4 components of a business model like freemium, lean canvas, business canvas, business model canvas examples|business model example|32 Types of Business Models
4 components of business
A business concept comprises four major components: Core Strategy, Strategic Resources, Customer Interface, Value Network.
Value Proposition.
Product or Service.
Value Architecture.
Revenue Model.
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Essentially business model is the way how a company makes money. A business model describes the way an organization creates value and money and how it aims to achieve its vision and mission. All the business policies and processes can be said to be a part of the business model of the organization. Learn the best Business idea
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Business model is for future with vision it is very important Since the business model is not only about how the company makes some money but it is also about how it leverages key business partnerships on and how it treats its employees, it is an essential part of the organization. Following are a few of the types of Business models that common organizations work on :
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Page Contents:-
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1. What are the Types of Business models?
2.31 Types of Business Models with Example
3.Example business model
4. 4 components of the business model with an example
update with New canvas Business model with Example that will gave you new business or startup shape
update with New canvas Business model with Example that will gave you new business or startup shape
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Now start with
31 Types of Business Model that's helps you to increase your Business Growth
1) Razor and Blade revenue Business Model :
In the Razor and Blade business model, the company makes the customer product loyal and sells the related accessories at a premium price. This can be compared to the razor and blade, where razor is a onetime purchase but the blade is a constant purchase and thus company ensures a constant stream of revenue by pricing the blade at a premium.
Another example of the same would be the pricing of a printer. While the printer comes at a very less cost, the ink cartridges associated with the printer which is necessary for printing or price very costly. An example of the same would be the pricing of the apps. While the apps come at free of cost in the app store, the in-app purchases can be very costly.
An everyday bike would also be an example of razor and blade revenue business model whereby the bike is a one time purchase but petrol is an everyday purchase which is becoming costlier every day. The primary focus of the company is not generating a constant stream of revenue. Mobile data operator, TV operators have been using this strategy to get regular revenue from customers.
2) Reversed Razor and Blade revenue business model :
As the name suggests this is the type of business model that is exactly opposite to the other one mentioned. Apple charges very high on its physical products why it gives out the music on iTunes for apps on Appstore for a very low cost which is a constant purchase. So in the case of Apple, the one-time purchase is more expensive than the regular purchases which are in fact Reversed Razor and Blade business model. This is one of the strategies that helped Apple grow and become a trillion-dollar company.
3) Cash Business Machine Model :
This is also called a Cash Conversion Cycle Business Model. An example would be a company which makes a very low-profit margin but disrupts the market. An example of the same would be Amazon.
The company has a long business cycle in which an item sets in Amazon inventory for approximately 36 days and after 19 days it takes Amazon to collect the money from customers and 82 days before Amazon has to pay to the supplier. Amazon gets its partners to finance the business. This type of business models can also be seen with other e-commerce companies as well.
4) Peer to Peer Business Model :
As the name explains in Peer to Peer Business model, third party or the parent company allows the customers to use services of another party at an added cost which in fact is a profit of its own. The perfect example of the same would be Airbnb. The company allows using the premises of other people to customers at an added cost. The reservation fee is anywhere between 5 to 15% of the total and the commission fee is about 2-3%. The same is done by Uber. Uber use cars owned by other people and provide services to customers at an added cost.
5) Hidden Revenue Business Model :
As the name suggests this company have their business model hidden. The most popular companies who follow these business models are Google and Facebook. They are entirely based on advertising revenue generated when people click on the ads. Every time the customer clicks on the link of the Google which says add next to it the company gets paid by the advertising firm. Same goes for Facebook wherein the news feed is the place Facebook monetize is its ads.
The ads keep on showing in the news feeds of the people and revenue keeps coming to Facebook. It has worked very well for both of the companies making them two of the richest companies on the planet. Also, the user data is one of the biggest monetary resources for the companies who sell their user data to the third party without the customer realizing the data is being sold. Mark Zuckerberg has run into a lot of trouble about the same when he was questioned for more than 3- 4 hours by the US congressmen. Same was done with Sundar Pichai, CEO of Google.
