultimate goal with a B2B app: recurring revenue. Below are some of the most common revenue models with B2B apps:
1. Subscription based: Monthly recurring revenue. This involves an understanding of the complexity of the solution to learn, to implement and to justify the change in the organization. Typically this offers several tiers of options differentiated by quantity of user(s) included and/or functionality by tier. Variations of the subscription revenue model include:
- Free Trial to Paid - The CRM space is an excellent example of this where you offer 30 days to try the service first after which they need to pay to continue. This reduces the barrier to entry creating greater opportunity for the individual / company to get hooked on using the service first. This facilitates paid conversion by creating dependency first.
- Freemium - The email marketing solution MailChimp uses this approach where they offer their service free for up to 2000 contacts and reduced functionality. This is done when you know that the inevitable eventuality in people using your tool require more than what free offers. That's when you get the revenue.
- Pay-per-use - Some offerings include a subscription AND offer pay per use services for one-time needs. This can be an E-Commerce solution that sells a theme for example.
2. One-time cost with maintenance: Less popular, but still posssible. This involves a one-time cost to purchase the license agreement for the access. If the app you create can be installed locally this makes more sense. The maintenance portion can include a form of technical or customer support for those using the tool. We see this used with Managed Service Providers who install software and then sell a block of time to troubleshoot.
When it comes to applications, the world is moving to recurring revenue. What remains critical to remember is that recurring revenue requires recurring value. Understand whether you truly offer recurring value, demands an unbiased perspective.