Let’s get the definitions out the way quickly so we can get to the actual list. The term “Business model” describes the framework that describes how an organization creates, delivers, and captures value. This includes target customers, value proposition, revenue streams, cost structure… “Business Model” is both an overhyped and over-used phrase, but defining one for one’s own business is a very helpful theoretical exercise (as long as the delivery behind it is rock-solid).
That definition exercise becomes much easier when entrepreneurs understand that no idea is truly unique (we’ve been doing capitalism for a long time!). Key archetypes exist, and building on them can greatly help accelerate a business’ successes. It is only once a concept has been mastered that it can be deconstructed to create something unique.
In this article, I introduce 85 business models that entrepreneurs should know about. From traditional models like the brick and mortar store to more innovative options like subscription-based models and peer-to-peer platforms, we’ll cover all the bases. By the end of this article, you’ll have a better understanding of which business model is the right choice for your company, and how to implement it effectively.
1. A la Carte business model
Pick what you want: the customer can select one, many, or all parts of a specific product or service. The customer enjoys the ability to have their needs better served while the company can learn more about their habits and preferences. This is especially useful if variable costs are low (as it is for digital offerings).
Value proposition
Control of the purchase given over to the customer.
Key attributes
Offering that can be easily divided up
Each product has a high marginal utility
Low variable costs
An advantageous pricing versus the sale of a whole product
A hard to segment market (hard to know who wants what when)
Examples: Skillshare, EdX, Hinge
2. Add-on Business model
Additional charge for extra: the main offer is priced lower than market average, while numerous non-mandatory extras bring in a sizeable part of the total profits. Even though customers often end up paying more than they had originally planned to, they benefit from being able to adapt their purchases to their immediate needs.
Value proposition
Variable offer and low initial price.
Key attributes
Offering that extras can be linked to
No other available options for extra (“Lock-in”)
Extras with high marginal utility
A product with a low initial price
Strong advertising to capture market share fast with low price
High potential for emotionally-driven purchase
Price-sensitive customers
3. Advertising revenue Business model
If it’s free, you’re the product: the company offers a cheap or free product, and subsidises it by offering space for advertisers seeking to reach new customers. The customer benefits from a cheap product while the advertisers are able to target potential buyers. Not to be confused with “Freemium” (see below).
Value proposition
Free and vast content offered to the customer
Easy access to targeted groups of customers for ad companies
Vast amount of data for data-driven companies
Key attributes
A (very) large customer base or long-term customer engagement
An easily-segmented customer base (to facilitate advertising)
An advertiser-friendly product
Data analysis capabilities / tools
A transparent contractual relationship with advertisers
Examples: Google, Facebook
4. Affinity club / Affiliation Business model
I make money when you make money: the company helps its partners make sales, usually getting a fixed fee or a percentage in the process. This is beneficial to said partners as they can benefit from extra reach or access to resources without over-relying on capital expenditure.
Value proposition
Easily create a nice side business.
Key attributes
“Achievements” from partners are easy to identify and track
A clear commission model
A strong ecosystem
Passionate customers
Clearly identified customers to target
A win-win scenario for all actors
Lower investments in sales forces
Examples: Pinterest, influencers, MLMs
5. Aikido Business model
Convert competitors’ strengths to weaknesses: it is possible to gain a large customer base by actively doing the opposite of what other players in the industry are doing. This allows the company to attract customers that are potentially un-served by existing offers.
Value proposition
Product or service radically different from industry standard.
Key attributes
A transparent competitive landscape, making it easy to know players’ strengths and weaknesses
Well-defined industry standards
Regular market research is possible
Clearly identified barriers of entry
Examples: BodyShop, Cirque du Soleil, Basecamp
6. Auction Business model
Going once, twice… sold: an offer, whether it is a service or a product, is sold to the highest bidder. By applying this model, companies are able to sell at the highest acceptable price (given communication was broad enough), while the customer is able to match the offer to his or her own view of the product’s value.
Value proposition
Customers never pay more than they want.
Key attributes
A wide customer base that is easily accessible (network effect)
Rare / heterogeneous products
A unique selling proposition to beat current market leaders
A solid regulatory framework (who pays what when and to whom?)
Products or offers that are difficult to independantly price
Examples: Ebay, Elance, Catawiki, Google (again)
7. Automated selling / Automation-enabled services Business model
No human interaction: as we automate more and more tasks, it has become possible to sell and purchase goods and services without ever interacting with a human. This automation has tremendous potential in reducing costs for companies, and allowing for a wider flexibility to serve final customers.
Value proposition
Flexible and time-saving shopping.
Key attributes
Identifiable tasks that can be automated
Products that customers need little advice with
Simplified processes
Processes in place in case of malfunction
Strong technological capabilities
Examples: All automated convenience stores
8. Bait & Hook / Razor & Blade Business model
The razor is cheap, the blades are expensive: while the offer’s starting price is cheap (or even free), the products or services needed to extract value from it are expensive and sold at high margins. In fact, the initial offering is often financed by later purchases. This business model is usually used together with “Lock-In” to better bind customers to the initial product.
Value proposition
Cheap initial product with expensive necessary additions.
Key attributes
Low-cost (generic) initial product
Generic product is subsidised by later purchases
Strong Lock-In potential
Low barriers of entry
Frequently used accessories
High exit barriers (Patents, strong brand)
Examples: Gillette (after which the model is named), Nespresso
9. Barter / Influencing / content promotion Business model
Tit for tat: exchange of goods or services for other goods or services without using money. The offers exchanged generally do not have a direct connection with each other and are likely to be valued differently by each party (ex: the Russians once traded an entire navy for some soda).
Value proposition
The customer gains more than they feel they give.
Key attributes
The ability to offer a product for free (or nearly)
Goods or services with different values to different stakeholders.
