Are you interested in exploring different business models? This blog post will explore 10 of the most popular business models to help you decide which is right for your venture.
With an understanding of each model’s key characteristics and practical applications, you’ll be able to make an informed decision about how to structure your business for long-term success. Whether you’re just getting started with launching a company or have been running it for years, examining these 10 approaches can shed light on different opportunities and potential growth areas.
Now, Let’s get down to business.
B2B [Business-to-Business]
B2B is a business model where transactions occur between businesses instead of between a company and an individual customer. An example of B2B business models includes wholesalers that sell to retailers.
D2C [Direct-to-Consumer]
D2C, also referred to as B2C (business-to-consumer) is a type of model in which a company sells products straight to the customer without going through any other type of retail store or company.
P2P [Peer-to-Peer]
The P2P model connects sellers with buyers directly without involving brokers or other people. A platform helps match the seller and buyer and also helps with the process of buying and selling.
SaaS [Software-as-a Service]
SaaS is an increasingly popular cloud-based delivery model for software, allowing companies to charge a subscription fee rather than the traditional one-time cost. As such, it offers customers unprecedented access to powerful digital tools and capabilities that can be used in their everyday operations.
Subscription Business Models
A subscription business model is a way to make money by having customers pay you regularly, weekly, monthly, or yearly. In exchange for their payment, they get to use your products or services.
Freemium Business Models
Freemium business models offer a basic product/service for free, with additional or special features available for a premium price. This model is effective because it allows the customer to enjoy a product/service for free. In doing so, the customer becomes familiar with the product and develops a sense of trust in the company. While using the free version, the customer is exposed to premium options making them more likely to recognize the benefits and quickly upgrade.
Some examples of Freemium models that you probably know include:
Razor & Blade Business Models
The razor-blade model involves selling a product at a low price, maybe even at a loss, to sell a related product later for a profit.
Some examples of brands that perfected the Razor & Blade business model include:
Speaking of famous brands, check out this post about some of their epic failures: 7 Companies that Made Catastrophic Strategic Mistakes.
Franchise
Franchise business models are contractual agreements in an established brand, known as the ‘franchisor,’ that allows an independent business owner, or franchisee, to use its branding, business model, and other intellectual property.
Some examples of famous franchises include:
Licensing Business Models
Licensing means renting products or services to other businesses. The seller controls the copyright on the product or service used by the buyer. Licensing is common for media companies and for patents, copyrights, trademarks — anywhere intellectual property is being used.
Some examples of famous licensing business models include:
Agency Business Models
An agency business is a company that provides a specialized service to its clients. Often, agencies act on behalf of another company, group, or individual to manage a business segment.
Some examples of popular agencies you might recognize include:
