I’ve been following Ray Deck’s 52 Bicycles blog and recently he posted on a topic too close to my heart for me to ignore – selling online services.
Selling a service online with repeat revenue, even if it is of much lower per-sale value than say a perpertual license single sale of an online or offline product, is much more appealing to any solution provider.
For one, you have a guaranteed revenue based cashflow (instead of a single-sale customer) assuming that your service is one that your customers would begin to depend upon and worthy enough to capture interest in the first place, of course.
Support, updates and value adds are much more justified and easier to deploy on an online service as well.
Customer interaction is again one-on-one and an excellent way to gather feedback and improve your offering.
Copy-protection / piracy issues are also eliminated from start – since your offering is online and so are your customers, pirates cannot rob you of the revenue that you work so hard for.
All-in-all, an online service model has more potential than other models. What remains to be seen is of course how today’s startup Web 2.0, 3.0, 4.0, etc. ventures figure out a business model that goes beyond the boring “Get advertisement revenue while we wait for Google / Yahoo / Microsoft / eBay to acquire us”