Corbett Barr

Lifestyle Business Weekly

An In-Depth Guide to Online Business Revenue Models for Lifestyle Entrepreneurs

An in-depth guide to online business revenue models for lifestyle entrepreneurs

If you’re in the process of planning or starting a business online, you might be wondering what the best way to make money is.

This is especially true if you’re planning to start a lifestyle business (a flexible small business with the goal of supporting the owner’s lifestyle as opposed to a typical business with the goal of earning as much as possible).

Revenue model is a fancy business term that just means “how a business makes money.” When it comes to online business revenue models, there are lots of different choices. If you’re planning a new business, you should understand the differences between potential revenue models and make sure the way you’re planning to make money will be a good fit for your business and life goals.

For example, some revenue models will require a big investment of time or money before you start to earn an income. Some might allow you to keep your day job while starting the business. Others might be better suited to running while traveling.

Revenue models can also be adapted and mixed to meet your needs. Let’s take a look at several of the major models for making money online so you can decide for yourself which would best support your lifestyle.

The four most popular online business revenue models

The four most common revenue models for online businesses are: selling services, selling products, affiliate marketing and advertising.

We’ll go into depth about the features of each below, but first let’s compare them to one-another according to four standard criteria that every online entrepreneur should consider:

  1. Start-up time: how long will it take you to build up to a full income?
  2. Income “passivity”: how “hands off” could the income eventually be?
  3. Revenue per visitor: how much average revenue will you earn from each visitor to your site?
  4. Visitors per month: how many visitors per month will you need to earn your target income?

In the graphic below, I’ve plotted each of the four popular revenue models along a line that represents earning a “decent living,” whatever that definition might be for you. For example, looking at “selling services,” you’ll see that revenue model has the highest average revenue per visitor, lowest required visitors per month to earn a “decent living,” it has a short start-up time and a low likelihood of generating passive income. The others are also plotted accordingly:

comparison of popular online revenue models

These are what I consider the typical expectations of each revenue model according to the four standard criteria we laid out. There are of course exceptions to what you can expect from each revenue model, and sometimes exceptions can be used to your advantage. If you know of any ways to majorly shift one of the four revenue models within the four criteria above, please share in the comments.

Let’s take a deeper look at each.

Selling services

Selling services may be the most common revenue model online. Other names for it include freelancing, consulting or independent contracting. Some services that people commonly sell online include graphic/web design, copywriting, editing, software development and marketing.

As I mentioned before, one of the primary features of selling services online is high revenue per visitor/customer. Most freelancers deal with only a handful of customers per month and still earn a decent wage. This means you don’t need to attract as many visitors to your website (all else being equal) to earn your target income as you might with the other revenue models.

Selling services is one of the fastest ways to get started earning a living online, especially if you already have skills you’ve earned from working in a traditional job. You can create a website advertising your services, get the word out and start working with clients in a short time. Other revenue models might take months or years to earn a full living.

On the other hand, selling services day-in and day-out for years can become a tiring treadmill that’s hard to get off of. If you become accustomed to earning a living by trading your time, you might find yourself not taking very much time off and feeling chained to your business.

Selling services is a very difficult way to earn passive income (you would have to run a team of freelancers to do so, and even that is hardly passive). Many people who start by selling services end up looking at ways to create products or otherwise earn a living without trading time.

Selling products

Selling products refers both to selling products you created directly online, as well as selling other people’s products (that you warehouse or via drop-ship) through your website.

When you sell products (unless you’re selling high-end luxury items), you will earn less revenue per customer on average than you do when you sell services. You will also have more costs to pay for each dollar of revenue you earn. This means you’ll need to attract more visitors to your website to earn your target income.

Startup time for a products-based business are usually longer than for a services-based business. You will have some product development or procurement time, as well as more time to set up your website and attract your audience. Paid advertising (when it has a positive ROI) can help bring visitors in faster than relying on SEO or organic growth.

There are many services like Etsy or Shopify that help you create an online store to sell your products through. They take out much of the startup time that would normally be involved in setting up your own site. They also help you market your products to some degree, and can bring more legitimacy to your online store.

