We’re All Just Remixing Capitalism: 85 Business Models That Prove So

Let’s get the definitions out of 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 of 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’ success. 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 is 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 the 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 a low price High potential for emotionally-driven purchase Price-sensitive customers Examples: Dell, Ryanair 3. Advertising Revenue Business Model If it’s free, you’re the product: the company offers a cheap or free product and subsidizes 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 the 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 to 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 independently 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 subsidized by later purchases Strong Lock-In potential Low barriers to 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 products or services using the minimum amount of parts to provide the core task the product or service was designed for. It is especially useful for manufacturing and borrows from the “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 cannibalization 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 that 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 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 enables 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-actualization 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 passionate about and are able to shape their creations. 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/or personalization. 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 Products 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 ensures that customers remain bound to the company, helping ensure future revenues. Value proposition Discounted goods or gifts 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 personalization 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 centered around the acquisition of data Strong processing abilities Many data points, with many attributes A strong data analysis team is already in place Often associated with 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 Dematerialization 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 middleman). These savings can be passed on to the customer. This model allows the company to control end-to-end processes 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) Optimization of internal functions Consistent messaging across channels Less recognized 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 dependent 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 are 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 an 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 distribution processes with other digital processes within the company. Value proposition Provide not only products and services but also support. Larger offerings as research is made easier Key attributes Low overheads Few intermediaries Few testing options Constant availability A large offering Transparency Lower costs 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 offered must fit closely with 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 Digitalization 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 expand 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 standardized processes Standardized 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 customers. 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 specializing in 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 detail 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 to replace Business model You break it, we replace it: Similar to the “trash to cash” model, this model allows 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 onto 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 specialization Broad knowledge depth Focus on the 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 specialized 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 The company is able to serve many customer segments across industries. Key attributes The 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 model 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 utilization, 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 Commercializing intellectual property: the company develops patents and other IP resources, which it then offers to other actors. As such, realization costs are low (if not 0), but the assets are nevertheless a 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-utilized. Value proposition An already recognized 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 the 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 that would make the bulk of its sales, a company chooses to offer a wide variety of niche products that attract 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 are 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-personalized products without losing any efficiency thanks to an optimized value chain. As a result, individual customer needs can be met under mass production conditions and at competitive prices. Value proposition Customization 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 customers to better understand them and see them at work. Value proposition Purchase products as seen in media. Products or services that can blend seamlessly Partnerships with media companies Media-linked capabilities Technology makes 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 for 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 amortize 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 The usual value proposition is reduced to its minimum, and savings are 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 fulfills 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 are available at all times. Key attributes A product that can be made available at any time and place Technology allows connections between clients and offers 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 subsidize prices Examples: Warby Parker, TOMS Shoes 52. Open business Business model Leverage collaborative value creation: Open business is an approach to an 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 that 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 the 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 optimized 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 consumes, 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 estimates or minimum usage in contract Ability to track usage efficiently Learn from customer behavior 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 the 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 services together). Though this model is by nature decentralized, an organizing company can offer a meeting point and communication service that 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 to 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 utilization. 