If you are new to concept of Business Models which most are when starting a new business, not to worry we have your back!! Head on over to Amron D’s post:
What is all this Business Model malarkey?
So here we go from A-Z on Business Models. Please do leave a comment below if we have missed your business model and we will add it Amron D’s list of models.
Affiliate Marketing
This business makes money by featuring, reviewing, and recommending other company’s products or services. Think about product review websites. These websites are paid based on sales opportunities that they bring to their vendor companies.
Examples: Capterra,
Agency Based
This business is based on a client paying an agency a fee for its services.
Examples: think Mad Men!
Aggregator
A network model which provides collective information about a particular service and sells them under their brand name. Under this business model, most companies provide information and sources on a single industry.
Examples: Uber, Amazon & Ebay
API Licencing
(Application Programming Interface)
These business provides licensing protocols which allow developers’ community to create third-party plugin/add-on apps for well-known platforms. And developers pay a fee to get API access.
Example: Microsoft, Apple, LinkedIn
Attention Merchant
Attention Merchant or influencer operate through advertising model and make money by grabbing the attention of their target audience.
Examples: Influencers on Social Media, Youtube, Tik Tok
Auction Based
sellers offer products in an online auction and buyers bid on what they want to buy. The buyer with the highest bid wins the product. Auction sites make their money by taking a percentage of the selling price.
Example: eBay.
Blockchain Based
Using a decentralized network enhances trust and allows consumers to transact peer-to-peer. Blockchain-based businesses make a profit using tokens and offer Blockchain as a service.
Examples: Bitcoin
Brick-and-mortar
As the name suggests this business has a physical presence in a building or other structure. The business is either leasing or owns the building.
Examples your local supermarket, hairdressers
Brokerage
These businesses provides a single platform to buyers and sellers for communicating the deals. It charges a fee for any transaction between the parties either from the buyer or the seller depending on the featured category.
Examples: Expedia, Century 21
Bundling
Bundling is a business strategy that combines products or services to offer a package gathered as a single combined unit to sell at a comparatively low price. It is the form of convenient purchasing for several products and services from a single business unit.
Examples: The Big Mac Meal!
Cash Machine
It basically means how quickly a company converts cash to good and services and then again into cash. This model is used by the companies who make low-profit margin but survive in the market with a disruptive position. Like, Amazon generates a massive amount of cash from its online store before it pays to its suppliers. Another way to look is that Amazon runs its supply chain on vendor credit.
Examples: Amazon
Combination of chains and franchise
This model is simply a mix of operated chains and licensed stores (franchising).
Example: Starbucks
Consulting
These business are based on two principle ideas: (1) hiring people (top talent if possible) and (2) charging clients a fee per hour or day for gaining access to this talent, its expertise and/or manpower.
Examples: Doctors, Experts, Software Developers
Crowd source
These businesses facilitate companies to have access to operational solutions like ideas and technologies, upgraded consumer interaction, opportunities for co-collaboration, operation optimization, and reduced costs.
Examples: Wikipedia, Youtube
Data Licensing
A data licence is a legal instrument that specifies a standard set of terms and conditions regarding sharing and re-use of your research data. If you want to publish your research data in a data repository, you have to choose a licence to accompany your data. Each data repository has its own licensing options.
Examples: Twitter sells real-time data to its partners, which is then used for advertising and customer insight.
Direct-to-consumers
This model allows companies or brands to sell their products to final customers directly.
These companies manufacture and ship their products directly to buyers without relying on traditional stores or other middlemen.
Examples: Unilever
Direct Sales:
This model is the sale of product or services without a middle man but typically has no fixed retail location example at home, online, or other venues that are not a store. This business model may also have a network of salespeople or be an individual.
Examples: Avon Products, Inc, Photographer
Discount with high quality
This kind of business model is usually practiced by supermarkets and departmental stores that get products in bulk and sell on the wholesale rate.
Disintermediation
A business that removes the middleman in the distribution chain.
Example: Dell, Tesla
Distribution
A business who makes a product or service available for the consumer or business user who needs it. This type of business works by having one or a few key distribution channels to integrate with its final customers follows this model.
Example: Unilever
Drop-shipping
A store that doesn’t have any stock. It purchases the products from a third-party supplier – commonly a wholesaler or a manufacturer – who ships them directly to the end consumer. So, there is no need for inventory and the seller doesn’t have to handle the product.
Example: Shopify
E-Commerce
E-commerce businesses allows buyers and sellers to connect and transact using an online platform (online shop).
Example: Amazon, EBay
Enterprise
Businesses that focus on only large clients, focusing on just big deals.
Example: Boeing, Golman Sachs
Family-owned
Any business that is run by a family, and its decision-making processes are controlled by two or more family members is a family-owned business.
Flex Pricing
A business model in which a product’s final price is open for negotiation.
Example: Letgo
Fractionalization
This business is directed towards ensuring that customers are able to sell a partial product.
Examples: You can sell pizza by the slice or by the box
Franchising
Best for the company’s expansion, franchising allows the franchisor to license its resources, brand name. Intellectual property and rights for a franchise to sell its products and services in exchange for a royalty.