A benefit of selling products over selling services is that a products business can more easily be turned into a passive-income business. This is especially true if you’re selling products that someone else creates. Beware that when you warehouse products yourself, you are creating the need to be physically in one location to run your business, or to have employees handle that part of the business.

Affiliate marketing

Affiliate marketing is a revenue model where you are paid a commission whenever a customer you refer to another site purchases something from that site. Affiliate marketing is a $13 billion dollar industry and is quickly becoming popular among entrepreneurs who want to build a lifestyle-friendly business.

With affiliate marketing, you will earn less revenue per visitor than you would when selling a product or service directly yourself. Typically as an affiliate, you will be paid a commission of between 5% and 75% of each purchase you refer (depending on the type of product).

To earn a “decent living” as an affiliate marketer, you will need to attract more traffic than you would when selling products or services directly. Many affiliate marketers also build more than one site (some build hundreds of small sites) in order to reach enough people and earn a full income. You can start earning some income very quickly with affiliate marketing, but you should expect it to take many months to earn your target income from affiliate marketing.

The most attractive feature of affiliate marketing to lifestyle entrepreneurs is that affiliate marketing can become a very passive income source. Once you’ve built up your income from affiliate marketing, you can generally work where, when and how much you choose because the work required to maintain your sites is very flexible.


Advertising tends to bring in some of the lowest revenue per visitor of any online revenue models. The amount you can earn per impression is largely dependent on your niche and the overall traffic to your site. Because of this, you will need some pretty impressive traffic numbers to earn a decent living from advertising.

However, it is possible for a solo entrepreneur to earn a living through advertising, and an entire mini industry has grown up around Google Adsense advertising. To make it work, you will either need to be great at SEO, or great at driving massive traffic through some other means.

The passive income potential of advertising as a revenue model really depends on how you create your content and attract visitors. Because you’re not dealing with selling products or services, advertising has the potential to be a highly passive income source, although the management of a single site that attracts enough traffic to make advertising viable can take a lot of effort. Outsourcing can be used to alleviate this.

Other options

What other options are there for online revenue models? What about blogging, article writing, gambling, trading stocks or subscriptions? Great question. Here are a the basics about each.

  • Blogging: blogging isn’t a revenue model. It’s a content delivery platform. Earning money from blogging requires relying on a revenue model (usually one of the above).
  • Writing articles: writing articles that you are paid for based on the traffic they generate (Squidoo, Mahalo, eHow, etc.) is essentially a secondary advertising model. These platforms already have an advertising mechanism in place and high search engine rankings. They pay you lower ad rates than you would get if you owned the platform and content in exchange for providing the platform.
  • Gambling: unless you can automate a gambling system (which probably isn’t legal), you’re trading time for money.
  • Trading stocks/currencies: again, if you can’t automate your trading activities, you’re trading time for money. If you can automate it (and actually earn a living), congrats but beware of hidden risks.
  • Subscriptions: a subscription model can be a fantastic way to earn recurring revenue. In essence, subscriptions are a recurring mechanism for selling products or services.

What about mixing models?

Mixing various revenue models is both wise and relatively common. If your goal is to create somewhat passive income streams, but you need to make some income right away, starting with selling services and transitioning to products or affiliate marketing might be a good way to go.

Working with clients hands-on in the beginning by providing services can be a great way to conduct market research for products you’ll eventually create. Jumping right into creating a product without connecting with your potential market first can end up being a big waste of effort.

Let’s discuss!

Which revenue models do you prefer? What is the best model (or combination of models) for a lifestyle business (no employees, time/location flexibility)? Other questions?

Please share your thoughts in the comments. I’m happy to answer any questions you might have as well.

photo by HckySo

Corbett Barr

A weekly curated email of useful links for people interested in lifestyle businesses and independent entrepreneurship.