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 customization: the rise of data, as well as digitalization and optimized 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 customization 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 that benefits all parties. Value proposition A wide offering. Key attributes Mechanisms that make the platform grow with every purchase An ability to efficiently manage 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. The 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 customer segments can be satisfied with the same product. Value proposition The product is sold by a different company than that which manufactured it. Key attributes Low infrastructure Specialization 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 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 decentralized 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 expectations, hence improving its image and attracting potential new customers. Value proposition A promise to customers that the offer will not meet certain expectations. Key attributes Understand customer expectations An easy way to display 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 in the ecosystem’s health, be they suppliers, or even competitors. This is usually because the presence of more than one actor is beneficial to 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 a fragmented value chain High barriers to 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 toward digitalization Examples: N/A 68. Reverse Engineering Business model Taking lessons from competitors: this pattern refers to the reproduction of another company’s product following a 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-margin 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 things 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 a 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 that 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 utilize 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 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 interests. 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 Examples: Weishang, Mogujie, L’Oréal 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 The 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 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 of customers seeks Effective supply chain Large population Standardized 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 a 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 endeavor, as collection costs are generally extremely low. In addition to removing some resource costs, it also assuages some customers’ consciences with regard 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 (which 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-alone 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 to 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 are possible. Value proposition A product that works perfectly with specific products and services, creating an entire ecosystem. 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 is an 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 produced the product once designed. As such, it is able to benefit from customer creativity, while the customer is able to benefit from pre-established infrastructure. Revenue can be earned by design, or by sale. Value proposition Customers realize 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 mean lower prices: The price of an offer changes based on a specific variable. This is very similar to dynamic pricing, but less specialized 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. Let’s get the definitions out of 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). Business model That definition of 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’ success. 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). Pick what you want Value proposition Value proposition Control of the purchase is given over to the customer. Key attributes 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) 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 Examples 2. Add-on Business Model Additional charge for extra : the main offer is priced lower than the 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. Additional charge for extra Value proposition Value proposition Variable offer and low initial price. Key attributes 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 a low price High potential for emotionally-driven purchase Price-sensitive customers 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 a low price High potential for emotionally-driven purchase Price-sensitive customers Examples : Dell , Ryanair Examples Dell Ryanair 3. Advertising Revenue Business Model If it’s free, you’re the product : the company offers a cheap or free product and subsidizes 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). If it’s free, you’re the product Value proposition 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 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 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 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 Examples 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. I make money when you make money Value proposition Value proposition Easily create a nice side business. Key attributes 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 “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 Examples 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. Convert competitors’ strengths to weaknesses Value proposition Value proposition Product or service radically different from the industry standard. Key attributes 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 to entry 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 to entry Examples : BodyShop, Cirque du Soleil, Basecamp Examples 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. Going once, twice… sold Value proposition Value proposition Customers never pay more than they want. Key attributes 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 independently price 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 independently price Examples : eBay, Elance, Catawiki, Google (again) Examples 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. No human interaction Value proposition Value proposition Flexible and time-saving shopping. Key attributes 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 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 Examples 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 Value proposition Cheap initial product with expensive necessary additions. Key attributes Key attributes Low-cost (generic) initial product Generic product is subsidized by later purchases Strong Lock-In potential Low barriers to entry Frequently used accessories High exit barriers (Patents, strong brand) Low-cost (generic) initial product Generic product is subsidized by later purchases Strong Lock-In potential Low barriers to entry Frequently used accessories High exit barriers (Patents, strong brand) Examples : Gillette (after which the model is named), Nespresso Examples 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 ). Tit for tat the Russians once traded an entire navy for some soda Value proposition Value proposition The customer gains more than they feel they give. Key attributes 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) 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 Examples 10. Basic component/Low-touch Business model Make more with less : a company makes one of its existing products or services using the minimum amount of parts to provide the core task the product or service was designed for. It is especially useful for manufacturing and borrows from the “bottom of the pyramid business model” as the new offering is often best suited for developing nations or lower ends of the market. Make more with less Value proposition Value proposition Cheaper products/services. Key attributes Key attributes An offering that can be reduced to its bare parts A strong brand recognition Low cannibalization risks (if other offers exist) Large potential customer base Need for cultural understanding / EQ to market properly An offering that can be reduced to its bare parts A strong brand recognition Low cannibalization risks (if other offers exist) Large potential customer base Need for cultural understanding / EQ to market properly Examples : Arvind, Zendesk Examples 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 that 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 rapidly developing places to lock in future customers. Target customers at the base of the earning pyramid Value proposition Value proposition Offer products that cater to the needs of this specific population. Key attributes Key attributes High-income inequality Large earnings pyramid base Positive PR Technology enables to connect with customers and attractive communication Any consumer can buy the offer Low(er) quality to avoid cannibalization High-income inequality Large earnings pyramid base Positive PR Technology enables 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) Examples 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!). All you need in one box Value proposition Value proposition A handful of similar products at a price lower than their addition. Key attributes 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 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 Examples 13. Cause Driven/Doing good Business model Doing good : providing an offer that values ethics over profits. Customers will find a possibility of self-actualization through the product, whether they seek to serve the environment, the company’s local ecosystem, or humanity in general. Doing good Value proposition Value proposition Ethical/sustainable products. Key attributes Key attributes Stakeholders not overly reliant on profit A somewhat universal cause An effective PR department More expensive products Well-off customer base 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 Examples 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. 1+1 = 3 Value proposition Value proposition Improved customer experience thanks to the expertise of the partner New products Improved customer experience thanks to the expertise of the partner New products Key attributes 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 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 Examples 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 What do you think? Value proposition Value proposition Customers can have a say in the value they see in an offer. Key attributes Key attributes Same as Dynamic pricing (see below)… but nicer Same as Dynamic pricing (see below)… but nicer Examples : N/A Examples 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. If one million people invest a dollar, you get one million dollars Value proposition Value proposition Customers get to participate in things they’re passionate about and are able to shape their creations. Key attributes 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 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 Examples 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. Outsourcing to the crowd Value proposition Value proposition Chance to participate in the creation process of a value brand, while satisfying entrepreneurial wishes. Key attributes 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 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 Examples 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/or personalization. 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. The curator knows best Value proposition Value proposition Products/services tailored to the consumer’s individual needs. Key attributes Key attributes Difficult to scale In-depth knowledge of the customer/customer base Extensive feedback collection High brand recognition Less is more Products with high margins Difficult to scale In-depth knowledge of the customer/customer base Extensive feedback collection High brand recognition Less is more Products with high margins Examples : StitchFix, Prose Examples 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 ensures that customers remain bound to the company, helping ensure future revenues. Incentives for long-lasting fidelity Value proposition Value proposition Discounted goods or gifts push the customer to come back. Key attributes 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 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 Examples 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 personalization 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. Making use of what you know Value proposition Value proposition Look at ChatGPT. No really, look at it. How cool is it?! That’s the value proposition. Key attributes Key attributes Head start from a business already centered around the acquisition of data Strong processing abilities Many data points, with many attributes A strong data analysis team is already in place Often associated with hidden revenue Business Model (see below) Something to trade for customer data (not always!) Head start from a business already centered around the acquisition of data Strong processing abilities Many data points, with many attributes A strong data analysis team is already in place Often associated with hidden revenue Business Model (see below) Something to trade for customer data (not always!) Examples : StitchFix, OpenAI Examples 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. Making the material immaterial Value proposition Value proposition Drastically reduced purchasing efforts. Key attributes Key attributes Dematerialization 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) Dematerialization 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 Examples 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 middleman). These savings can be passed on to the customer. This model allows the company to control end-to-end processes while retaining a connection to its customers. Skipping the middleman Value proposition Value proposition More personal sale