Business Models to Generate Revenue – Business Model Innovation is of utmost important nowadays. Business model innovation in the company does not come from creatives. It comes from understanding other business models and learning from them. Business model innovation can help you to reach the next level in the business. You can generate more revenue from your business and grow big. The real-life examples of business model innovation are Google & Amazon. Google & Amazon are continuously innovating learning from the market and making a change in the business model.
Well who don’t want to grow big like Google & Amazon? Of Course Everyone. So, let’s try to learn from business models of some of the big companies who are already in the business and generating big revenue.
Also Read – 100 Business Ideas with low investment
I am sure you must be excited about this. So, fasten your seat belt, and let’s start our journey to the next destination of business models (new blog category). In the business models category, I am going to share business models insights and case studies about few popular businesses.
What is Business Model?
A business model in layman word is a plan by which the company is going to operate and generate revenue from the business. A business model means the basis of how business creates, delivers, capture value. It is very important for the sustainability and growth of the business.
Sounds Complicated? Let’s simplify!
Create – Create a Unique Value Proposition for a customer. You need to understand your customers and their problems and design or propose products, service or solutions to create a continuous revenue stream.
Capture – Delight the customer and capture value from customers in return. Design the right strategy for relationship management & customer retention.
Deliver – Deliver value to your customer via solution. Customers should believe in your product or service. You can do it via various methods such as the utility of a product, warranty, etc.
In short, you can design a business model by answering the following questions
- How product or services will be created/manufactured or procured?
- How sales and distribution of product service will take place?
- How new & loyal customers will be added?
- How customer will pay you?
- How company will make money?
You can make use of ABCDE formula for creating a business model.
A – Analysis
B – Brainstorming
C – Creating
D – Delivering
E – Evaluating
20 Types of Business Models to Generate Revenue
Here is detail about 20 types of business models that can help you in starting and growing your business.
Manufacturing is a well-known business model. The person involved in this type of business is known as a manufacturer. Manufacture makes products from raw materials. The product can be to make or ready to sell. A manufacturer can sell a product to the customer directly without a middleman.
Examples – L&T, General Electrics, 3M etc.
A distribution ship is another popular business model. A person who has taken the distributorship of a product/company is known as a distributor. A distributor purchase product from the manufacturer in the bulk and sell it to the retailer or customers.
Examples – Ingram Micro, Redington
A retailer business is very simple. Retail procure products from the distributor and sell it to the customer directly.
Examples – D-Mart, Amazon
A franchise is a branch under the parent brand name. It is a very good and proven business model. A franchise can use parent’s products/services and brand everything under the parent’s name by paying royalties to it.
Examples – McDonald, Dominos
Brick-and-Mortar is a traditional business model. Under the brick-and-mortar model, products and services are offered to a customer’s face to face at a specific location.
Example – Local provision shop
e-Commerce is a popular online business model. In this business model, products and services are offered to the customer online. The rest of the thing in this model is similar to brick-and-mortar.
Examples – Flipkart & Amazon.
#7 Brick and click
Brick and click is a business model adopted by many people. It is an online-offline business model. This means the company offers products online as well as offline in the store.
Freemium is a popular and effective business model. In this model sample product is given to the customer for a shorter period on free usage. It is also known as sampling. The product can be given to all customers or selected customers. The intent is a long-term association or sale of the product.
Examples – Free Test Drive of car to the customer before buying a car.
Subscription is the most suitable model where the cost of customer acquisition is very high. If you want long-term customer association, you can use this model. It is a recurring revenue generation model.
Example – Amazon Prime, Netflix
#10 Hidden Revenue Business Model
The hidden revenue business model is a business model where the free product is offered and revenue is generated from the advertisement. This model is adopted by most of the online companies.
Example – Google, Facebook
#11 Razor and Blade
In this business model product is very low cost but support charges or other associated item charges are very high. You cannot run a primary product without extra item or support. An example is a printer. The printer is onetime expense (low) but you need a cartridge (associated item) to run the printer.
Example – HP Printer, Razor & Blade
An aggregator is a low capital investment high-profit margin business model. It is an asset-light model. In this model aggregator act as a bridge between asset owners and customers. Ola & Uber are examples of aggregator business model. Ola and Uber do not own any car yet they make big money by becoming a bridge between asset owners and customers. This model is also reefer as two-way model.
Example – Airbnb,Ola,Uber
#13 Affiliate Marketing
Under affiliate marketing, company makes money by featuring or reviewing other company’s products. It is like get payment for saying something good about company products or marketing for them.
Example – NerdWallet
#14 Network Marketing
Network Marketing is an old and popular business model. It is a pyramid model business. The recruitment of new members by promising them rewards is a key principle of this model. Every new member can also recruit another member. The network keeps growing.
Example – Amway
#16 Reverse Auction Based business model
A Reverse Auction is a popular business model for selling products. In this model price of the product is kept high and the auction is done. In auction bidder offer price and price drop take place. The lowest bid supplier will get a chance of business.
#17 On Demand
On demand is an access-based business model. In this model products or services are offered on demand. An example could be renting a car, renting a room by the hotel, etc.
#18 SAAS, IAAS, PAAS
Software as service, Infrastructure as service, and platform as service are examples of the IT industry business model. Here software, platform, and infrastructure are offered on rent.
Example – Dropbox, Mailchimp, Zendesk, Windows Azure
#19 Online Education business model
This model is specifically focused on the students. In this model online education platform is provided for the student along with digital content for learning. This could be fix fee or subscription model.
Example – LinkedIn learning, BYJU
#20 Multi Brand business model
Multi brand business model is based on the marketing of multiple similar and competing products together. Under a single brand, multiple products with the same function are maintained and grown.
Example – Hindustan Unilever, P&G
Over to you
I hope you have got complete understanding of Business Model & how company grow and make money.
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