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6) One for One Business Model :
In this Business model, the company does a non-profit gesture for every product sold. For every product sold another product is given free of cost as a part of Charity.
The best example would be TOMS shoes which give out one pair to the kids around the world cannot afford them for every pair of shoes sold. This move has made the company very profitable and sustainable over a long time is it improves the brand image in the minds of people. The nonprofit side of the business is excellent for revenue generation.
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7) Multi-Sided Platform Business Model :
These types of Business Models act as invisible middlemen who ensure smoother transactions in interactions among buyers and sellers. One of the best examples would be LinkedInThe business social network is an undoubted market leader in its platform which allows job seekers and companies to interact “socially” in
a “business sense.”
8) Direct sale business model :
These are perhaps the most common types of Business Models. With the evolution of technology, it may seem that direct sales are a thing of the past but in fact, direct sales work better than any of the technology-assisted series programs. Many companies are becoming automated but direct sales still remain the preferred choice for many industries like Pharma wherein sales teams approach doctors every day for visits which are part of sales.
Pharma industry spends a fortune in training and paying these salespeople but it develops a long-term business with customers. Of course, they have accepted automation like the inclusion of Sales tracking, visit tracking, mailers, and technology-assisted simulations for customers but they are far from replacing the sales model because no machine can provide the human touch. For every Pharma company, direct sales will remain the business model.
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Related: Marketing Management Philosophy
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9) Freemium Business Model :
The term ‘Free’ is very attractive as a customer. Freemium business model works on providing a certain free product with full features for a limited time and then charging a premium for a lifetime. These types of Business models work very well in the tech industry with anti-virus for example.
The first three months of an anti-virus sir for free of cost with full features so that the user can experience the premium features. Once the user is convinced about the quality of the product the free period expires and the user has to pay for it. Video movie streaming company Netflix provides 1 month for free of cost and is chargeable from subsequent months. Users can experience all sorts of movies for free for one month which gets them used to the service and which itself brings conversion.
10) Affiliate Marketing Business Model :
Affiliate Marketing is when profits are earned by selling the third party product. The customer or the user can have a website where he can feature the products of the third party and when the buyers click on the link they are redirected to the original website but the middleman who hosted the website gets paid a certain amount of commission.
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Related: Amazon Private Label Product with Example
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This is known as an Affiliate marketing business model. Amazon runs the world’s most successful affiliate marketing business model whereby it gives commissions to individuals over the product sold. The commission is a pre-decided percentage based on the price of the product.
11) Subscription-based Business Model :
A subscription business model is the one in which a company sells the same product on a subscription basis divided over time. Latest take an example of an online course.
Suppose there is a course for $10 and you sell that course to 10 people, you will earn $100 for one month. Next month you will have to come up with new buyers for the course without which there would be no revenue. Instead of this course is converted into a subscription-based business model, the course sections can be given to students for $3 per month. This way with 10 subscribers you have $30 fixed revenue for subsequent months and as users keep on adding the revenue keeps on growing. Amazon Prime and Netflix run a similar business model.
12) Consulting Business Model :
Consulting is a major business revenue for companies like Accenture which is the world’s most successful consultancy business model company. The services provided by Accenture are to variety of industries right from financial sector to communication and even the government sector.
Consulting business model depends on hiring talented people and making them work on multiple projects of different clients. The fees paid by clients can be Per hour or Per day or according to the requirements and the specifications of the service. Using this business model Accenture was able to build a multi-million dollar company on a global scale.
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13) Agency based Business Model :
These types of business models work on upcoming projects that are enough qualified leads are generated and a team is a setup to manage those projects which grow the agency. Agency based business model is one of the most recent in the types of business models. The businesses monetize on the services offered by the agency.
Since these agencies cater only to individual services, it makes them cost of foldable for companies and they can outsource the particular function to the specific agency. Many advertising agencies work on some other business model.
