Strategy Slide
How does the business work and how will it makes money? The Business Model simplifies how a company operates and creates value.The Business Model
A business model encompasses the overall strategy and approach a business takes to generate revenue and sustain operations. It’s the structure the business chooses to interact with its customers. Selecting the right business model is one of the most complex decisions you’ll make about your business, requiring careful consideration of various factors. It’s important to thoroughly analyze the context of your business, dynamics of the market, and revenue generation potential. You’ll want to consider as much as possible to make an informed decision that aligns with your overall business strategy and goals.
The Business Model should include:
Revenue Model
Pricing
Customer Lifetime Value (CLV)
Sales & Distribution Model
Customer Pipeline
Business Model Considerations
Target customers, your value proposition, key activities, resources, partnerships, channels, and cost structure are some of the key items to consider. Your business model describes how all these elements work together to create a profitable and sustainable business. Considerations include:
- Your customer needs
- How your customers purchase
- Market potential and competition
- Your value proposition
- All potential revenue streams
Business Model Examples
- Advertising — content is often offered for free on a platform with advertising space sold for impressions (ex: Facebook)
- Affiliate Product Marketing — company markets and sells other brands and products with an agreement to receive a commission (ex: Amazon)
- Agency — specialized service is provided for fee (ex: Huge)
- API Licensing — (ex: Stripe)
- Brokerage — (ex: Robinhood)
- Crowdsourcing — (ex: Kickstarter)
- Dark kitchen — (ex: Doordash)
- D2C (Direct to Consumer)
- Dropshipping — (ex: Shopify)
- Ecommerce — selling products online through a website or app, may involve drop-shipping, warehousing, or manufacturing (ex: Zappos)
- Ecosystem — (ex: Apple)
- Edtech — (ex: Udemy and SkillShare)
- Franchising — (ex: KFC)
- Freemium — attracts users with a free offering and then converts them into paying customers (ex: Canva)
- Gatekeeper — (ex: Google)
- Horizontal Expansion — (ex: Foxconn)
- Marketplace — connects buyers and sellers on a platform and makes money off the transaction (ex: Ebay)
- Network Effect — (ex: Uber)
- Octopus — reorganizes the structure to democratize authority, allowing independent parts to be autonomous (ex: OYO)
- Open source — (ex: WordPress)
- Pay-as-you-Go — (ex: AWS)
- Peer-to-Peer — (ex: OLX)
- Razor Blade — one product is sold at a loss with an accessory product sold at a premium (ex: Gilette)
- Reverse Razor Blade — the razor blade model except the original product is sold at a premium and the consumable accessory products are sold for little to no cost
- Space-as-a-Service — (ex: Wework)
- Subscription — customers pay on a reoccuring schedule (ex: Netflix)
- Two-sided platform — (ex: Airbnb)
- Three-sided platform — (ex: Uber Eats)
- Umbrella — (ex: Amazon prime)
- Vertical Expansion — (ex: Unilever)
Sample Slides