Complementary partnerships (supplier, customers, competitors…)
Good relations with stakeholders (trust matters in bartering)
Examples: Aklamio, Procter & Gamble
10. Basic component / Low-touch Business model
Make more with less: a company makes one of its existing product or service using the minimum amount parts to provide the core task the product or service was designed for. It is especially useful for manufacturing and borrows from “bottom of the pyramid business model” as the new offering is often best suited for developing nations or lower ends of the market.
Value proposition
Cheaper products / services.
Key attributes
An offering that can be reduced to its bare parts
A strong brand recognition
Low cannibalisation risks (if other offers exist)
Large potential customer base
Need for cultural understanding / EQ to market properly
Examples: Arvind, Zendesk
11. Bottom of the pyramid / Target the Poor Business model
Target customers at the base of the earning pyramid: a large part of the world is still at the bottom of the earning pyramid, especially in developing countries (though this is rapidly changing). By creating an offer which targets them, a company makes small profits per product sold, but is able to sell it in incredibly high numbers. An added bonus is the possibility of establishing the company within a rapidly developing places to lock in future customers.
Value proposition
Offer products that cater to the needs of this specific population.
Key attributes
High income inequality
Large earnings pyramid base
Positive PR
Technology able to connect with customers and attractive communication
Any consumer can buy the offer
Low(er) quality to avoid cannibalization
Examples: Walmart, Lidl (though that is changing for both)
12. Bundle Business model
All you need in one box: make purchasing simple and more complete by packaging related goods / services together. The customer gets more for their money while the company is able to better manage its stock and supply chain. This often has better margins as customers get worse at assessing the value of many products together (psychology, baby!).
Value proposition
A handful of similar products at a price lower than their addition.
Key attributes
Products that can be bundled together
Good packaging, whether physical or digital
An understanding of the value the customer derives from each product
A supply chain that can continue to supply bundled items
Examples: Apple, John Lewis
13. Cause Driven / Doing good Business model
Doing good: providing an offer that values ethics over profits. Customers will find a possibility of self-actualisation through the product, whether they seek to serve the environment, the company’s local ecosystem, or humanity in general.
Value proposition
Ethical / sustainable products.
Key attributes
Stakeholders not overly reliant on profit
A somewhat universal cause
An effective PR department
More expensive products
Well-off customer base
Examples: Lush, serengetee (now sadly gone)… and countless others worthy of a dollar
14. Co-creation / Partnership Business model
1+1 = 3: Two (or more) companies partner to create a unique offer. The consumer benefits from the combined expertise, and both companies gain access to a new market.
Value proposition
Improved customer experience thanks to the expertise of the partner
New products
Key attributes
A significant value difference between both actors partnering to avoid cannibalizing
Efficient communication around the partnership
Shared vision
Compatible strengths
Defined roles and limitations
Examples: H&M, F1 & Louis Vuitton
15. Crowd Pricing Business model
What do you think?: Prior to the launch of a product, potential customers can collectively define future retail price based on perceived value
Value proposition
Customers can have a say in the value they see in an offer.
Key attributes
Same as Dynamic pricing (see below)… but nicer
Examples: N/A
16. Crowdfunding Business model
If one million people invest a dollar, you get one million dollars: a project is financed by a group of untraditional investors (usually the general public). If a pre-defined funding point is reached, the project goes ahead, and the investors get project-specific rewards. These rewards are usually proportional to the amounts invested.
Value proposition
Customers get to participate in things they’re passinate about, and are able to shape its creation.
Key attributes
Goodwill and / or incentives
Ability to do “all-or-nothing”
Free advertising
Willingness to fail
Ideas needing early validation / feedback
Platform with large draw
Examples: GoFundMe, KickStarter
17. Crowdsourcing Business model
Outsourcing to the crowd: information or input related to a task or project is generated by enlisting the services of a large number of people, either paid or unpaid, typically via the Internet. Actors are generally offered a small reward for their contribution.
Value proposition
Chance to participate in the creation process of a value brand, while satisfying entrepreneurial wishes.
Key attributes
External actors who are able to perform the required task
Extrinsic or intrinsic rewards available
An already innovative company
Increased loyalty
A channel to communicate
Well-framed requirements
Clear and transparent assessment process
Examples: Volition Beauty, PepsiCo
18. Curator Business model
The curator knows best: a curator offers products or services to customers, based on previously acquired knowledge of the customer base and / personalisation. Data is particularly important but not mandatory. This is generally a high-margin business but difficult to scale as automation would beat the purpose. This model is fast disappearing due to progress in machine learning, but a human touch will always have some value.
Value proposition
Products / services tailored to the consumer’s individual needs.
Key attributes
Difficult to scale
In-depth knowledge of the customer / customer base
Extensive feedback collection
High brand recognition
Less is more
Product with high margins
Examples: StitchFix, Prose
19. Customer Loyalty Business model
Incentives for long-lasting fidelity: Customers are given rewards by a company (monetary or others) if they continue to make their purchases from said company. This ensure that customers remain bound to the company, helping ensure future revenues.
Value proposition
Discounted goods or gift push the customer to come back.
Key attributes
Incentives with well-perceived customer-value
Possibility of making incremental incentives
Competitors with similar offers
Capacity to leverage data to segment customer profiles and offer relevant rewards
Good communication with customers
Ability to make rewards “in kind” Vs financial
Examples: Sephora, Starbucks
20. Data into Assets / Data brokerage Business model
Making use of what you know: Value is created by collecting a processing customer data for either internal use or sale to a third party. Internal use includes personalisation and / or prediction (now known as AI, but it has a long pre-2020s history). Note that new laws have made this business model more regulated.
Value proposition
Look at ChatGPT. No really, look at it. How cool is it?! That’s the value proposition.