experience, improved products and services thanks to client proximity Better service thanks to proximity More personal sale experience, improved products and services thanks to client proximity Better service thanks to proximity Key attributes Key attributes Possibility of a direct connection to customers Control of sales information (both ways) Optimization of internal functions Consistent messaging across channels Less recognized brand name (often) Expert sales staff Possibility of a direct connection to customers Control of sales information (both ways) Optimization of internal functions Consistent messaging across channels Less recognized brand name (often) Expert sales staff Examples : AliExpress Examples 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. Killing two birds with one stone Value proposition Value proposition Customers who know the business will know they’re not taking a risk with a new product. Key attributes 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 dependent on the second Low-margin original product High entry barriers Consistent pricing Possibility of naturally offering Complementary products and/or services Transferable existing competencies High level of customer trust Good execution as the primary product becomes dependent on the second Low-margin original product High entry barriers Consistent pricing Examples : Ikea Examples 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. The right price at the right time Value proposition Value proposition Prices are adapted to what the customer is willing to pay. Key attributes Key attributes A deep understanding of the offering’s intrinsic value Enough data on environmental factors to make an accurate prediction The technological ability to update prices in real-time. Real-time accuracy Pricing software A deep understanding of the offering’s intrinsic value Enough data on environmental factors to make an accurate prediction The technological ability to update prices in real-time. Real-time accuracy Pricing software Examples : Uber, Amazon Examples 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 distribution processes with other digital processes within the company. Online business Value proposition Value proposition Provide not only products and services but also support. Larger offerings as research is made easier Provide not only products and services but also support. Larger offerings as research is made easier Key attributes Key attributes Low overheads Few intermediaries Few testing options Constant availability A large offering Transparency Lower costs Vast data availability Low overheads Few intermediaries Few testing options Constant availability A large offering Transparency Lower costs Vast data availability Examples : Glossier, Fnac-Darty, Asos/Boohoo/Pretty Little Things Examples 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 offered must fit closely with the narrative developed by the brand. Sell emotions, not products Value proposition Value proposition Experience rather than mere functionality. Key attributes 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 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 Examples 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. Multiply competencies outside your core business Value proposition Value proposition Ability to use know-how or other resources. Key attributes Key attributes Spare resources Recognised capabilities Highly specialised/unique core competency Fluctuating or seasonal demand Potential outside funding Spare resources Recognised capabilities Highly specialised/unique core competency Fluctuating or seasonal demand Potential outside funding Examples : AWS, BASF Examples 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. Unlimited consumption at a fixed price Value proposition Value proposition Cost-controlled unlimited consumption. Key attributes Key attributes Low marginal costs Customers have diminishing marginal utility A clear, numerical understanding of the “average” customer Offer abuse Digitalization Low marginal costs Customers have diminishing marginal utility A clear, numerical understanding of the “average” customer Offer abuse Digitalization Examples : Netflix, Spotify Examples 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 expand quickly, while the franchisee is able to benefit from an already well-known brand and the availability of know-how and support. We’re all family Value proposition Value proposition Access to a proven business model for franchisees as well as some expertise, meaning lower risks. Key attributes Key attributes Quick geographical expansion An ability to cater to entrepreneurs Low risk Pre-existing assets, IP, brand strength (legally protected) Attractive assets Highly standardized processes Standardized IT systems High stickiness Large moats Quick geographical expansion An ability to cater to entrepreneurs Low risk Pre-existing assets, IP, brand strength (legally protected) Attractive assets Highly standardized processes Standardized IT systems High stickiness Large moats Examples : Body Shop, Sephora, Domino’s Pizza Examples 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 customers. Choosing between free basics and paid premium versions Value proposition Value proposition The basic version is free of charge while the premium version is not. Key attributes 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 An addictive or high-value product (Lock-in) 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 Examples 31. Functional specialist Business model Make your own league : By strongly specializing in 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. Make your own league Value proposition Value proposition An expertise related to the company’s primary model. Key attributes Key attributes An obsessive attention to detail 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 An obsessive attention to detail 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 Examples 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. Bring a friend Value proposition Value proposition Lower product prices the more people are brought to the sale. Key attributes 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 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 Examples 33. Guarantee to replace Business model You break it, we replace it : Similar to the “trash to cash” model, this model allows 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. You break it, we replace it Value proposition Value proposition A product that will be replaced systematically. Key attributes 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 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 Examples 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. The offer always works (T&C may apply) Value proposition Value proposition Ensuring almost 0 downtime for machines and equipment. Key attributes 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 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 Examples 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. Seeking