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Business Model Types

The most popular type is the product/service provider model. This article is provide in-depth knowledge about business model types.

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The most popular type is the product/service provider model.

When a company provides a product or service, they are essentially selling their own product. A great example of this is a restaurant that sells food. The second most popular model is the partnership model. In this model, two or more companies work together to provide a product or service. An example of this is a company that provides computer services and a company that sells computers. The third most popular model is the franchising model. In this model, a company licenses the use of their brand name to another company, who then manages and runs the business. An example of this is McDonalds, which licenses its brand name to individual restaurants.

Other common types include affiliate, franchise, and hybrid models.

There are many different types of business models, but in general, a business model can be divided into two main categories: those that are owned and operated by a single entity, and those that are shared or co-owned by multiple entities.

Business model types can be further divided into two general categories: subscription-based and product-based. A subscription-based business model involves customers paying a fee on a regular basis to use the service or product. A product-based business model involves selling a physical or digital product.

There is no one-size-fits-all solution for businesses.

Overall, there are three main business model types: distribution, service, and product.

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There are many variations of these three model types, so it is important to select the one that best suits your business. Below are descriptions of each model type and some tips for choosing the right one for your business.

Distribution Model

The distribution model is the most common type of business model. This model involves selling products or services to consumers directly. example: a clothing store that sells clothes to consumers in its store or online.

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Service Model

The service model is a type of business model that involves providing a product or service to consumers. An example of a service business is a restaurant that serves food to customers.

Product Model

The product model is a type of business model that involves selling products to consumers. An example of a product business is a computer software company that sells software to consumers.

Each type has its own advantages and disadvantages.

The four types are:

1. Cost-based model

Advantages: This model focuses on minimizing the costs of delivering a service. Disadvantages: This model can be less effective at meeting customer needs.

2. Quality-based model

Advantages: This model focuses on delivering high-quality services. Disadvantages: This model may not be effective at meeting customer needs if it does not take into account cost.

3. Customer-centric model

Advantages: This model focuses on meeting the needs of customers. Disadvantages: This model may be less effective at meeting the needs of employees or other internal stakeholders.

4. Employee-centric model

Advantages: This model focuses on meeting the needs of employees. Disadvantages: This model may be less effective at meeting the needs of customers or other internal stakeholders.

Some types may be more suitable for certain industries than others.

When selecting a business model, it is important to consider the industry, the target market, and the competition.

Proprietary: A proprietary business model is where a company sells a unique product or service that is not easily replicated. Examples of proprietary businesses include Apple Inc., Google Inc., and Microsoft Corporation.

Licensed: A licensed business model is where a company sells a product or service that has been licensed from another company. Examples of licensed businesses include Dell Computers and Starbucks Coffee.

Distributed: A distributed business model is where a company sells products or services through affiliates, distributors, or partners. Distributed businesses are less likely to have a single point of failure. Examples of distributed businesses include Amazon.com, eBay, and Uber.

It is important to choose the right type of business model for your specific business goals.

If you are not sure which model to choose, consult with an experienced business adviser.

Here are four types of business models:

  • 1. Franchise: A franchise is a business model in which a business owner leases or sells the right to operate a specific type of business. There are many types of franchising, including fast food, retail, and service businesses.
  • 2. Cooperative: A cooperative is a type of business in which each member owns an equal share in the business. Cooperatives are common in the agricultural and retail industries.
  • 3. Subscription-based: A subscription-based business model involves charging customers for access to a service or product. For example, a computer software company may charge customers for monthly updates or access to new features.
  • 4. Pay-per-use: A pay-per-use business model involves charging customers for use of a service or product. For example, an online storage company may charge customers for storage space usage.

A good way to learn more about different types of business models is to consult with a business advisor or consultant.

In this article, we will discuss four common business model types:

  • 1. Cost Plus Model: In this type of business model, a company charges a fee for its services and then earns a commission on the sales generated by its customers.
  • 2. Fee for Service Model: In this type of business model, a company charges customers for its services rather than charging a fee for its products.
  • 3. Commissions-Only Model: In this type of business model, a company earns commissions on the sales generated by its customers, but it does not charge any fees for its services.
  • 4. Tiered or Per-User Models: In this type of business model, a company charges different prices for different levels of service or access to its products or services.

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It's one of the most important things you can do to grow your business.

1. Service Model

This is a model in which the company provides a unique service or product that cannot be found elsewhere. The company relies on customer referrals and word-of-mouth marketing to generate business.

2. Sales Model

In this model, the company sells its products or services directly to customers. Sales representatives or sales teams sell products or services to customers.

3. Affiliate Marketing Model

In this model, the company earns commission (income) when customers purchase products or services from other companies that are affiliated with the original company. The affiliate companies provide the products or services, and the original company earns a commission for every sale.

Be passionate about what you do.

In order to be successful, you need to be passionate about your business. If you are not passionate about your business, you will not be able to sustain it over time.

There are three primary business model types:

  • 1. Product-based model: in this model, the company sells a product or service.
  • 2. Service-based model: in this model, the company provides a service.
  • 3. Platform-based model: in this model, the company uses its platform (such as a website or app) to sell products or services to consumers.

Believe in yourself and your product.

Sometimes called

"pioneering" or "innovative," this type of business model is based on the belief that customers will find value in what the company is offering and that they will be willing to pay for it. Some key elements of a successful belief-in-yourself-and-your-product business model include creating a unique product or service, focusing on customer satisfaction, and developing a strong brand identity.