Key attributes
Head-start from a business already centred around the acquisition of data
Strong processing abilities
Many data points, with many attributes
Strong data analysis team already in place
Often associated to hidden revenue Business Model (see below)
Something to trade for customer data (not always!)
Examples: StitchFix, OpenAI
21. Digitalisation Business model
Making the material immaterial: existing physical offers are transformed into digital versions of themselves. As such, they can be shared and reproduced much faster, at a much lower cost.
Value proposition
Drastically reduced purchasing efforts.
Key attributes
Dematerialisation of an existing product or service
Infinite reproduction of services (digital baby!) and reduced marginal costs and efforts
High IP protection capabilities
Constant availability (digital baby!)
Equilibrium between digital value proposition (external) and digital operations (internal)
Examples: Dropbox, Netflix, Charity water
22. Direct to consumer / Direct selling / Disintermediation Business model
Skipping the middleman: Products are sold directly from the manufacturer to the customers, without going through intermediaries. The company thus saves retailing costs (or any other cost associated with the middle-man). These savings can be passed on to the customer. This model allows the company to control end-to-end process, while retaining a connection to its customers.
Value proposition
More personal sale experience, improved products and services thanks to client proximity
Better service thanks to proximity
Key attributes
Possibility of a direct connection to customers
Control of sales information (both ways)
Optimisation of internal functions
Consistent messaging across channels
Less recognised brand name (often)
Expert sales staff
Examples: AliExpress
23. Donut selling / Cross-selling Business model
Killing two birds with one stone: offers from an external business are linked to the existing offer. This requires little extra costs, while more potential customer needs can be satisfied and additional revenue generated, as relatively few changes to existing infrastructure and assets are needed.
Value proposition
Customers who know the business will know they’re not taking a risk with a new product.
Key attributes
Possibility of naturally offering Complementary products and / or services
Transferable existing competencies
High level of customer trust
Good execution as the primary product becomes dependant on the second
Low-margin original product
High entry barriers
Consistent pricing
Examples: Ikea
24. Dynamic Pricing Business model
The right price at the right time: the price for an offer changes depending on a variety of criteria (customer, time of day, weather…). This allows the company to charge a more exact fee to fit the value the customer has attached to the offering.
Value proposition
Prices adapted to what the customer is willing to pay.
Key attributes
A deep understanding of the offering’s intrinsic value
Enough data on environmental factors to make accurate prediction
The technological ability to update prices in real time.
Real time accuracy
Pricing software
Examples: Uber, Amazon
25. E-commerce Business model
Online business: offers are sold through a web portal only. This removes most of the costs associated with physically selling a product. Customers can acquire a product at any time and in any place, while the company is able to reduce costs, as well as integrate its sales and distributions processes with other digital processes within the company.
Value proposition
Provide not only products and services, but also support.
Larger offering as research is made easier
Key attributes
Low overheads
Few intermediaries
Few testing options
Constant availability
A large offering
Transparency
Vast data availability
Examples: Glossier, Fnac-Darty, Asos/Boohoo/Pretty Little things
26. Experience selling Business model
Sell emotions, not products: The customer experience surrounding the purchase of an offer overshadows the offer itself, hence increasing its perceived value. As a result, the company experiences higher demand and can increase its prices dramatically. The experience offer must fit closely to the narrative developed by the brand.
Value proposition
Experience rather than mere functionality.
Key attributes
An all-star marketing team
A perfect understanding of the product or service’s value to the customer
Control over the purchasing environment
A unified brand theory
The same experience regardless of branch or channel
Examples: Louis Vuitton, Harley Davidson, Lamborghini, RedBull
27. External consulting / Make More of It Business model
Multiply competencies outside your core business: internally developed expertise, as well as any other high-value assets, are offered to other companies who could benefit from it. This allows the company to produce revenues from unused resources, thus diversifying revenue streams and enhancing the core value proposition.
Value proposition
Ability to use know-how or other resources.
Key attributes
Spare resources
Recognised capabilities
Highly specialised / unique core competency
Fluctuating or seasonal demand
Potential outside funding
Examples: AWS, BASF
28. Flat rate pricing Business model
Unlimited consumption at a fixed price: a specific price is asked for an offer, regardless of the use the customer makes of it. The company is thus able to better predict income (though demand is never a given), while the customer is able to manage expenses.
Value proposition
Cost-controlled unlimited consumption.
Key attributes
Low marginal costs
Customers have diminishing marginal utility
A clear, numerical understanding of the “average” customer
Offer abuse
Digitalisation
Examples: Netflix, Spotify
29. Franchising Business model
We’re all family: while the franchisor owns its brand, processes and IP, it is able to lend them to independent entrepreneurs. The company thus limits its risks and is able to expend quickly, while the franchisee is able to benefit from an already well-known brand and the availability of know-how and support.
Value proposition
Access to a proven business model for franchisees as well as some expertise, meaning lower risks.
Key attributes
Quick geographical expansion
An ability to cater to entrepreneurs
Low risk
Pre-existing assets, IP, brand strength (legally protected)
Attractive assets
Highly standardised processes
Standardised IT systems
High stickiness
Large moats
Examples: Body Shop, Sephora, Domino’s Pizza
30. Freemium Business model
Choosing between free basics and paid premium versions: basic services are provided free of charge while more advanced features must be paid for. This type of model typically occurs on the internet. The free offer attracts a high volume of customers, while revenue is generated by the (generally smaller) volume of premium customer.
Value proposition
The basic version is free of charge while the premium version is not.
Key attributes
An addictive or high-value product (Lock-in)
Low primary customer engagement
A known minimal conversion rate
Very low marginal costs
Strong customer focus
An understanding of what functionalities increase conversion
Examples: Dropbox, Skype, Spotify, Hootsuite
31. Functional specialist Business model
Make your own league: By strongly specialising on one aspect of its value chain, a company is able to offer an impossible-to-beat value proposition. It is therefore able to sell its expertise to competitors who seek to copy its aptitudes.