alternative sources Value proposition Value proposition Cheaper products as they are cross-financed. Key attributes 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 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 Examples 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. Do-it-yourself Value proposition Value proposition Customers can make products as they see fit. Key attributes 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 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 Examples 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 onto the product and increases its attractiveness. Brand squared Value proposition Value proposition A more desirable product. Key attributes 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 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 Examples 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. Involvement all the way down the line Value proposition Value proposition By managing most operations internally, the company can pass savings on to customers. Key attributes Key attributes Not benefitting from specialization Broad knowledge depth Focus on the downstream value chain Better understanding of the value chain than competitors No outsourcing costs Not benefitting from specialization Broad knowledge depth Focus on the downstream value chain Better understanding of the value chain than competitors No outsourcing costs Examples : Zara, Intel, Tesla Examples 39. Layer Player Business model Benefiting from specialized 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. Benefiting from specialized know-how Value proposition Value proposition The company is able to serve many customer segments across industries. Key attributes Key attributes The 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 The 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 Examples 40. Leasing / Rent instead of Buy Business model Pay for temporary right to use : customers rent the product instead of outright buying it. This model 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 utilization, given that time of non-usage, which unnecessarily ties capital down, is reduced. Pay for temporary right to use Value proposition Value proposition The customer is able to use products they might not be able to otherwise, freeing up capital. Key attributes 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 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 Examples 41. Licensing Business model Commercializing intellectual property : the company develops patents and other IP resources, which it then offers to other actors. As such, realization costs are low (if not 0), but the assets are nevertheless a 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-utilized. Commercializing intellectual property Value proposition Value proposition An already recognized product. Key attributes 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 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 Examples 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. Don’t you want to be more like me? Value proposition Value proposition An ability to be inspired, guided, and motivated through products and services. Key attributes Key attributes Well-known spokespeople Partnerships An ability to market a lifestyle Long-tail offerings A varied offering Well-known spokespeople Partnerships An ability to market a lifestyle Long-tail offerings A varied offering Examples : Goop, Harley Davidson, Red Bull, M&S Examples 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. Forcing loyalty with high switching costs Value proposition Value proposition Low value for customers. Key attributes Key attributes Switching “cost” is not only monetary Well-understood switching costs No interoperability with the competition Patents to ensure non-interoperability Rewards for cumulative purchases Unique additional products High customer value Switching “cost” is not only monetary Well-understood switching costs No interoperability with the competition Patents to ensure non-interoperability Rewards for cumulative purchases Unique additional products High customer value Examples : Nespresso, Microsoft, Canon, Kindle Examples 44. Long Tail Range Business model Reverse Pareto : rather than concentrating on one offer that would make the bulk of its sales, a company chooses to offer a wide variety of niche products that attract 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. Reverse Pareto Value proposition Value proposition Small quantities of a large number of products are sold, allowing for more choices for the customer. Key attributes 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 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 Examples 45. Mass Customisation Business model Off-the-rack individualism : The company offers semi-personalized products without losing any efficiency thanks to an optimized value chain. As a result, individual customer needs can be met under mass production conditions and at competitive prices. Off-the-rack individualism Value proposition Value proposition Customization according to customer needs for the same price as mass products. Key attributes 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 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 Examples 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 customers to better understand them and see them at work. Learn and consume at the same time Value proposition Value proposition Purchase products as seen in media. Products or services that can blend seamlessly Partnerships with media companies Media-linked capabilities Technology makes the purchase easier Good understanding of what the customers seek in their media interactions Products or services that can blend seamlessly Products or services that can blend seamlessly Partnerships with media companies Media-linked capabilities Technology makes the purchase easier Good understanding of what the customers seek in their media interactions Examples : iQiyi, Tasty Examples 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. Sell to the seller who sells to the seller who sells to… Value proposition Value proposition Offers participants the opportunity to earn income both through direct sales and by recruiting new sellers. Key attributes Key attributes A product that can be sold without training Good PR Celebrity endorsement Tracking sales Legal protection A product that can be sold without training Good PR Celebrity endorsement Tracking sales Legal protection Examples : Avon, Younique, Amway Examples 48. Negative operating cycle/Cash Machine/Cash Advance Business model Selling a product before having paid for it : the customer pays for 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 amortize debts or fund investments. Selling a product before having paid for it Value proposition Value proposition Increased liquidity for the seller (few benefits for the buyer). Key attributes 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 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 Examples 