Cash cow

How does BizBuyer.com make money? That’s not exactly clear. Louvat cryptically states that the model is “evolving.” For the first several months of beta-testing, BizBuyer.com charged no transaction fees. In October, it began to levy a $3 flat fee on ISP vendor bids and $10 for patent and trademark attorneys. The plan is to roll out other fees gradually over the coming weeks. Exactly what these will be remains hazy, but the company says they will fall in the $3 to $10 range initially.

Louvat says it is likely that as the model is refined, BizBuyer.com will charge different prices for say, ISDN connections vs. T1 or T3 connections. The company has also entered into deals with cellular and paging service providers that will net it a percentage of the lifetime revenues of that customer.

To ensure lightning-fast download speeds, Louvat vows that the site will never include paid advertising. However, buyers like Joyce Bennett — who now get to use the site free — may be a future source of income. “Buyers see a lot of value in the time savings,” explains Louvat. “We might save them 20 hours of legwork” in buying a phone system. Those time savings could be converted into revenue.

Can BizBuyer.com make money with this model? If it gets a large enough pool of participating businesses, says Aberdeen Group analyst Tim Minahan. “It’s easy to charge a fee as a cost of doing business,” says Minahan. “The question is, will BizBuyer be able to scale this revenue model? It really depends on the number and quality of buying organizations they can attract. If they are charging $3 a bid, they will have to be generating millions of transactions.”

One person who has no doubts about BizBuyer.com is eBay CEO Meg Whitman. An early investor, she also agreed to serve on BizBuyer.com’s board. It is only the second time she has done this. “I thought there was an opportunity to take on a very fragmented market and create a forum that could be more efficient,” she explains. “They are on the 1-yard line of a 100-yard football field and have a long way to go. But these things tend to grow organically.”

While a national marketing campaign will soon be under way, BizBuyer.com’s founders hope that a large portion of its business will come through word-of-mouth referrals. They are also counting on vendors becoming buyers and vice versa. “Every time someone in the company says we have two communities, I say no, we have one community,” explains Consiglio. “Our best member is someone who is a buyer, a vendor, and an affiliate.”

Purchasing long distance telephone cards is a reliable, convenient, low cost way for long distance and global phone calls for most of people all over the earth.

February 17th, 2012 - Posted in Communication | | Comments Off

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