How to Successfully Sell eBooks While Traveling the World


Transitions, Best of Both Worlds and Investing in the Process


  1. Great break down here Corbett. I like a fusion of services and products. I have had advertising on my site for years now and been able to make some money from it thanks to large ad campaigns, but I’m developing my services and products at the moment. I say why not do them all? Affiliate and some ads for passive income to support the larger time suckers like providing a service. My guess is it will take a fine balance of the models to fit your ideal lifestyle. Right now I’m experimenting with all.

    • I agree that a mix probably makes the most sense for the most people. The reason not to do them all is that your time is limited and some models will prove ineffective for you. It’s hard to know which to follow until you experiment a little with each though. Good plan.

  2. This is great Corbett. You summed it up nicely at the end. Mixing revenue models is the way to go. It’s actually natural to mix revenue models simply because they’re so related. For example, say you’re offering a coaching service. It’s very easy to take that information and create an infoproduct. Once you start selling that infoproduct it’s very easy to become an affiliate of other complementary products.

    As far as affiliate marketing itself: a lot of times it’s less passive than people let on. Managing PPC campaigns is something that has to be done with regularity. Especially in competitive niches, which is where the most money is to be made. There are ways to make it more passive, of course. The best way is by building up an e-mail newsletter list and treating them well.

    I’m going to stop myself because I could go on for hours. :)

    Thanks for the great breakdown!

    • I suppose you’re right about managing PPC (pay-per-click like google adwords, for the uninitiated) campaigns. I was referring mostly to affiliate marketing where the traffic comes from the search engines. It sounds like you have some good experience to share — would love to get a guest post from you here sometime if you’re interested.

  3. My own personal preference is either product sales or affiliate marketing. With affiliate marketing, once a site is up and running and generating organic traffic, it takes virtually no time to run, no customer service etc. and so I see it as the ultimate lifestyle business.

    Product sales require far more effort and customer service, but if you can build up a decent list then you can launch a product, market it to your list, make a big payday, then take it off the market when you go travelling.

    I know a few people who earn a large sum of cash each year by doing limited product launches then going off to enjoy themselves rather than trying to keep up with a product and all the support it requires for long periods of time.

    Incase it’s of interest to other Free Pursuits readers by the way I just published a free 30+ page report on building traffic to your blog which may come in handy for a number of people. It’s at

  4. Corbett… wait wait wait… blogging & gambling… aren’t… revenue models? Damn.

    Cheers for mentioning my book… but all this talk of affiliate marketing and you didn’t use an affiliate link for it! ;) Don’t leave that money on the table brother! Bam.

    Don’t forget selling digital goods under “Selling Products” – that eliminates 90% of the hassles of selling physical goods.

    Continuity revenue model is my new obsession. Why work for a one-time sale when you can score a recurring lifetime customer? And membership/access sites let you release a portion of your product and refine/expand over time… which in turn reduces your customer attrition rate. Loving it.

    Good post, dig the business/financial focus.

    • Thanks for the affiliate heads-up. I need to sign up for that. How are sales of the book going? I have heard so many great mentions of it over the past few months.

      Let me know how your continuity quest goes. Lots of people look at that as the holy grail of online revenue models. Few pull it off well though.

      • I can tell you as an affiliate that book sales are doing well!

        Really effective graphic Corbett. Love the breakdown and it hits home for me trying to mix the service and digital goods model while looking out to continuity platforms. I’m almost over the initial time suck of first time experiences and moving beyond the procrastination of putting something real out there for consumption. I can tell things take off after this stage. I’ve noticed blogging isn’t a real income revenue, but it’s been the grounding rock in my learning process. Good read!

  5. Nice summary, Corbett. I was kind of surprised, though, to see services as the fastest start up of the revenue models. I coach a lot of people who sell services and then try also to create info products or membership sites down the road. You mentioned that you usually have to have some professional skill to offer services. I think it needs to be really clear that developing a professional skill to the point that people will be willing to pay you good money for your service usually takes years. In addition, building a clientele after you’ve developed the skill can take months or years again. While it is also true that you can make a good living off many fewer paying clients with high end services, one also needs to remember that you’ll have to do a lot more convincing of the potential customer to pay you a couple hundred dollars per hour as opposed to a person who might spend a few dollars on a simple product. So you’ll still need to get your word out to lots of people in order to catch the paying ones. On the other hand, putting up a site with affiliate marketing can be done in less than a week if you want. But as Karol says, maintaining it well enough to keep money flowing in can also be time consuming. This, of course, could be outsourced much more simply than services. Whichever way people go “they’re gonna have to serve somebody” at some point as Dylan would say.