14) E-Commerce Business model :
The name Amazon, Flipkart, and eBay have become synonymous with E-commerce. With more than $24 billion in revenue and about $8 million dollars in profit, Amazon has captured the marketplace. Running very close to it is Alibaba which is the Chinese market leader in e-commerce which recorded over 423 million active buyers in the year 2016. Both of them have Business models diversified with many moving parts however the core is based on e-commerce.
Building a website has become practically inexpensive and avoids a lot of traditional costs in brick and mortar type of businesses and hence more and more upcoming businesses are following the similar type of business model to have their businesses online. No wonder this model has made Amazon owner Jeff Bezos the world’s wealthiest man in 2018.
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Related:-Leadership skills
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15) Attention Merchant Business Model
The company that generates revenue by investing in human attention is called attention merchant business model. These types of Business models run on attention merchant who works on grabbing the attention or focus.
Companies in advertising are termed as attention merchants and it is the same logic that has made Facebook and Google highly profitable buy harvesting the attention of the people. The primary function of attention merchant Business models is to keep the attention of the customer engaged and hooked and then use that to promote a certain Ad. Recently, Facebook has started to show ads in between the videos.
16) Privacy as Business Model :
Privacy has become the biggest need in recent times and with the evolution of technology. With Google and Facebook gathering uses data the concerned is legitimate for all the people about their privacy. In this respect, many of the businesses are started evolving which allow users to control privacy better than popular businesses.
Free sample over Google privacy concerns, a search engine like duckduckgo have started evolving which allows users to control the data and private navigation. Duckduckgo makes money via associations and by sales of local keywords. Does privacy has become a business model for duckduckgo?
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Related: 101+ Small Business Ideas
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17) Franchising Business Model :
Franchising is perhaps undoubtedly the most popular form of business model followed by many businesses which require only capital investment. In franchising, independent business owners can adopt the business model of the franchise company and pay them royalties.
Mcdonald’s is perhaps the best example of the world’s most successful franchising business model. Mcdonald’s gets paid against its services and product in exchange for royalty fees. Following the success of McDonald’s many companies like dominos KFC, Burger King have started their own franchise.
18) On-Demand subscription-based Business Model :
For more than a decade in the past, we have relied on fixed schedules of the media business. People used to watch late-night shows which were live or repeat telecast of the same show on the next day morning. But with the increase in the usage of YouTube videos, online video streaming companies like Netflix have gained popularity.
Netflix is an on-demand subscription-based business model wherein the subscribers can take a subscription whenever they want to watch a particular TV show or a movie and their subscription at their own convenience. Following the success of Netflix Amazon have started Amazon prime Hulu and many more. In 2020 Disney will come up with its own streaming channel called Disney plus which will have the most popular movies.
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19) User-generated Content Business Model :
These types of Business models work entirely on user content. People come on these websites to know about information and that information is provided by other people themselves.
The best example is Quora which is termed as Social QNA site. The concept comes from Wikipedia where users use their knowledge to edit certain articles and share their talent for others to read. Blogs are another example of the user-generated content business model. Many people have their own blogs, with millions of followers, wherein they share their views and thoughts about particular topic and websites earn money from advertising on those blogs or by taking yearly fees from the blogger for the site space.
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20) Educational Niche business model :
These types of Business models operate in the educational sector by charging a premium from the users who want to enroll with certain courses. The best example of the same would be the online learning app Udemy, a Language learning app Duolingo, etc. These applications provide courses for free of cost but getting a certification is chargeable.
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Related:-What is Digital Marketing
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21) Instant News Business Model :
People want to know the happenings around the world instantly. While Facebook is serving that purpose partly, the news available on Facebook are hardly reliable, except if they are from reliable sources and with the increase in data many users are not comfortable with Facebook. In such cases, apps like InShorts which provide news in 60 seconds instantly have come into the limelight. Twitter also serves the purpose of instant news with the trending hashtags. Users can simply check the trending hashtags to know the current topics.
