We try to identify specific characteristics of Startup Business Models and identify some companies that use those Business models.
|S No||Business Model||Description||Examples|
Bricks And Clicks
Sell products via both the online and physical stores
Involves participation of a large number of likeminded professionals, traders related to each other by means or some other business interest.
Cutting out the Middleman
Cut out the middlemen in the value chain to pass on benefits to the consumers
Producer directly meets and sells to the consumer
|Stella & Dot|
Franchiser offers its business concept for expansion with the resources of franchisee whereas franchisee enjoys reduced risks and established brand and business processes
Offer some basic services for free and charge for the more advanced products
Pay what you can
The consumers are free any renumeration for the service used as they desire
Online auction where the highest bidder gets the product
A setup where multiple sellers offer the same product at different but comparable prices to the consumer.
Offer high-end products and services appealing to targeted customers for high profits. (Basically charging for the brand value)
Partner with other sellers to market or sell their products and earn a cut out of every succesful sale
Charge users a periodic fee for a range of services that may avail
Create a monopoly in a particular product or market segment and use that advanrtage to drive revenue and profits
|Motion Picture Association of America|
Razor and Blades
Offer a basic product at a low profit or even a loss and earn majorly through the sale of complimentary products
Inverted Razor and Blades
Offer the basic product at a premium and the complimentary products at a lower cost
Offer instantaneous but desired services to the user
Become a platform where buyers and sellers interact
Middleman (Warby Parker Model)
Cut out the middlemen in the value chain to pass on benefits to the consumers
Sell ‘Virtual Goods’.Virtual goods are online only products users pay for normally in games or apps such as upgrades, points, gifts, or weapons.
|Clash of Clans|
Multi level Marketing
encourage the existing distributors to recruit new distributors by paying the existing distributors a percentage of their recruits’ sales
Owner of an asset charges the users for a temporary use of that asset
Earn revenue by selling advertisement spots to other business on your platform
Pay As You Go
Charge users as per their usage of the service
Earn revenue by analyzing or selling huge amounts of user data available with you.
Wholesalers and retailers of goods and services sell directly to consumers online.
Facilitate the interaction between the buyer and the seller and charge a fee for that service.
Charge commission for attracting customers or fulfilling transactions for other sellers.
Assemble or build products a large level (thus at cheaper prices) for yourselves or for others.
Crowd thinks, delivers, chooses
Hotel California Model
Create a must-have product that traps customers into buying unrelated high-profit items
Users benefit if more customers start using the product
Offer some products at very low profit or a loss to attract consumers in hope that consumer buys additional services (which usually are more profitable)
Offer unlimited services for a fixed price
Nickel and Dime
Price your niche product with the most basic features the cheapest and then charge for every extra feature
License an intellectual property to other firms for commercialization. (usually works for patents, trademarks and copyrights)
Products are built by community, Revenue doesn’t come directly from the product, but from the services around it
Peer to Peer
Company enables business transactions between private persons
Earn more from privileged customer segment, but supply more to unprivileged customer segment which may not otherwise afford the offer
|Aravind Eye Care|
Strategical partnership and collaboration to increase revenues in a win-win situation
Business transactions and communications via ICT
Target the Poor
Offers are targeted to the bottom of income pyramid, they are usually designed to cover minimal, but still essential needs of customers
Two sided Market
Platform concept where the suppliers and customers are brought together
Offers are targeted to the top of income pyramid, they are usually unique and suit for self-realisation needs of customers, Focus on branding, events, highest quality standards associated with large investments which are covered with high margin of sales prices
Gives consumers the ability and infrastructure to design, produce, sell and market their own custom products
Offering not only a product, but also a turn-key solution around customer’s problem, so the customer can focus on its own core business
Shop in Shop
Opening a business or a store (rent or franchise) inside another business or store
Customer is actively involved in the delivery process of the offer, so thanks to the saved costs the company can further invest or reduce its prices
Sell additional products to your existing customer
|Life Insurance Companies|
the core offering is priced competitively but there are numerous extras that drive the final price up so the consumer is not getting the deal they initially assumed.
Crowd invests for a sample product
Physical Products and Offers become immaterial
Offers exclusive and unique product and service experience combined with positive emotions
From Push to Pull
Put customers as the central driving factor in every operation and decision, Produce only what the customer is ready to buy and do it as efficient as it is possible without waste
Provider offers uninterrupted availability instead of ownership, Provider is responsible for achieving this including timely repair, replacement and maintenance
Offers free or cheap service to customers, but generates revenue from ads
Cheapest prices by offering unusual, but still essential version of products
Offering products and services which are attached to intensive costs, time and learning if the customer wants to move to another provider
Offering a large portfolio of products, not only the ones most people buy, but also niche products
Deliever services customized to the exact needs and demands of the customer for an extra personalized touch.
Company focuses only on its core competence, everything else is provided by third parties, but the company is also excelled to administer and integrate the activities of third party providers
Detailed Analysis of competitor’s products, services and business models to exploit the gained knowhow for its own business
Innovation and R&D are executed in developing countries to meet the extreme needs of developing countries, and then the offer is brought to developed countries
Product to Service
Instead of selling the product, sell the service it offers
Leasing out the products to the consumer for a fixed period in exchange of a fee
Negative Operating cycle
Accept the payments before delievering the products or services
Customer owns a specific portion or usage rights of a product
packaging together complementary goods and/or services into a single offering.
|Microsoft (in MS Office)|
Pay royalties sto some large organization to sell products directly to their customers.
Stands for ‘Software as a Service’ : A software usually hosted on a central system is licensed to the users to be used on subscription basis
Sponsoring and Value Exchange
Collect Money from customers, but pay later to suppliers
Performance Based Contracting
Client is charged based on the monetary benefit it received from the offer or based on successful delivery of complex/risky offers
|Rolls Royce Airplane Motors|
Rent instead of Buy
Customer rents the product instead of buying it which frees the customer to do capital intensive investments to use the product
Offers a large spectrum of product to fulfil many requirements of the customer at one place
Production of content or material that is designed to inform or explain
Make more of It
Offering core competencies to others externally
Buy up an asset for a large value and then rent it out at small cheaper prices per month, per year types.
Trash to Cash
Exploit recycled material to build new products with reduced costs, Give the customer good conscience to use your product
helps reduce costs, marketing for sponsors
|Bulk domain/hosting buy|
Increased discounting model
As the billing grows, discount increase
buy items at retail stores for lower price and sell them online at higher prices
|Sellers on amazon|
|Local grocery stores|
Day and Night
Shift 1 in day and shift 3 in night
|co-working for day and night|
Leverage for complteley different purpose
|Co-working conference for Movie screening|
- The financial and social performance of companies who follow different business models
- Case studies of widely used Business models and the rarely used ones and identify why that is the case.
- Study division of Business models between B2B vs B2C start-ups
- Study division of Business models between Product vs Service Startups
This research can be used by startups who are developing/experimenting with their business models, trying to identify alternate revenue streams. It can be used to evaluate the viability of information aggregation initiatives.