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. Whatever, as long as it’s cheap Value proposition Value proposition The usual value proposition is reduced to its minimum, and savings are passed on to customers. Key attributes Key attributes Price-sensitive customers Regular costs audits Standardised offering Automation Economies of scale Price-sensitive customers Regular costs audits Standardised offering Automation Economies of scale Examples : Aldi, Vaseline Examples 50. On-demand Business model Get it as soon as you want it : This model fulfills consumer demand on the basis of immediate access to goods and services. It is a business model driven mostly by technology Get it as soon as you want it Value proposition Value proposition Products and services are available at all times. Key attributes Key attributes A product that can be made available at any time and place Technology allows connections between clients and offers Platform-based model C2C Aggregation A product that can be made available at any time and place Technology allows connections between clients and offers Platform-based model C2C Aggregation Examples : GlamSquad, Stylelisted Examples 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. Buy one / Give one Value proposition Value proposition Combine consumer purchasing with social impact. Key attributes 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 subsidize prices 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 subsidize prices Examples : Warby Parker, TOMS Shoes Examples 52. Open business Business model Leverage collaborative value creation : Open business is an approach to an 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. Leverage collaborative value creation Value proposition 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 Key attributes Coherent value chain, attuned to that of future partners Cooperation that benefits all stakeholders A focal product, service, or company that feeds all the others Areas in the value creation process where other parties can contribute A possible win-win scenario Coherent value chain, attuned to that of future partners Cooperation that benefits all stakeholders A focal product, service, or company that feeds all the others Areas in the value creation process where other parties can contribute A possible win-win scenario Examples : Red Hat Examples 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. Working together to create a free solution Value proposition Value proposition Freely available products or services created by collective brainpower. Key attributes Key attributes Appropriate technology A developed sense of community Low R&D budget Personal motivations Free of supplier dependencies Set standards for the creation Shared risks and resources Appropriate technology A developed sense of community Low R&D budget Personal motivations Free of supplier dependencies Set standards for the creation Shared risks and resources Examples : Firefox, Wikipedia Examples 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 optimized 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. Efficiency within the value chain Value proposition 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 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 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 Examples 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 consumes, 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. Pay as you go Value proposition Value proposition Pay for usage instead of a fixed rate. Highly transparent Pay for usage instead of a fixed rate. Highly transparent Key attributes Key attributes Customers seeking flexibility Transparent/simple fee system Ability to make sales estimates or minimum usage in contract Ability to track usage efficiently Learn from customer behavior Offer financed in advance Customers seeking flexibility Transparent/simple fee system Ability to make sales estimates or minimum usage in contract Ability to track usage efficiently Learn from customer behavior Offer financed in advance Examples : Lime, AWS Examples 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. Whatever it’s worth to you Value proposition Value proposition The customer decides how much to pay for a product or service, hence keeping control over their assets. Key attributes Key attributes Possibility of guiding the customer to the 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 Possibility of guiding the customer to the 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 Examples 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 services together). Though this model is by nature decentralized, an organizing company can offer a meeting point and communication service that connects these individuals. The company is then able to earn a fee through this service. Dealing from person to person Value proposition Value proposition Transaction between individuals, similar to commercial interactions, with added social benefits and increased marginal utility. Key attributes Key attributes Set of ground rules Ability to create network effects Community relationships Trusted image Simplified processes High barriers to entry Set of ground rules Ability to create network effects Community relationships Trusted image Simplified processes High barriers to entry Examples : PAP, eBay Examples 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 utilization. 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. Basing fees on results Value proposition Value proposition A precise output is paid a specified amount, allowing customers to control their costs. Key attributes Key attributes Strongly integrated manufacturing ecosystems Ability to track performance B2B Long-term cooperation Complex products with challenging application Transparency No upfront costs 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 Examples 59. Personalisation Business model One step beyond mass customization : the rise of data, as well as digitalization and optimized 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. One step beyond mass customization Value proposition Value proposition Maximum value from the product for a specific customer. Key attributes Key attributes Different from mass customization Data analysis capabilities Communication with customers and their needs Data collecting processes Ethical rules in place to avoid potentially costly mistakes Different from mass customization 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 Examples 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 that benefits all parties. Sell next to your competitor Value proposition Value proposition A wide offering. Key attributes Key attributes Mechanisms that make the platform grow with every purchase An ability to efficiently manage sellers Efficient contracts More Supply More demand Lower prices Mechanisms that make the platform grow with every purchase An ability to efficiently manage sellers Efficient contracts More Supply More demand Lower prices Examples : FeelUnique, BeautyLish Examples 61. Pre-paid/credit model Business model Pay now, use later : Several units of a good or service are purchased in advance. The validity of these units can be limited in time or not. Pay now, use later Value proposition 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 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. 