Pioneering businesses that rely on this model often face significant challenges in terms of scaling up their operations and securing necessary funding, but they are often more passionate and committed to their products and customers than traditional businesses and are thus able to overcome these obstacles.

Dont be afraid to take risks.

Usually, the payoffs for a new business model can be significant, so it's worth investigating any that seem promising.

There are four main types of business model:

  • 1. Ownership model: The company is owned by one or more individuals or families.
  • 2. Partnership model: Two or more entities share ownership in the company.
  • 3. C corporation: A corporation is owned by shareholders, who are usually individuals or families.
  • 4. S corporation: A limited liability company is owned by its shareholders, who are also its employees.

Learn from your mistakes.

This is not an exhaustive list, but it covers the most common types.

  • 1. B2B model: A business model in which a business sells its products or services to other businesses.
  • 2. B2C model: A business model in which a business sells its products or services to consumers.
  • 3. Focused model: A business model in which a business concentrates on a specific market segment, such as selling software to businesses or selling groceries to consumers.
  • 4. General business model: A business model that is not focused on any specific market segment.

Persevere through difficult times.

Not only do they have a good business model, but they have the perseverance to see it through difficult times.

  • 1. The Start-Up Model: This type of business model is typically used by companies that are just starting out. They may not have a lot of money, but they are willing to risk everything to make their business successful. These businesses are often very innovative and quickly become popular.
  • 2. The Franchise Model: This type of business model is typically used by businesses that want to expand their operations. They can use a franchise model to get started quickly and then later hire their own employees. This type of business is often very stable, because the franchisor is responsible for all the day-to-day operations.
  • 3. The Co-Op Model: This type of business model is typically used by businesses that want to share some of the risks and rewards associated with their operation. Members of a co-op share in the profits and losses of the business.

Always continue to strive for improvement.

Mostly, you should aim to create a sustainable business model that can generate recurring revenue.

One key factor to consider when designing a sustainable business model is how you plan to generate recurring revenue. There are a number of options available, such as charging customers for access to your product or service, charging customers for membership services, or selling advertising space. It's important to choose a model that will allow you to generate consistent revenue over time, so that you can continue to improve your product or service and grow your business.

There are many types of business models.

Generally, business models can be classified according to their primary focus:

  • 1. Proprietary: This type of business model is operated and controlled by a single entity.
  • 2. Co-operative: This type of business model is operated by a group of entities that share ownership and decision-making responsibilities.
  • 3. Shared Ownership: This type of business model is where the ownership and control of the company is shared among a group of people or entities.
  • 4. Community-Based: This type of business model focuses on providing goods and services to local communities or groups of people.
  • 5. Technology-Based: This type of business model is based on the use of new technology to deliver services or products.

The most common type is the linear/traditional model.

At its most basic, this model assumes that customers are willing to pay a fixed price for a product or service. In other words, customers are willing to pay the same amount every time they buy something.

The second most common model is the variable price model. This type of model assumes that prices will change based on the market conditions. For example, if there is a lot of competition in the market, prices might go down. If there is less competition, prices might go up.

The third most common model is the subscription/coupon model. In this model, customers pay a set price for a product or service every month or year. Then, they receive a discount or coupon for each purchase they make.

The fourth most common model is the auction/bidding model. In this model, customers place bids on products or services. The highest bidder gets the product or service.

Other types include the subscription, freemium, and pay as you go models.

The subscription model is where the user pays a set fee every month or every year for access to the service. The freemium model is where the user can use the service for free, but has the ability to upgrade to a premium account that offers additional features or privileges. The pay as you go model is where the user pays for access to the service on a periodic basis.

The subscription model is the most common type of business model, accounting for around two-thirds of all businesses. The freemium model is used by around one in five businesses. The pay as you go model is used by around one in ten businesses.

Each type has its own advantages and disadvantages.

It is important to consider the specific business model before making a decision.

1. Cost-based model: This model charges customers for products or services based on the amount of resources used. The company may also charge for specific features or services.

Advantages:

The cost-based model can be very efficient and effective because it allows companies to charge customers based on the amount of resources used. This can help companies to control costs and make more money.

Disadvantages:

The cost-based model can be difficult to manage because it requires companies to track how much resources are being used and charged for. It can also be difficult to find customers who are willing to pay for resources that are used inefficiently.

Choose the right model for your business based on your goals and resources.

The following business model types are examples of models businesses may use:

  • 1. Product-based business: A product-based business sells a physical product or service.
  • 2. Service-based business: A service-based business provides a professional service.
  • 3. Franchise-based business: A franchise-based business is a business that is owned and operated by a franchisor, who provides the business opportunity and supports and guides the franchisees.
  • 4. Concierge-based business: A concierge-based business offers personalized services to customers.

Be prepared to adapt your model as your business grows and changes.

Generally, there are three types of business models:

  • 1. Traditional business model: The traditional business model is where a company makes money by selling products or services.
  • 2. Service-based business model: The service-based business model is where a company makes money by providing services, such as software development, marketing, or customer service.
  • 3. Collaborative business model: The collaborative business model is where a company makes money by collaborating with other businesses to create new products or services.

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Reviewed & Published by Artie Campbell
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Business Model Category
Artie Campbell is internet marketing expert, have solid skill in leading his team and currently the editor of this website's article writer team.
Business Model Category

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