Value proposition
An expertise related to the company’s primary model.
Key attributes
An obsessive attention to details for a specific part of the business
Many competitors that could benefit from such an offer
Process that can be applied to other companies or industries
Low employee turnover
A wide-ranging network of partners
Examples: PayPal, Amazon, Communication agencies
32. Group Purchases Business model
Bring a friend: A company offers an increasingly reduced price when larger amounts of people purchase the product as a group. The customers get a cheaper product, while the company gains new customers through network effects.
Value proposition
Lower product prices the more people are brought to the sale.
Key attributes
Strong digital abilities
A set of enforceable rules to avoid fraud
Strong social media presence
High margin products
A social ecosystem willing to welcome the model
Examples: Zola, Pinduoduo
33. Guarantee replace Business model
You break it, we replace it: Similar to the “trash to cash” model, this model offers customers to systematically replace defective products. In exchange, it can collect those products and potentially sell them a second time, sell them for scraps, scavenge parts… As for the customers, they are more likely to stay loyal. This model is a great addition to the Razor & Blade model and has many parallels to guaranteed availability.
Value proposition
A product that will be replaced systematically.
Key attributes
Processes to simplify customer returns
Good customer communication
Strong customer loyalty
Long-term partnerships with third-party actors
Ability to process demand fluctuations
Examples: Timberland, IQOS
34. Guaranteed availability Business model
The offer always works (T&C may apply): The providing company ensures that a product or service previously sold is always online. This becomes central to the business and impacts every part of the value chain.
Value proposition
Ensuring almost 0 downtime for machines and equipment.
Key attributes
Efficient and easy-to-repair offerings / Easy to offer
Strong communication channels
Offerings that rarely break down
Long term customer relationship
Industry where availability is crucial
Ability to handle unforeseen events
Examples: Hilti, Otis
35. Hidden Revenue Business model
Seeking alternative sources: The business’ survival no longer directly depends on the customer. Revenues are instead provided by a third party who cross-finances the offer proposed to customers (generally making it cheaper). The most common use of this model is through advertisement: the customers so attracted are of value to the advertisers who then fund the offering.
Value proposition
Cheaper products as they are cross-financed.
Key attributes
A product customers need but are unwilling to pay a lot for
Customers willing to share their data
Ability to provide an offering for
Strong partnership with stakeholders
Low marginal costs
Examples: Spotify, JCDecaux, Youtube
36. Homemade Business model
Do-it-yourself: The company sells ingredients that need to be assembled by the customer in order to create the finished product. The company reduces costs by exporting part of the value-creation process, while the customer is able to create something that will fit their needs.
Value proposition
Customers can make products as they see fit.
Key attributes
A product or service that can be broken down
A product that is not dangerous
Obvious benefits to the customer
A reduction in marginal costs
Clear instructions
Examples: Mwamem, Aroma-zone
37. Ingredient Branding Business model
Brand squared: part of an offering originates from a specific supplier. Because of the supplier’s expertise/image/credentials, the offer is advertised as containing the “ingredient”. The positive association with the ingredient brand is projected on to the product and increases its attractiveness.
Value proposition
A more desirable product.
Key attributes
Cannot be bought individually
An essential function in the final product
Significantly better than the competition’s offers
High brand awareness
The final product is not overshadowed
Examples: Intel, Starbucks
38. Integrated supply / Integrator Business model
Involvement all the way down the line: An integrator has control over most of its offerings’ value creation process, including all resources and capabilities in terms of value creation. Efficiency gains, economies of scope and reduced dependency on suppliers result in a decrease in costs. These savings can then be passed on to customers. The company however loses out on specialisation, and may incur numerous complexity costs.
Value proposition
By managing most operations internally, the company can pass savings on to customers.
Key attributes
Not benefitting from specialisation
Broad knowledge depth
Focus on downstream value chain
Better understanding of the value chain than competitors
No outsourcing costs
Examples: Zara, Intel, Tesla
39. Layer Player Business model
Benefiting from specialised know-how: the company provides a single value-adding offer to other companies value chains, across a variety of industries. The company benefits from economies of scale, while customers benefit from their expertise.
Value proposition
Company is able to serve many customer segments across industries.
Key attributes
Typical client is an orchestrator
Specific know-how
Ability to see changing market trends ahead of time
Competitive industry
Possibility of later expansion to other markets
Mature industry with highly vertically integrated companies
Examples: AWS, PayPal
40. Leasing / Rent instead of Buy Business model
Pay for temporary right to use: customers rent the product instead of outright buying it. This models differs from shared use because the company receives the product back after each use. The company is able to get more regular revenues which last during the entire product life-cycle, while the customer enjoys the product for cheaper than it would have cost to purchase it. In fact, both parties benefit from greater efficiency in product utilisation, given that time of non-usage, which unnecessarily ties capital down, is reduced.
Value proposition
The customer is able to use products they might not be able to otherwise, freeing up capital.
Key attributes
Capital-intensive assets
Offer financed in advance
Ability to assess rent duration
Possibility to transfer to pay-per-use model
Product customers are happy to share with others
Examples: Rent the Runway, Blockbuster
41. Licensing Business model
Commercialising intellectual property: the company develops patents and other IP resources, which it then offers to other actors. As such, realisation costs are low (if not 0), but the assets are nevertheless source of revenue. Licensing gives a company the freedom to focus on R&D and allows the provision to third parties of knowledge that could otherwise be under-utilised.
Value proposition
An already recognised product.