    • Yes, excellent clarifications, Carmen. Someone does already need to have a professional skill to share (and some marketing skills) to get started offering services online quickly. On the other hand, to create a convincing product, one would also have to possess similar professional skills, wouldn’t you say? Affiliate marketing can be a quick way to get started, but my comparison was about how long it takes to build up to a “full” income, not merely to make your first buck. I still think offering services (based on a skill you already have) is the quickest way to get to a full income online.

      • If you have a sell-able professional skill, I do agree that services are the quickest way to get started. On the other hand, Carmen is correct too.

        I live in a town where the median family income is something ridiculous like $89,000/year, has one of the highest concentrations of PhDs in the U.S., and it seems like everyone is a doctor, professor, or a lawyer. My wife grew up here (I did not), and except for a short stint in another college-town with similar demographics, she’s spent her whole life here. As a result, her view of what’s “average” is severely skewed. “Everyone has a professional degree and makes $100,000/yr, don’t they,” she has asked more than once. Well, of course not. Fewer than 1/3 of people even have a college degree, and the median family income in the U.S. is around $50,000. 1 out of 5 Americans don’t even finish high school.

        So there’s a bit of an error in assuming the broad swath of people have the eduction or experience to sell professional services; most don’t, even if you include designers, artists, or naturopaths who otherwise might not need a traditional degree to do so.

        So I think Carmen has a good point that, for many people, the answer is an information product. But one need not be an expert in a field to write about it. Journalists often write intelligently about topics outside the scope of their personal education or experience. What they have become are experts at researching, assimilating, and presenting information in a clear, interesting way. Those are skills that can be learned without college. A good, sell-able information product is like a good book written by a journalist, with the added benefit of targeting and solving a problem for the customer.

        It may not be the fastest way, but it may be the fastest way for someone without a particular professional skill to sell.

        • I thought I’d add 2 cents here as well. Services are generally the easiest to “boot strap”. You guys have been mentioning professional services that require years to attain a teaching type status. I’ve done a lot of make-shift businesses in the last 5 years that were great for immediate income, paying the bills and experience. They’ve taught me the difference between freelancer and entrepreneur which is the direction I’m moving in now, seeing the value in turning service skills into products and continuity type products. The “businesses” were never really legal businesses but I represented myself as a pet-assistant, web developer, it administrator, construction worker and so one, each time branding myself on some business cards, a website, and nabbing clients online and offline by interacting with small businesses or home owners for an hourly rate. Very quick pickup, just need to put yourself out there. I literally lived via craigslist in those days…. I supported myself through those jobs, I wouldn’t try to buy a home or feed a family though!

  6. No, I don’t like this post, I love it. Especially the lovely chart you made and the corner that reads killing it. I have to agree with Carmen though. From the chart it looks easy to sell your services online. In theory you only need one visitor to get a new copywriting or web design customer. But I’ve been in the web design business for years and I think it’s hard to convert a customer who hasn’t met you. That’s where blogging longterm and building up a relationship can help you convert clients in the long run. But you’re going to be hungry to begin with. Especially if you don’t have any qualifications, experience or a portfolio of work to show people. In theory it looks easy but I think it will take a long time investment to start working well.

    There are plenty of interesting scenarios and combinations to play around with though and I think persistence will pay off in the end.

    • Glad you caught that little corner of the graph. Don’t we all want to be “killing it” somehow?

      See my note above to Carmen. I agree about your concern over services. I suppose I’ve been considering it from the standpoint of an established professional (potentially with some existing contacts). Someone just starting out building a skillset would have a much longer road ahead of them.