22) Multi-Brand Business Models :
Companies these days want to serve all categories of people. To save this purpose companies need to have all sorts of brands which resonate with all categories of customers. Not everybody would afford Puma Shoes, for example, hence many retail outlets have started to keep multiple brands in the same store so that the users can have a choice and the retailers can have a business. Lifestyle and Pantaloons are few other examples which follow a multi-brand business model strategy.
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23) Direct to Customer Business Models :
These types of business models are followed by many established forms for a long time. The company service directly to the customers without the requirement of an intermediary party. These companies organize extensive marketing campaigns and involve customers in them to increase their market visibility and brand recall.
The best example would be companies like Unilever, Procter and Gamble Johnson & Johnson. Unilever is considered as world’s second largest advertiser according to 2017. It has the world’s second-largest media spend along with more convention advertising. Unilever also delivers content through customizing channels and has made itself available digitally as well. These companies emphasize more on marketing rather than sales process because they believe that marketing is the backbone of sales. Better marketing campaign automatically results in increased sales.
24.Licensing Business Model
The vehicle under the licensing business model through which the licensor acquires the right to use the IP, from the licensee is called a licensing agreement, and it is the basis for the licensing business model
24.Licensing Business Model
The vehicle under the licensing business model through which the licensor acquires the right to use the IP, from the licensee is called a licensing agreement, and it is the basis for the licensing business model
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25.Cost Plus Business Model
Cost-plus pricing involves adding a markup to the cost of goods and services to arrive at a selling price. Under this approach, you add together the direct material cost, direct labor cost, and overhead costs for a product, and add to it a markup percentage in order to derive the price of the product
26.Usage-Based Business Model
Charging a customer on how much they use the product or service is a new concept for many businesses and is a key strategy for companies in the Subscription Economy. This concept is called usage-based pricing, which bases a charge model on the consumption of a billable service or resource.
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27.Temporary Access Business Model
Sharing economy is a term for a way of distributing goods and services, a way that differs from... A successful business model in the access economy will not be based on community, however, as a sharing ..... to engage in monetized exchanges through Social peer-to-peer processes for temporary
28.Shared saving Business Model
Shared savings is a payment strategy that offers incentives for provider entities to reduce health care spending for a defined patient population by offering them a percentage of any net savings realized as a result of their efforts.
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29.Hourly Rate Business Model
The first agency pricing model is also the simplest—and that's charging by the hour. With an hourly pricing model, you set an hourly rate and charge your client for every hour worked. So, if your hourly rate is $150 and you work 10 hours on a project, your client would pay you $1500.
30.Transaction Fee Business Model
The revenue is generated through transaction fees by the customer paying a fee for a transaction to the operator of a platform. The company is a market place operator providing the customer with a platform to place his transactions
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31.Operating and Maintenance Business Model
Operating maintenance can be performed by the customer itself, by an equipment provider, case companies, we developed the following two maintenance business models: ... maintenance as well as the requirements for networked operation.
32.Business model canvas|lean canvas|Business model canvas examples
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Lean Canvas is a 1-page business plan template created by Ash Maurya that helps you deconstruct your idea into its key assumptions. It is adapted from Alex Osterwalder's Business Model Canvas and optimized for Lean Startups. It replaces elaborate business plans with a single page business model.
Here is a quick explainer of each Lean Canvas block (and in the order to go through them):
1. Problem
Each customer segment (CS) you are thinking to work with will have a set of problems that they need solving. In this box try listing the one to three high priority problems that you CS has. Without a problem to solve, you don’t have a product/service to offer.
2. Customer Segments
The problem and Customer Segments can be viewed as intrinsically connected — without a CS in mind you can’t think of their problems, and visa-versa.