Key attributes
Rare IP
More than one interested party
Recognisable brand
Knowledge and technology-intensive context
Long-term relationship with licensees
Strong R&D capabilities
Clear rules and regulations / solid patents
Examples: Coty, L’Oréal
42. Lifestyle as a product Business model
Don’t you want to be more like me?: A lifestyle brand is a brand that attempts to embody the values, aspirations, interests, attitudes, or opinions of a group or a culture for marketing purposes. Lifestyle brands seek to inspire, guide, and motivate people, with the goal of their products contributing to the definition of the consumer’s way of life.
Value proposition
An ability to be inspired, guided and motivated through products and services.
Key attributes
Well-known spokespeople
Partnerships
An ability to market a lifestyle
Long-tail offerings
A varied offering
Examples: Goop, Harley Davidson, Red Bull, M&S
43. Lock-In Business model
Forcing loyalty with high switching costs: customers are “forced” to keep using a company’s offer because of high technological, economic or legal switching costs. This means that most customers will not be able to / want to change to another provider. This is generally generated through product or service interdependency.
Value proposition
Low value for customers.
Key attributes
Switching “cost” is not only monetary
Well understood switching costs
No interoperability with competition
Patents to ensure non-interoperability
Rewards for cumulative purchases
Unique additional products
High customer value
Examples: Nespresso, Microsoft, Canon, Kindle
44. Long Tail Range Business model
Reverse Pareto: rather than concentrating on one offer which would make the bulk of its sales, a company chooses to offer a wide variety of niche products which attracts a large number of customers (though they neither demand high volumes nor high margins individually). If a wide variety of these products is offered in sufficient amounts, the profits from the resulting accumulated small sales can add up to a significant amount.
Value proposition
Small quantities of a large number of products sold, allowing for more choices for the customer.
Key attributes
Narrow margins
Long-term gains
All products contribute equally to revenues
Efficient distribution costs
Low search costs for customers
Highly specialised / individual offerings
Complexity
Examples: Youtube, Itunes
45. Mass Customisation Business model
Off the rack individualism: The company offers semi-personalised product without losing any efficiency thanks to an optimised value chain. As a result, individual customer needs can be met under mass production conditions and at competitive prices.
Value proposition
Customisation according to customer needs for the same price as mass products.
Key attributes
Gain useful user feedback on products
High production efficiency
Varied customer tastes
Same price as competitors
Close customer relationship
Ability to handle complexity
Automation
Examples: Lenovo, Subway
46. Media Blends Business model
Learn and consume at the same time: eliminate the boundary between media and commerce by offering products that are shown within media. This allows companies to insert their product organically, and customer to better understand them and see them at work.
Value proposition
Purchase products as seen in media.
Key attributes
Products or services that can blend seamlessly
Partnership with media companies
Media-linked capabilities
Technology making the purchase easier
Good understanding of what the customers seek in their media interactions
Examples: iQiyi, Tasty
47. Multi-level marketing Business model
Sell to the seller who sells to the seller who sells to…: MLM is a strategy some direct sales companies use to encourage existing distributors to recruit new distributors who are paid a percentage of their recruits’ sales. Distributors also make money through direct sales of products to customers. The ethics of this business model is still under discussion.
Value proposition
Offers participants the opportunity to earn income both through direct sales and by recruiting new sellers.
Key attributes
A product that can be sold without training
Good PR
Celebrity endorsement
Tracking sales
Legal protection
Examples: Avon, Younique, Amway
48. Negative operating cycle / Cash Machine / Cash Advance Business model
Selling a product before having paid for it: the customer pays a product immediately, while the company has negotiated generous terms with suppliers, which allows it to have more cash in hand at any given time. This results in increased liquidity that can be used to amortise debts or fund investments.
Value proposition
Increased liquidity for the seller (few benefits for the buyer).
Key attributes
Fast-moving/build to order products
Position of power with suppliers and customers
Customers can pay quickly
Product or service has high perceived value for customers
Low cash reserves
Examples: Groupon, Amazon
49. No frills Business model
Whatever, as long as it’s cheap: the company concentrates on providing the minimum necessary effort a customer is willing to accept for an offer. Said offer is thus a core proposition, with little around it. Cost savings are shared with the customer, ensuring a larger customer base, but lower margins.
Value proposition
Usual value proposition is reduced to its minimum, and savings passed on to customers.
Key attributes
Price-sensitive customers
Regular costs audits
Standardised offering
Automation
Economies of scale
Examples: Aldi, Vaseline
50. On-demand Business model
Get it as soon as you want it: This model fulfils consumer demand on the basis of immediate access to goods and services. It is a business model driven mostly by technology
Value proposition
Products and services available at all time.
Key attributes
A product that can be made available at any time and place
Technology allowing connections between client and offer
Platform based model
C2C
Aggregation
Examples: GlamSquad, Stylelisted
51. One for One / Buy One give One Business model
Buy one / Give one: One for one is a social entrepreneurship business model in which one needed item is given away for each item purchased, appealing to socially conscious consumers.
Value proposition
Combine consumer purchasing with social impact.
Key attributes
A high volume product
A necessity for part of the population
A partnership which benefits all actors (ex: NGOs)
Partnership with an NGO able to offer services around the donation
Customers willing to subsidise prices
Examples: Warby Parker, TOMS Shoes
52. Open business Business model
Leverage collaborative value creation: Open business is an approach to enterprise that draws on ideas from openness movements like free software, open source, open content and open tools and standards. The approach places value on transparency, stakeholder inclusion, and accountability. Collaboration with partners in the ecosystem becomes a central source of value creation, thus benefiting all actors.
Value proposition
Leverage transparency, collaboration, and stakeholder inclusion to drive value creation. By embracing open-source principles, it fosters innovation through collective input and shared resources, benefiting all ecosystem participants.