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 Examples 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 customer segments can be satisfied with the same product. Own brand strategy Value proposition Value proposition The product is sold by a different company than that which manufactured it. Key attributes Key attributes Low infrastructure Specialization Economies of scale Sales supplemented by white labels Strong differentiation between actors selling the same product Price sensitive customers Low infrastructure Specialization Economies of scale Sales supplemented by white labels Strong differentiation between actors selling the same product Price sensitive customers Examples : Schwartz, Tang Frère Examples 63. Product to Service/Solution Provider Business model Finding all you need at the one-stop shop : Every needed products and services for 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. Finding all you need at the one-stop shop Value proposition Value proposition Single source for a specific offer so customers can concentrate on their core activities. Key attributes 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 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 Examples 64. Push to Pull Business model Come will they and it build: The value chain is decentralized 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 Value proposition The customer is king. Key attributes 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 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 Examples 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 expectations, hence improving its image and attracting potential new customers. The customer knows the offer is good Value proposition Value proposition A promise to customers that the offer will not meet certain expectations. Key attributes Key attributes Understand customer expectations An easy way to display quality assurance Contractually protected quality assurance Communication Transparency Understand customer expectations An easy way to display quality assurance Contractually protected quality assurance Communication Transparency Examples : Label AB, Label Rouge Examples 66. Revenue-sharing Business model Win-win with symbiosis : Revenues are shared with all who participated in the ecosystem’s health, be they suppliers, or even competitors. This is usually because the presence of more than one actor is beneficial to all the others through a higher potential customer base or higher customer satisfaction. Win-win with symbiosis Value proposition Value proposition All participants in the ecosystem share the revenue. Key attributes Key attributes Commonly found on the internet Fair and transparent way of sharing revenue Beneficial/win-win partnerships Industry with a fragmented value chain High barriers to entry Commonly found on the internet Fair and transparent way of sharing revenue Beneficial/win-win partnerships Industry with a fragmented value chain High barriers to entry Examples : NFL, Medium, Spotify Examples 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. Going twice, Going once… Value proposition Value proposition All parties get a price according to the perceived value of the offer. All parties get a price according to the perceived value of the offer. Key attributes Key attributes An environment with near-perfect information availability A propensity toward digitalization An environment with near-perfect information availability A propensity toward digitalization Examples : N/A Examples 68. Reverse Engineering Business model Taking lessons from competitors : this pattern refers to the reproduction of another company’s product following a 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. Taking lessons from competitors Value proposition Value proposition A product that is either as good as the original or appeals to a new customer segment. Key attributes Key attributes Unprotected IPs Industry transparency Consistent patent expiration watch Good PR / Legal teams Strong recruitment capabilities Unprotected IPs Industry transparency Consistent patent expiration watch Good PR / Legal teams Strong recruitment capabilities Examples : Pelikan, Denner Examples 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. Learning from good-enough solutions Value proposition Value proposition Offer innovative solutions to customers. Key attributes Key attributes Products that have value across the world Untouched key functionalities Locally-based R&D Reduced costs Protected IP Efficient repackaging Products that have value across the world Untouched key functionalities Locally-based R&D Reduced costs Protected IP Efficient repackaging Examples : Nokia, TVS Examples 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-margin original product. This means customers have less resentment towards the company while the company enjoys high margins. The opposite of Gillette Value proposition Value proposition Enjoyment of a product once the initial payment has been made. Key attributes 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 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 Examples 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 things 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. Take from the rich, give to the poor Value proposition Value proposition Offer a product the disadvantaged might not otherwise be able to afford, while richer customers have a better conscience. Key attributes Key attributes Economies of scale Positive image Market with a solid customer base High margin market Increased future sales Economies of scale Positive image Market with a solid customer base High margin market Increased future sales Examples : Warby Parker, TOMS Shoes Examples 72. Scarcity Business model “Hurry up, we’re almost out of stock” : Producing a 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. “Hurry up, we’re almost out of stock” Value proposition Value proposition A product that gains in perceived value due to rarity and demand. Key attributes Key attributes Effective communication A process to handle dissatisfied customers A strong analysis of optimal revenues A real scarcity High word-of-mouth possibilities 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 Examples 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. Putting the customer to work Value proposition Value proposition Lower price, as well as time savings. Key attributes 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 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 Examples 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 utilize a needed product, while the company is able to make a sale it might not otherwise have been able to make. Timeshare makes for efficient usage Value proposition Value