Newbies Guide to Various Business Model Examples!
Business Model Examples is a rage these days on the internet, people right from newbies to experts are consuming what is the business model of Uber, Ola, Flipkart and what not but I personally found no resource on the internet. So I compiled this one. Please understand that this guide is a just something to gorge on and implement on a real time basis after considering its repercussions on your start up. I always rely on this book to give me new perspectives on how to fine tune business model of an existing or out of the wild and upcoming startup, it’s called business model generation and it is written by the Grand Daddy of Business Model Canvas – Alex Osterwalder, it comes with awesome graphic materials to be used as well. Get it Now!
Business Model Example
Please note that 80% of the business models are waste and the rest 20% of the business model examples will generate 80% of the money for entrepreneurs as per the 80 20 Rule.
Here is a list of all available Business Models (P.S. If you think something is missing, please add up in comments and I will put that up here)
|Name of Model||Short Description||Companies who Adopt this Model – Example of Business Model|
|Printer and Toner / Razor – Blades||Purchase the base thing/product at a cheap price (Printer for 999 INR) and pay havoc for the consumable there on. Get people to use your product by buying for nearly free and paying continuously for the consumable around it.||Gillette, HP, Sony, EPSON, Xerox etc.|
|Reverse Printer – Toner or Reverse Razor – Blade||Contrary to the above example of business model, where the consumer is frustrated to pay a higher amount every time it is empty, you ask the consumer to pay one time and use and throw or pay more now and pay less later or never 🙂||Sell Hardware at a premium (Phones, Tablets, Computers) and the associated insertions are at a lower cost.|
|Multi-Fold PERCEIVED Value of the Product||Sell a Sweat Shirt (locally made) which is made of the material similar to that of a Ralph Lauren and carries a similar look and feel but at half the price. Ralph Lauren has 200% margin and sells X units – you have 50% margin and sell 4X units.||HouseFull furniture co. in Mumbai, IKEA, Pottery Barn, Particle Board Furniture companies, Micro Max (Tried to Emulate Blackberry Phones at 10% of the price).|
|Online – Offline or Click – at – Brick||Browse, Order Online and pick up the store at an offline store and pay after satisfied.||HouseFull.com, MetroShoes.net, BestBuy.com|
|MLM – Multi Level Marketing||You Buy from a stranger, you sell it to your family, friends etc. they sell it to theirs and the chain continues.||Avon Cosmetics, Tupperware, Amway|
|Franchising Model||Start Something Awesome – Scale it – Ask others to start the same with your help and pay you royalty.||Many Food Stores use this Model. Theranos wanted to use this with Wal-Green Partnership.|
|Starts From or Onwards||You decide to buy a new car with a budget of say X millions – When you go visit the dealer, you end up spending X+Y because of the extras and things that need to be bought with it – like insurance, Teflon coating etc.||Builders, Car Dealers etc.|
|Loss leader||I love this and hate this model at the same time – the philosophy is a business can not (should not aim to) make money on all its items, one of them should offer such a high sales velocity that no one knows that it does exist in SKU line. The anticipation is that this product will sell along with other items (which have a higher margin)||Malls, D-Marts, Wal Mart etc. Loss Leader would be a product like the pick any t-shirt for 49 (the quality would be so poor that you will eventually but a huge number of that thing along with high margin. Used to sell unwanted merchandise, attract customers into the store etc.|
|Subscription model – SaaS / Sharing Economy||Recurring revenue from the same customer monthly (regularly). Connecting Demand to Supply / Buyer to Seller.||Many StartUps, software as a service (SaaS), Per User Per Month Models. Slack, Ola, Uber, AirBnB etc. Google APIs. Practo, NetFlix, Dollar Shave Club, ClassPass, DuoLingo.|
|Eye Ball Model / Network Effect||As I always Say – If you don’t pay for the product – YOU ARE THE PRODUCT. Here you are given away something awesome for free in turn for your time and eyeballs.||FaceBook, WhatsApp, Twitter, LinkedIn, YouTube and many other chat apps and social networking sites.|
|Sell Grouped Services as a SINGLE Product||Services are typically time-man-hour based and are priced according to the time spent in servicing, but some straight forward services are charged as a one-time use product.||If you call someone to polish your car – the products required for that would be billed into that price itself. HouseJoy is one such example. Flat Fee-based Plumbing etc.|
|Direct to Consumer||Something that was supposed to be distributed via Distributors, Retailers etc are being shipped directly to the customer.||Self-owned E-Commerce sites. Flipkart, SnapDeal, Amazon, E-Bay, Jet.com (Wal Mart Acquired), 23andMe, Theranos etc.|