Key attributes
Coherent value chain, attuned to that of future partners
Cooperation that benefits all stakeholders
A focal product, service or company which feeds all the others
Areas in the value creation process where other parties can contribute
A possible win-win scenario
Examples: Red Hat
53. Open source Business model
Working together to create a free solution: the core of the offer (usually source code) is made freely available to anyone wishing to use it. As such, it can be contributed to (encouraged), or simply used as a customer would. A company can earn revenues by providing complementary services, such as consulting and support. However, it usually benefits more from becoming an industry standard, and the image boost that comes with it.
Value proposition
Freely available products or services created by collective brainpower.
Key attributes
Appropriate technology
A developed sense of community
Low R&D budget
Personal motivations
Free of supplier dependencies
Set standards for creation
Shared risks and resources
Examples: Firefox, Wikipedia
54. Orchestrator Business model
Efficiency within the value chain: the company focuses on its strength within the value chain, while it outsources and coordinates those aspects that can be optimised by an external actor. It is thus able to reduce costs and benefits from the supplier’s expertise. Additionally, the focus on core competencies enhances performance.
Value proposition
Maximize operational efficiency by focusing on core competencies while outsourcing non-core activities to specialized partners. This approach reduces costs, leverages the supplier’s expertise, and enhances overall performance.
Key attributes
Efficient coordination abilities
Efficient decision-making abilities
Close cooperation with partners
An appropriate knowledge of the company’s key strengths
Hands-on management of partners
Examples: Nike
55. Pay as you go / Pay per Use Business model
Pay as you go: The customer pays on the basis of what he or she effectively consumers, whether that is a product or a service. This can be in units of time or distance, for example. The customer is thus able to be more flexible about his or her consumption, though it may be priced higher than if the offer had been purchased outright.
Value proposition
Pay for usage instead of a fixed rate.
Highly transparent
Key attributes
Customers seeking flexibility
Transparent/simple fee system
Ability to make sales estimate or minimum usage in contract
Ability to track usage efficiently
Learn from customer behaviour
Offer financed in advance
Examples: Lime, AWS
56. Pay what you want /pay what you can Business model
Whatever it’s worth to you: clients pay the amount they want for an offer, sometimes going as low as zero should they choose to do so. A minimum amount may be set in order to avoid unethical behaviour a guarantee some revenue. Alternatively, a suggested price may be indicated by the company in order to guide the client. The client is thus able to control his other expenses, while the company is able to attract a large amount of customers, while benefiting from publicity.
Value proposition
The customer decides how much to pay for a product or service, hence keeping control over their assets.
Key attributes
Possibility of guiding the customer to wanted price
Wide consumer base
Low marginal costs
Strong relationship with customers
Fairness as a social norm
The value of a product is easy to gage
Ability to apply this model to only part of the offering
Ability to shut out free riders
Examples: RadioHead, BrandAlley
57. Peer to Peer Business model
Dealing from person to person: individuals interact to buy and sell goods and services directly to and from each other (or produce goods and service together). Though this model is by nature decentralised, an organising company can offer a meeting point and communication service which connects these individuals. The company is then able to earn a fee through this service.
Value proposition
Transaction between individuals, similar to commercial interactions, with added social benefits and increased marginal utility.
Key attributes
Set of ground rules
Ability to create network effects
Community relationships
Trusted image
Simplified processes
High barriers of entry
Examples: PAP, eBay
58. Performance-based contracting / result-based Business model
Basing fees on results: This model is similar to pay-per-use insofar as the value of the offer is not based on its physical value. Instead of a fee per use, it is here instead tied to the outcome of the offer utilisation. This leads the company to develop special expertise to ensure good performance, which benefits the client. Performance-based contractors are often strongly integrated into the value creation process of their customers.
Value proposition
A precise output is paid a specified amount, allowing customers to control their costs.
Key attributes
Strongly integrated manufacturing ecosystems
Ability to track performance
B2B
Long-term cooperation
Complex products with challenging application
Transparency
No upfront costs
Examples: Rolls-Royce, Government agencies
59. Personalisation Business model
One step beyond mass customisation: the rise of data, as well as digitalisation and optimised processes allows us to offer a different product to different customers in a simultaneous manner. The company is hence able to acquire a loyal following while the customer is pleased that his or her tastes are taken into account.
Value proposition
Maximum value from the product for a specific customer.
Key attributes
Different from mass customisation
Data analysis capabilities
Communication with customers and their needs
Data collecting processes
Ethical rules in place to avoid potentially costly mistakes
Examples: Spotify, Netflix, Asos
60. Platform Selling / Brokerage Business model
Sell next to your competitor: By aggregating a large number of companies, a platform is able to attract a large number of customers, hence creating an ever-increasing network effect which benefits all parties.
Value proposition
A wide offering.
Key attributes
Mechanisms that make the platform grow with every purchase
An ability to efficiently manager sellers
Efficient contracts
More Supply
More demand
Lower prices
Examples: FeelUnique, BeautyLish
61. Pre-paid / credit model Business model
Pay now, use later: Several units of a good or service are purchased in advance. Validity of these units can be limited in time or not.
Value proposition
Customers can purchase multiple units of a good or service upfront, often at a discount, providing them with convenience and potential savings. For the business, it ensures cash flow and customer retention
Key attributes
Prepaid units: Goods or services purchased in bulk ahead of time.
Usage flexibility: Customers can use units as needed, within or without a time limit.
Discount incentive: Bulk purchasing typically offers a cost benefit.
Examples: AWS, WeWork
62. Private Label / White Label Business model
Own brand strategy: a product is manufactured or packaged for sale under the name of the retailer rather than that of the manufacturer. The same product or service is often sold to a variety of brands. In this way various customers segments can be satisfied with the same product.
Value proposition
Product is sold by a different company than that which manufactured it.