proposition Ability to purchase products that one may not be able to otherwise afford, and more efficient use of said product. Key attributes Key attributes Company oversees maintenance Company creates clear rules (ex: exit clauses) Capital intensive assets Customers willing to share assets Risks Company oversees maintenance Company creates clear rules (ex: exit clauses) Capital intensive assets Customers willing to share assets Risks Examples : HomeBuy, Blablacar , OuiCar Examples Blablacar 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 rent, while the hosted company gains access to cheaper resources such as space, location, or workforce. Piggybacking Value proposition Value proposition Extra products and offers in the same convenient space. Key attributes Key attributes Possible synergies Higher customer loyalty Closer proximity to customers / higher visibility No cannibalism Close cultural and operational fit with partners Possible synergies Higher customer loyalty Closer proximity to customers / higher visibility No cannibalism Close cultural and operational fit with partners Examples : Starbucks, Superdrug Examples 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 interests. Put the community to use Value proposition Value proposition Lower prices thanks to a social purchase component. Key attributes Key attributes Technological ability to track customer purchases Strong social media presence Customer engagement Contractualisation Products that need to be tried Technological ability to track customer purchases Strong social media presence Customer engagement Contractualisation Products that need to be tried Examples : Weishang , Mogujie , L’Oréal Examples Weishang Mogujie L’Oréal 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. Buying a season ticket Value proposition Value proposition Customers save time, money, and energy. The price of the offer is often lower than that of a repeat purchase. Key attributes Key attributes Regular access to customers Easy to understand terms and conditions Long-term benefit for the customer The product needed on a regular basis Data analysis capabilities Regular access to customers Easy to understand terms and conditions Long-term benefit for the customer The product needed on a regular basis Data analysis capabilities Examples : HelloFresh 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. Large selection and small prices under one roof Value proposition Value proposition Sell a large variety of products under one roof for a low price.. Key attributes Key attributes A large number of partners A way to contractually manage many partners An understanding of the variety of customers seeks Effective supply chain Large population Standardized processes A large number of partners A way to contractually manage many partners An understanding of the variety of customers seeks Effective supply chain Large population Standardized processes Examples : Carrefour, Sephora Examples 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 a very high margin due to the small customer pool. More for More Value proposition Value proposition Great service… and feel like a Star Star Key attributes Key attributes High-quality services Very high margins Great branding Well-trained employees Scarcity effects Small customer pool / fluctuating demand High-quality services Very high margins Great branding Well-trained employees Scarcity effects Small customer pool / fluctuating demand Examples : Lamborghini, Rolex Examples 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 endeavor, as collection costs are generally extremely low. In addition to removing some resource costs, it also assuages some customers’ consciences with regard to their environmental impact. Turning old rubbish into new cash Value proposition Value proposition Goods that give a good conscience. Key attributes 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 (which usually produce the most valuable trash) 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 (which usually produce the most valuable trash) Examples : GameStop, H&M Examples 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. Attracting indirect network effects Value proposition Value proposition Network effects for both providers and consumers. Key attributes 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 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 Examples 82. Unbundling Business model Give the client more choice : unbundling is the idea of removing the ties between products to offer them as stand-alone rather than as part of a package. Give the client more choice Value proposition Value proposition The ability to not be tied down by un-extracted value. Key attributes Key attributes An industry ripe for innovation/disruption Very low barriers to entry Slow-moving competitors An industry ripe for innovation/disruption Very low barriers to entry Slow-moving competitors Examples : Netflix, Google Examples 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 are possible. This only works here Value proposition Value proposition A product that works perfectly with specific products and services, creating an entire ecosystem. Key attributes Key attributes Communication in case of potential backlash Set an industry standard A product customers can’t live without Regular use No legal barriers Communication in case of potential backlash Set an industry standard A product customers can’t live without Regular use No legal barriers Examples : IoS Examples IoS 84. User Design Business model The customer is an 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 produced the product once designed. As such, it is able to benefit from customer creativity, while the customer is able to benefit from pre-established infrastructure. Revenue can be earned by design, or by sale. The customer is an inventive entrepreneur Value proposition Value proposition Customers realize their entrepreneurial dreams without having to create any infrastructure Key attributes Key attributes Get feedback on customer preferences Products customers want to help design / Customise Simple to use tools for creation Simple products Community Get feedback on customer preferences Products customers want to help design / Customise Simple to use tools for creation Simple products Community Examples : TeeSpring, Lego Examples Lego 85. Variable-Based Pricing Business model Larger waves mean lower prices : The price of an offer changes based on a specific variable. This is very similar to dynamic pricing, but less specialized and reliant on algorithms. It is better understood and better for marketing purposes. Larger waves mean lower prices Value proposition Value proposition Help customers understand why they are paying the price they are paying. Key attributes Key attributes High margin products Ability to handle fluctuations Transparent choice of variable Good for marketing purposes Understanding of customer needs and wants 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 Examples 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.