Examples: Mac donalds
Freemium
A business that has a pricing strategy by which a basic product or service is provided free of charge, but money is charged for additional features, services, or virtual or physical goods that expand the functionality of the free version of the software.
Examples: Zoom, DropBox, Canva
Hidden Revenue
A business that has revenue generation that keeps users out of the equation so they don’t pay for the service or product offered. Instead, the revenue streams come from advertising money spent by businesses bidding on keywords.
Example: Google, Facebook, Instagram, Twitter
High Touch
A business that involves talking to and helping customers a lot through the entire pre and post sales process.
Example: Buying a car from a dealership, creating an Enterprise Saas. These businesses require alot of discussion between the salesperson/developer and the customer.
Instant News
This model focuses on sharing and updating news instantly without any intermediary.
Example: Twitter
Leasing
A business in which the customer pays for continuous access to a product over an agreed period. Product manufacturers typically maintain ownership of the product and are responsible for delivery, maintenance and take-back.
Examples: Home Depot(Tool Leasing)
Low Touch
A business that requires minimum customer interaction.
Example: Low cost online software, SurveyMonkey
Manufacturing
A business that utilizes raw materials to create a product to sell.
Example: Ford, GM
Multi-brand
This model is based on marketing more than two products, almost similar yet competing with each other and come under a single organization but having different brand names. It is done to create economies of scale and to build an empire.
Example: Proctor & Gamble, Nestle
Multi-sided platform
A business that is a service, technology or product that lets two or more customer or participant groups have direct interactions.
Examples: Paypal, Ebay and Facebook
Nickel and Dime
A business that drives the cost of a product down to its lowest point while still making a profit.
Examples: Ryanair or other low budget airlines that charges the lowest possible price for the flight tickets and charges fee over additional services like printed boarding pass fees, carry-on/ check-in luggage, seat preference, priority boarding, Wi-Fi, beverage, meal/snack, phone booking fees, etc.
One-for-one
A combination of both profit and not-for-profit services.
Example: TOMs provides shoes to underprivileged children globally for every pair of shoes sold.
Online Education
A business allows students to get access to educational resources via flat course fees or subscription. It can be said as a combination of freemium, course fees, and a subscription-based model.
Example: LinkedIn learning
Pay as Go
The business model charges as per the usage of the product or service.
Examples: Pay as You Go Mobile
Peer to peer
A business whereby two individuals interact to buy sell goods and services directly with each other or produce goods and service together, without an intermediary third-party or the use of an incorporated entity or business firm.
Example: AirBnB
Product as a Service(PaaS)
A business that allows customers to purchase a desired result rather than the equipment that delivers that result. I.e. the customer buys the service of the product being made rather than the actual product
Example: Zipcar, FedEx printing service
Pyramid Scheme
A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others
Examples: Herbalife
Razor and blade
A business that adopts the pricing approach where they sell consumable and dependent products as a pair. The model involves selling the dependent item at a loss or offering it for free but selling the consumable product paid with it at a higher price.
Example: Nespresso Coffee Machines, XBox
Reverse Auction
The sellers keep control over the full auction process, unlike the forward auction where buyers control the prices.
The sellers get the highest possible quality at the lowest prices.
It increases the competition as multiple bidders join the reverse auction to win the contracts.
Example: Bidding for government contracts
Reverse Razor and blade
The reverse razor and blade business model is a variant of the well-known razor and blade model. In this model, the company earns from the razor product rather than the blade product. The bladed product is optional in most cases for customers.
Example: Apple’s App Store and iTunes sell apps, movies, songs, etc. at reasonable rates but charges premium prices on its devices like iPhone, iPad, and Mac.
Social enterprise
These businesses tackle the world’s social and environmental challenges. There are only three ways that a social cause can garner income: donations, government grants and earned income. This third avenue is at the root of social enterprise.
Example: Aravind Eye Care is one of the earliest examples of a social enterprise model at work. This renowned Indian organization is designed to let people pay what they can.
Standardization
Businesses that use the standardization business models means that they make their service/product universal.. This attracts customers due to convenience and low prices.
Example: Coca Cola standarises their marketing, advertising, branding across all markets.
Subscription Model
This model can apply to both brick and mortar as well as online. The customer pays a recurring amount (weekly, monthly etc.) for access to the product or service
Examples : Gym membership, Netlfix
User Base Communities
The users of a certain product or service get together to interact with each other. Even if they are not regular users of the product, but they have an interest in a particular product, they can be a part of the community too.
Example: Craigslist
User-generated content
Businesses that involvescreating content by the users. These users are not employees, partners, affiliates, or have links with the organization. User-generated content is information about a brand that originates from the customers rather than the company behind it.
Example: GoPro camera relies on it’s 17million followers to create its ad content
Vertically integrated supply chain
These are businesses that own or control their suppliers, distributors, or retailers. Various companies use a network of other parties for their supply chain. However, companies that use the vertically integrated model try to control a larger portion of their supply chain.
I hope you have found your business model here. Please do reach out and comment below. Our community should be able to help you.