Key attributes
Low infrastructure
Specialisation
Economies of scale
Sales supplemented by white labels
Strong differentiation between actors selling the same product
Price sensitive customers
Examples: Schwartz, Tang Frère
63. Product to Service / Solution Provider Business model
Finding all you need at the one-stop shop: Every needed products and services for a specific offers are bundled to a specific point of contact. As such, customers can benefit from relevant expertise, while the company adds revenue streams, locks customers in, and gain close contact with its customers, hence creating a virtuous circle.
Value proposition
Single source for a specific offer so customers can concentrate on their core activities.
Key attributes
Complete area expertise
Ability to provide an all-inclusive package
Increasingly close relationships with customers
New ways to extend existing products and services
Key customer insights gained
Increased complexity and variety
Examples: Amazon, Apple
64. Push to Pull Business model
Come will they and it build: The value chain is decentralised and made flexible in order to become more customer focused. This generally means higher costs but higher perceived customer value, leading to higher margins.
Value proposition
The customer is king.
Key attributes
Flexible value chain (including suppliers)
High adaptability
Low inventory costs
A specific decoupling point
Foresight on future demand
Identified optimal points to integrate the customer to the value chain
Eliminate waste
Central planning
Examples: Zara, Toyota
65. Quality Assurance Business model
The customer knows the offer is good: the company is able to ensure the quality of its offering is on par with consumer expectation, hence improving its image and attracting potential new customer.
Value proposition
A promise to customers that the offer will not fail certain expectations.
Key attributes
Understand customer expectations
An easy way to display the quality assurance
Contractually protected quality assurance
Communication
Transparency
Examples: Label AB, Label Rouge
66. Revenue sharing Business model
Win-win with symbiosis: Revenues are shared with all who participated to the ecosystem’s health, be they suppliers, or even competitors. This is usually because the presence of more than one actor is beneficial to the all the others through a higher potential customer base or higher customer satisfaction.
Value proposition
All participants in the ecosystem share the revenue.
Key attributes
Commonly found on the internet
Fair and transparent way of sharing revenue
Beneficial / win-win partnerships
Industry with fragmented value chain
High barriers of entry
Examples: NFL, Medium, Spotify
67. Reverse Auction Business model
Going twice, Going once…: Roles of sellers and buyers are reversed. Sellers compete to obtain business from the buyer and prices will typically decrease as the sellers underbid.
Value proposition
All parties get a price according to the perceived value of the offer.
Key attributes
An environment with near perfect information availability
A propensity towards digitalisation
Examples: N/A
68. Reverse Engineering Business model
Taking lessons from competitors: this pattern refers to the reproduction of another company’s product following detailed examination of its construction or composition. As this system requires little investment in research or development, the ensuing products can be offered at a lower price than the original one.
Value proposition
A product that is either as good as the original or appeals to a new customer segment.
Key attributes
Unprotected IPs
Industry transparency
Consistent patent expiration watch
Good PR / Legal teams
Strong recruitment capabilities
Examples: Pelikan, Denner
69. Reverse Innovation Business model
Learning from good-enough solutions: Simple and cheap offers developed for emerging markets are imported and sold in developed economies. These offers are often innovative as they were created in a world largely untethered by complex infrastructures.
Value proposition
Offer innovative solutions to customers.
Key attributes
Products that have value across the world
Untouched key functionalities
Locally-based R&D
Reduced costs
Protected IP
Efficient repackaging
Examples: Nokia, TVS
70. Reverse Razor & Blade Business model
The opposite of Gillette: Offer low-margin offers tied to an original product at a very low price to encourage the sale of the much higher margined original product. This means customers have less resentment towards the company while the company enjoys high margins.
Value proposition
Enjoyment of a product once the initial payment has been made.
Key attributes
High-margin initial product
Offers that add value to the initial product
Less customer resentment
Expensive initial product
Ability to supply high demands
Examples: Amazon, Apple
71. Robin Hood Business model
Take from the rich, give to the poor: an offer is priced differently depending on the buyer’s income, so that most of the profits are made from richer customers, who effectively cross-finance the offer for poorer customers. Similarly to the Bottom of the Pyramid model, this way of doing thing generates little initial profits, but creates economies of scale that other providers cannot achieve. Additionally, it has a positive effect on the company’s image, and recruits potential customers for the future.
Value proposition
Offer a product the disadvantaged might not otherwise be able to afford, while richer customers have a better conscience.
Key attributes
Economies of scale
Positive image
Market with a solid customer base
High margin market
Increased future sales
Examples: Warby Parker, TOMS Shoes
72. Scarcity Business model
“Hurry up, we’re almost out of stock”: Producing few products infuses it with rarity in a world where everything is limitless. This enhances the company’s image and increases revenue due to perceived value. This however means missing out on economies of scale. Note that scarcity can be in product units, but also in time.
Value proposition
A product which gains in perceived value due to rarity and demand.
Key attributes
Effective communication
A process to handle dissatisfied customers
A strong analysis of optimal revenues
A real scarcity
High word-of mouth possibilities
Examples: Pat McGrath, Starbucks, Booking.com
73. Self-service Business model
Putting the customer to work: the customer is (knowingly or unknowingly) tasked with producing part of an offer’s value creation process. In exchange, the company is likely to reduce the offer’s price. This is particularly suited for process steps that add relatively little perceived value for the customer, but in fact incur high costs. Customers are able to save time, as is the company: as in some cases the customer is able to execute a value adding step more quickly than the company.
Value proposition
Lower price, as well as time savings.
Key attributes
An understanding of customer price sensitivities
High costs processes with low perceived customer value
Customer information / training
Perceived customer value
Error-free process
Examples: Ikea, McDonalds
74. Shared Use / Fractional Ownership / Fractionalisation Business model
Timeshare makes for efficient usage: Assets are shared by a group of owners. The assets linked to this type of model are typically capital-intensive, yet required on a regular basis (though not consistently). The customers are able to own and fully utilise a needed product, while the company is able to make a sale it might not otherwise have been able to make.
