How to Create a Business Model and Revenue Model for your New Startup Idea
I was talking with a founder friend this week (2 previous large exits) and something important came up.
When people talk about idea validation, they focus on problems, customer demand and the competition.
But there’s one step that a lot of us completely miss… and it’s the one that determines whether our idea is a hobby or a business:
Does your target audience actually spend money?
Some groups love to talk, sign up for betas and share feedback, but they rarely buy.
Before you build, ask yourself:
“Is this a paying audience?”
If not, there’s still hope! 👇
If you’ve found yourself with a great idea that people aren’t willing to pay for, don’t give up.
Below are 5 examples of this being solved in the real world. The answer to your problem isn’t so complicated…
If your audience won’t pay for your solution… determine who in your market will pay to reach these people and start matching up your audience with them.
Here are some quick examples of target customers that don’t pay, and how companies have found ways to still make money:
1️⃣ Job Seekers
Why they don’t spend: They are between jobs, they are risk-averse and surrounded by free tools.
Reality: About 90% of job seekers rely entirely on LinkedIn or Indeed.
When people talk about idea validation, they focus on problems, customer demand and the competition.
But there’s one step that a lot of us completely miss… and it’s the one that determines whether our idea is a hobby or a business:
Does your target audience actually spend money?
Some groups love to talk, sign up for betas and share feedback, but they rarely buy.
Before you build, ask yourself:
“Is this a paying audience?”
If not, there’s still hope! 👇
If you’ve found yourself with a great idea that people aren’t willing to pay for, don’t give up.
Below are 5 examples of this being solved in the real world. The answer to your problem isn’t so complicated…
If your audience won’t pay for your solution… determine who in your market will pay to reach these people and start matching up your audience with them.
Here are some quick examples of target customers that don’t pay, and how companies have found ways to still make money:
1️⃣ Job Seekers
Why they don’t spend: They are between jobs, they are risk-averse and surrounded by free tools.
Reality: About 90% of job seekers rely entirely on LinkedIn or Indeed.
They just don’t want to pay to move forward.
Who pays instead:
Recruiters and staffing agencies
Job boards and hiring platforms
Resume-writing and interview-prep services
Real-life Example: LinkedIn earns 75% of its talent revenue from recruiters, not job hunters.
2️⃣ Startup Founders / Indie Hackers
Why they don’t spend: They are cash-poor but have tons of ideas. They don’t want to pay for subscriptions to move their ideas forward.
Reality: Roughly 70% of founders never invest more than $500 in their first idea.
Who pays instead:
Accelerators and incubators
Web hosting and no-code platforms (Replit, Bubble, Wix, Base44)
SaaS affiliate programs
Real-life Example: Y Combinator gives founders free tools, but investors pay for access to that deal flow.
3️⃣ Students / Learners
Why they don’t spend: They have limited disposable income and access to endless free tools already.
Reality: 60% of students say they can’t afford paid learning tools.
Who pays instead:
Bootcamps and ed-tech recruiters
Employers and upskilling programs
Certification platforms
Real-life Example: Duolingo monetizes through ads and English tests for corporations, not from students.
4️⃣ Creators / Artists
Why they don’t spend: They have unpredictable income. They are apprehensive of products that promise to boost engagement and revenue.
Reality: 98% of YouTube creators make under $1,000 per year.
Who pays instead:
Brands and sponsors
Merch and print-on-demand platforms
Ad networks
Real-life Example: YouTube’s $30B+ ad revenue comes from advertisers, not creators.
5️⃣ Nonprofits / Activists
Why they don’t spend: They are mission-first focused. Many are grant funded. Most are resource constrained (money, headcount etc.).
Reality: Most U.S. nonprofits operate on under $500K/year.
Who pays instead:
Donors and foundations
Corporate sponsors
Fundraising software vendors
Real-life Example: GiveButter.com is free for nonprofits, it earns processing fees from donor payments.
👉 If you’ve found yourself in the position of reaching a non-paying audience, don’t be discouraged. There are plenty of companies that will pay for access to the audience you can easily reach. Consider who may pay to reach the audience that you have.
There’s always a revenue model out there… you just have to be creative and find it!
Who pays instead:
Recruiters and staffing agencies
Job boards and hiring platforms
Resume-writing and interview-prep services
Real-life Example: LinkedIn earns 75% of its talent revenue from recruiters, not job hunters.
2️⃣ Startup Founders / Indie Hackers
Why they don’t spend: They are cash-poor but have tons of ideas. They don’t want to pay for subscriptions to move their ideas forward.
Reality: Roughly 70% of founders never invest more than $500 in their first idea.
Who pays instead:
Accelerators and incubators
Web hosting and no-code platforms (Replit, Bubble, Wix, Base44)
SaaS affiliate programs
Real-life Example: Y Combinator gives founders free tools, but investors pay for access to that deal flow.
3️⃣ Students / Learners
Why they don’t spend: They have limited disposable income and access to endless free tools already.
Reality: 60% of students say they can’t afford paid learning tools.
Who pays instead:
Bootcamps and ed-tech recruiters
Employers and upskilling programs
Certification platforms
Real-life Example: Duolingo monetizes through ads and English tests for corporations, not from students.
4️⃣ Creators / Artists
Why they don’t spend: They have unpredictable income. They are apprehensive of products that promise to boost engagement and revenue.
Reality: 98% of YouTube creators make under $1,000 per year.
Who pays instead:
Brands and sponsors
Merch and print-on-demand platforms
Ad networks
Real-life Example: YouTube’s $30B+ ad revenue comes from advertisers, not creators.
5️⃣ Nonprofits / Activists
Why they don’t spend: They are mission-first focused. Many are grant funded. Most are resource constrained (money, headcount etc.).
Reality: Most U.S. nonprofits operate on under $500K/year.
Who pays instead:
Donors and foundations
Corporate sponsors
Fundraising software vendors
Real-life Example: GiveButter.com is free for nonprofits, it earns processing fees from donor payments.
👉 If you’ve found yourself in the position of reaching a non-paying audience, don’t be discouraged. There are plenty of companies that will pay for access to the audience you can easily reach. Consider who may pay to reach the audience that you have.
There’s always a revenue model out there… you just have to be creative and find it!