  7. You and other commenters have mentioned mixing models, and I think hybrids are one of the most prevalent methods used by lifestyle entrepreneurs. The result is often called a Funnel. For example, a person may blog, which brings in a wide audience. Perhaps that blog has AdWords and a display ad or two for affiliate products. To that audience they may offer an inexpensive info-product of their own that creates a sublist of people willing to spend money for the value you’re providing. From this list you can market a range of products – both your own and/or affiliate products. Fewer people will buy these, but they’ll be higher cost (higher profit) items. From that group there will likely be a handful who are interested in private consulting with you. This is the highest profit level. The first tier may not do much more than cover expenses, and the second tier will earn some consistent cash; but the consulting level is where one can bring in the big paydays.

    Lately I’ve noticed many holding online programs which offer some private “consulting” but cost less and have 50-150 participants. I think this has a lot of potential, though achieving the reputation where you can fill programs consistently may take some time.

    With a product oriented business you have the ability to outsource a great deal. Production, ordering and fulfillment can all be outsourced to various companies. In the case of information products much can simply be automated with various Web services. One big key to products is to create something that is consumable – which provides you with recurring sales – or to create a broad but strong brand that brings customers back to purchase other items. A nutritional supplement would be an example of the former. Chris Guillebeau’s Unconventional Guides is an example of the latter.

    I think there are a couple of other models worth considering, but I’ll leave that to another discussion. Or for someone to pay me to tell them about. ;)

    • Awesome thoughts, Brandon. I agree about the attractiveness of a group consulting offering. It’s a win-win in that the consultant can bring in more revenue than simply charging per hour, and the customers can get a lot of value for much less money.

  8. Corbett,

    This is a very timely post for me. I will have to print out your handy little graph as I think about things in the next couple of months.

    I’m attracted to affiliate marketing, simple because you’re selling products that exist and taking a cut for it. If you can get organic traffic, that’s the best. But the hard work is probably ranking in the search engines. Or if your strategy is to drive traffic through article marketing, that can be abit of a challenge.

    Not sure I’d go for PPC.

  9. Great overview! While all of these are good business models, a combination of selling my own product (not physical, downloadable) and affiliate marketing is the most attractive to me.

    For example, selling a product and then later on that same customer receives an autoresponder email series promoting a relevant product that I can make a commission from. It’s almost totally automated.

    It gets even more automated and passive once you can enable affiliates to do the work for you. For example, once the product I’ve been creating is finished, my focus will go towards enabling and recruiting affiliates to do the work for me.

    Let’s say you sell a $49.00 product offering 75% commission… That’s $36.75 for the affiliate, and $12.25 for you. If you can get 10 affiliates making a sale a day that’s over $120 in sales per day with absolutely no work on your part. That is where I think the real exciting opportunities are when it comes to an online business model for generating passive income.

    • Hey Nate, nice examples. You’re sort of describing up-selling, which is a whole other topic that we should discuss here sometime soon. Good stuff.

  10. Many thanks Corbett. It has given me a number of ideas that I will implement.
    For blogs though, I notice that some Bloggers provide the ability to “Subscribe”. That is not covered and I would like to have some idea whether that is an advisable step. Thanks.

    • Hi Walt, the “subscription” process for blogs you’re describing is much different that what I was talking to regarding revenue models. When a blog asks if you want to subscribe, it is referring to sending you free updates over email or RSS. Here is much more detail about what RSS is:

  11. It’s all about the reoccuring membership model. Atleast that’s where we have our success.

  12. Quite a nice knowledge in charts that you have provided.

  13. Dan

    Absolutely love it. Looks like we need to develop a “killing it” system for would-be lifestyle entrepreneurs. The model I prefer: KILLING IT with tons of employees ALL enjoying a lifestyle full of personal freedom and fulfillment. Why not?

    • Sounds like a great vision Dan! Me, I’m not so into having tons of employees, but how about giving lots of business to other independent contractors instead?

  14. Corbett,
    I do not believe this part about making one’s presence felt on the Web and so I’ll ask it now.
    I subscribe to Simple SEO submission on the 1& eb hosting platform. I have begun to have doubts about its effectiveness or usefulness. The reason I say that is long after I cancelled some domains, I still got reports about them having been submitted for SEO.
    It seems that is just wasted money on a subscription that takes me nowhere. May we have your thoughts on that? Many thanks.