Value proposition
Ability to purchase products that one may not be able to otherwise afford, and more efficient use of said product.
Key attributes
Company oversees maintenance
Company creates clear rules (ex: exit clauses)
Capital intensive assets
Customers willing to share assets
Risks
Examples: HomeBuy, Blablacar, OuiCar
75. Shop Squared / Shop in Shop Business model
Piggybacking: a company integrates an already existing commercial space instead of creating one from scratch. The hosts can benefit from a larger number of customers and a constant revenue in the form of a rent, while the hosted company gains access to cheaper resources such as space, location or workforce.
Value proposition
Extra products and offers in the same convenient space.
Key attributes
Possible synergies
Higher customer loyalty
Closer proximity to customers / higher visibility
No cannibalism
Close cultural and operational fit with partners
Examples: Starbucks, Superdrug
76. Social Purchasing / User communities Business model
Put the community to use: Customers use media to share and purchase products, abandoning entirely the confines of the brand control environment. The company benefits from potential virality and network effects while customers is able to receive targeted messages tailored to their interest.
Value proposition
Lower prices thanks to a social purchase component.
Key attributes
Technological ability to track customer purchases
Strong social media presence
Customer engagement
Contractualisation
Products that need to be tried
77. Subscription / Subscription club Business model
Buying a season ticket: the customer gains access to a product or a service by paying a regular fee (usually monthly or yearly). The company is thus able to generate a steady income while customers benefit from low usage costs and consistent availability.
Value proposition
Customers save time, money and energy. The price of the offer is often lower than that of a repeat purchase.
Key attributes
Regular access to customers
Easy to understand terms and conditions
Long-term benefit for the customer
Product needed on a regular basis
Data analysis capabilities
Examples: HelloFresh
78. Supermarket Business model
Large selection and small prices under one roof: a large number of products (or services) are offered under the same roof by a company. This attracts a large customer base, which keeps the prices generally low. The price is also kept low thanks to economies of scales.
Value proposition
Sell of a large variety of products under one roof for a low price..
Key attributes
A large number of partners
A way to contractually manage many partners
An understanding of the variety customers seeks
Effective supply chain
Large population
Standardised processes
Examples: Carrefour, Sephora
79. Top of the Pyramid / Ultimate luxury Business model
More for More: By providing the best possible products, along with the best possible services and branding, the company is able to target the richest customers. As systematic differentiation is key, the costs are high, but are met by very high margin due to the small customer pool.
Value proposition
Great service… and feel like a Star
Key attributes
High quality services
Very high margins
Great branding
Well-trained employees
Scarcity effects
Small customer pool / fluctuating demand
Examples: Lamborghini, Rolex
80. Trash to Cash Business model
Turning old rubbish into new cash: used products are collected by the company and either sold for a profit or transformed into new products. This is generally a profitable endeavour, as collection costs are generally extremely low. In addition to removing some resources costs, it also assuages some customers’ consciences with regards to their environmental impact.
Value proposition
Goods that give a good conscience.
Key attributes
Resources that have use after their shelf life
Environmental products / green policies
Processes that can accommodate a new resource diversity
Cheap resource acquisition
High margin industries (who usually produce the most valuable trash)
Examples: GameStop, H&M
81. Two-sided Market / Indirect network effect Business model
Attracting indirect network effects: similar to platforms, a two-sided market model operates on the basis of connecting and serving more than one group of customers. The value of the platform increases as more groups or individual members of each group use it. The two-sides are frequently different types of entities: businesses on one side and NGOs on the other, for example.
Value proposition
Network effects for both providers and consumers.
Key attributes
Network effects
Two or more sides
Quick visibility to develop
Identification of all stakeholders (included/left out)
Identification of value stream between stakeholders
Examples: Facebook, Groupon
82. Unbundling Business model
Give the client more choice: unbundling is the idea of removing the ties between products to offer them as stand-alones rather than as part of a package.
Value proposition
The ability to not be tied down by un-extracted value.
Key attributes
An industry ripe for innovation / disruption
Very low barriers of entry
Slow-moving competitors
Examples: Netflix, Google
83. Unique Format Business model
This only works here: Unique format is a form of the lock-in business model, which has been pushed to render switching to another product impossible. Instances are rare, and legal ramifications possible.
Value proposition
A product that works perfectly with specific products and services, creating an entire eco-system.
Key attributes
Communication in case of potential backlash
Set an industry standard
A product customers can’t live without
Regular use
No legal barriers
Examples: IoS
84. User Design Business model
The customer as inventive entrepreneur: the customer is the designer behind an offer (not to be confused with the manufacturer). The company provided consumers with all the necessary support, and produces the product once designed. As such, it is able to benefit from customer creativity, while the customer is able to benefits from pre-established infrastructure. Revenue can be earned by design, or by sale.
Value proposition
Customers realise their entrepreneurial dreams without having to create any infrastructure
Key attributes
Get feedback on customer preferences
Products customers want to help design / Customise
Simple to use tools for creation
Simple products
Community
Examples: TeeSpring, Lego
85. Variable-based pricing Business model
Larger waves means lower prices: The price of an offer changes based on a specific variable. This is very similar to dynamic pricing, but less specialised and reliant on algorithms. It is better understood and better for marketing purposes.
Value proposition
Help customers understand why they are paying the price they are paying.
Key attributes
High margin products
Ability to handle fluctuations
Transparent choice of variable
Good for marketing purposes
Understanding of customer needs and wants
Examples: Alaskan Airlines, Asigra
This is a long read, but hopefully budding entrepreneurs will learn something new; there is an infinity of ways to make money. What matters is figuring out the right business model for one’s business… and for oneself.
Good luck out there.
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