3. Unique Value Proposition
In the middle of the canvas is the UVP. A value proposition is a promise of value to be delivered. It’s the primary reason a prospect should buy from you. A way to get your head around this is to think why are you different and why should your CS buy/invest time in you — further reading: Useful Value Proposition Examples (and How to Create a Good One)
4. Solution
Finding a solution to the problem is the golden egg! You’re not going to get this right off the first bat — it’s OK, as that’s what Lean is all about. What you need to do is Get Out The Building — a phrase coined by the godfather of Lean Startup, Steve Blanks. And what Blank’s here is that the solution is not in your office, it’s out there in the streets. So go interview your customer segment, ask them questions, and take those learnings. Remember the Lean Startup is validated learning through a continual Build — Measure — Learn cycle.
5. Channels
Channels are ways for you to reach your CS. And remember that in the initial stages it’s important not to think about scale but to focus on learning. With that in mind try to think which channels will give you enough access to your CS at the same time give you enough learning. Channels can be email, social, CPC ads, blogs, articles, trade shows, radio & TV, webinars etc. and BTW you don’t have to be on all of them, just where your CS are.
6. Revenue Streams
How you price your business will depend on the type of model it is, however, it’s quite common for startups to lower their cost, even offer it for free to gain traction, however, this can pose a few problems. The key being it actually delays/avoids validation. Getting people to sign up for something for free is a lot different than asking them to pay. There is also the idea of perceived value. Further reading: Simple pricing strategies for your products or services, the lean way!
7. Cost Structure
Here you should list all the operational costs for taking this business to market. How much will it cost to build / landing page? What is your burn rate — your total monthly running costs? How much will it cost to interview your customer segment? How much do market research papers cost? etc. You can then use these costs and potential revenue streams to calculate a rough break-even point.
8. Key Metrics
Every business, no matter what industry or size, will have some key metrics that are used to monitor performance. The best way to help with this is to visualize a funnel top down that flows from the large open top, through multiple stages to the narrow end. A good model to help with this is Dave McClure’s ARRRR (aka Pirate Metrics) — further reading: Startup Metrics for Pirates
9. Unfair Advantage
This is the most difficult to block to answer. However, do try to think about this as having an unfair advantage can help when it comes seeking partners & investors. Here is a great definition of unfair advantage:
“The only real competitive advantage is that which cannot be copied and cannot be bought.” — Jason Cohen.
Unfair advantage can be insider information, a dream team, getting expert endorsements, existing customers etc. So rather than think about adding something like “commitment and passion” as an unfair advantage (because it is not), think about what you have that no one else can buy.
Completed Lean Canvas:
The idea here is to spend around 15–20 minutes to get that idea down on to paper. Some people prefer to project the PDF onto a wall and use sticky notes to add their ideas into the boxes. But I’ve become so used to Lean Canvas that I sketch my business model ideas directly into my notebook.
Now that you have your first Lean Canvas, the key is to test. Ash encourages you to try as many iterations of the first canvas as possible and to test each one after which a winning business model will emerge. Sounds like hard work? Well yes, it is. But going through this process will save you time, energy and money. Think about it: the worst possible outcome for any entrepreneur is to build something that no one wants!!
The Lean Canvas
As a business entrepreneur, it’s your duty to get ideas out from your head onto paper so that others can see and help build the problem solution. Traditional business plans are not relevant in the ideation stage, they take too much time and are usually created without any validated learning. Business plans are more suited to once you have a business running and are looking to scale.
During the ideation stage try to stay lean, use the Lean Canvas to get your ideas down and use lean principles to test your hypothesis by getting out the building.
It is my wish that this introduction to Lean Canvas has helped spark an idea, or given some inspiration to startup. I have linked to all sources — I follow these blogs and I recommend you do too. If this post has got your Lean on I’d welcome comments below
Now We are sharing One Video About what is Business Model BY Dr.Vivek Bindra I got very authentic information So, Sharing with you all , So You can understand
Now, We are Sharing Map View Where you can learn how to develop Business Model and Entrepreneurship Development So , that you can easily See Growth in your Business
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The above was all the different types of Business Models. Thus, you have more than 31 types of Business Models to choose for your business.
Source:-23 Types of Business Models
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