    • Hi Walt, I’m not familiar with that submission service. However, I doubt that one tool alone can produce the SEO results you might be looking for. I always suggest that people learn at least the basics of SEO (you can do it in a couple of days), so you’ll better understand how tools and services might help you reach your goals. Check out this post at Think Traffic for more details:

  15. I enjoyed the post Corbett! In an information economy, I see affiliate marketing and advertising as the two leading revenue models. If you can create a sustainable business around supplying information, you’ve nailed it. I would be willing to sell a service at first, but ideally a business would generate revenue based on a combination of those two models. The other added benefit is that you’ll likely be passionate about the information business you’ve created.


    Hya all !
    I did not read all posts, but, is it reasonable to ask (if someone would know) that these premises are valid to Europe, as well? Countries like Spain and Italy, now in slightly dire straights, may have unequal profiles to that of US/Canada. Do I stand correct? Anyone risks interpretations or suggestions?

  17. corbett, I’m following up on this suggested link from your post in think traffic. I am aware of these models. I guess from my side, being at incubation, I’m still experimenting with it all, and trying to be clear in my head what the rev model is for a blog. It would seem to be a “service” if you can highlight your ability through your content, and affiliate marketing. Possibly to a lower extent advertising. At what level of readership/following does it become meaningful?

    • It really depends on your topic, goals and specific situation. There’s no way to tell when revenue might become “meaningful” for you. For me, it took over a year to figure out what I was doing and get some compelling products / services built.

      • Thanks Corbett for that insight. It has been a year for me now also and I think (hope) that I know what I am doing.

        All the best!

  18. newbie

    I’ve read somewhere that affiliate marketing and pay-per-click are generally not viable, because if you get enough traffic to make reasonable money, then you need dedicated servers and technical know-how, all of which can eat into much of the profit.

    Is this true?

    • Corbett

      Hey Newbie, I’m not sure where you heard that, but it is definitely not true. Affiliate marketing doesn’t need any special servers or technical know-how if you are the affiliate. It’s really pretty simple.

  19. Avery Dibiase

    Corbett, this was a great read!!! This article alone should be the basis of a virtual enterpreneurship course that should be taught in colleges and universities worldwide. As a former MBA student, this would have saved me from making costly mistakes when I first started dabbling in making money online. You were on point with the description of each model using plain English that anyone can understand in a “straight up” manner with realistic expectations for each. Kudos for that. Now that I am getting serious about going hard in pursuing this venture, it really put things in perspective for me given that I am new to the internet enterpreneur game.

    Currently, I am engaging in social media marketing for a few clients and you hit the nail on the head when you mentioned the seemingly endless treadmill of trying to garner and only to lose clients in the blink of an eye for whatever reason. Hopefully, I can reverse this dynamic and develop strong leads with sustainable clientele. Thank you for leaving me with a better understanding of the ways to earn money online.

    PS I appreciate your response to my post on the Think Traffic Facebook Fanpage where you lead me to read this article.

  20. kl

    good advice, masha-Allah. every human on the planet is looking for a good way to earn a good living, but ultimately it is the Creator of the heavens and earth who provides, so dont forget to ask Him and rely on Him, He provides for the birds who set out everyday in search food, and lets them return home with sustenance, but they did do their part – they went out looking and He taught them where to find it.

    To the person who mentioned his wife who lived in an upper-middleclass town. sometimes, living in an envirenment like that affects pushes you to aspire for higher education and higher income. our envirenment affects our standards.

    im canadian and i moved to saudi, and there are poor, middleclass and rich people for sure, however i see more people with phds here, than back in canada, and that has made feel like it is the only natural way to go is to continue school, so i started up school again after a 6 year break.

  21. mohand

    thank you so much corbett for this lovely subject

Leave a Reply

Happy ! Thanks for reading.

RSS   |    Archives   |    Newsletter