|Amortization||Buy up an asset for a large value and then rent it out at small cheaper prices per month, per year types.||Hosting companies, Renting companies, Structured Settlement Annuity Companies.|
|Affiliate Network||Others promote your product (resulting in a sale) for a commission.||All Affiliate websites for e-commerce companies.|
|No Middle Man (Similar to Direct to Customer)||Slight difference from Direct to Consumer in the way that this applied mostly to essentials where middleman marks up the product up to 10 times.||Farm Fresh – Mega Stores.|
|Freemium business model||Base product is offered for free and the essential add-ons are always chargeable on a recurring or pay per use basis.||Business Model Examples of Subscription based products – Skype, Shopify etc.|
|Auctions||Multi-Fold Markup on any product with a higher perceived value.||Auction Houses.|
|I must HAVE THAT||Sell something, that is for cheap (let’s say) and when they buy that – they will want to have other affiliated things.||Buy entry passes to a Lounge, pay for drinks (3 times MRP)|
|Trading||Always live on the Arbitrage of the product. Procure from place X sell it at place Y at a markup.||Wal Mart, D-Mart, Wal Greens, WholeFoods Market etc.|
|Manufacturing||Manufacture products and sell them for a mark up to the customer, retailer, trader etc.||Virtually every business in the world is like this. Zara.|
|Open Source / Royalties||Open Source the technology that you have developed and ask users to pay donations/royalties from the commercial value that they attribute to the product.||Wikipedia, Android, Linux etc.|
|Premium||Offering only to selected buyers, those who don’t mind paying very high for the product on account of its brand name.||Lamborghini, Ferrari|
|Nickel and dime||Pricing your most granular product the cheapest and then charging for every little extra thing.||Fish Tank – is the cheapest product that you buy – Adding fishes to it will pile up the cost.|
|Flat fee||The business model example is opposite of nickel and dime. If you buy a hotel room – you will have to buy BreakFast (in many cases): Incidental purchases are bundled with the base price.||Resorts, Airline Tickets (hotel room), Venture Capital Firms, BookMyShow|
|Brokerage / Arbitrage||The business model example is probably the oldest profession in the world (well oldest after Prost*****on) and is dependent on the business man finding a person ready to buy goods at (X+Y) where X is the price which the trader paid and y is his profit margin.||Traders, Import Export Guys etc. Payment Gateways follow (X-Y strategy where X is what the person paid, Y is the payment gateways fee called TDR), UberEats, KickStarter, OLX, PayPal.|
|Licensing||This business model example is probably the best margin example after manufacturing. In this licensing business model, you acquire the rights to something in return of rev-share to the original rights holder.||NetFlix, Amazon Prime, Fanatics.com etc.|
Business Model Examples
These business model examples are from everyday companies and are generally inclined towards reasonably quick profit making things. There are various startups that are gravity defining Valuations and do not have a single cent of revenue or a decent business model. These are listed down below:
Business Model of HyperLoop: Hyperloop is a rapid transportation system, no defined business model as such – it will benefit from freight paying companies, for quickly transporting their goods from one location to other.
Business Model Examples of Large Companies: Large Companies like Reliance, Tata, Birla’s have a myriad of companies under one brand name and they have a “Conglomerate” business model where in their group companies make money from many of the above-listed Business Model Examples.
Business Model Examples
Basically, these business model examples can be clubbed into broad categories of Mark Up, Software, Advertising & Value-Based. A good tool to make your business model right is to use the business model canvas.
Some Business models are atypical and do not necessarily fall into the above mentioned categories, like PirateBay (though it is into advertising, but depends on illegally sourced content) & Beggars in India (illegal to beg but the begging mafia minting money out of it).
Business Model Example
Whenever defining the Business Model of your company always check various Business Model Examples of similar businesses in the ecosystem and check on their previous track record so that it can help you take a calculated risk while starting up.
Disclaimer: StartUps are all about Right Business Models (weird, though) but it is important to find out what the unit economics of that model is. So I would like to put this little one here, that the Business Model Examples outlined here in the guide are most the most likely ones to get profit from these types of business models, please check your Unicorn Economics before putting it to use.