Business Models - Examples
The items listed below are examples of standard business models. You are not restricted to these models, they are simply listed here as examples for your reference. All of this data is pulled from public lists (e.g. Wikipedia). Companies may employ more than one business model, but usually have at least one that is their primary focus.
Auction Business Model
Mostly used for unique items that are not frequently traded, and therefore don't have a well established market value. Some typical uses of the model are within antiques, real estate, collectibles, spectrum auctions (i.e. communication networks) and the sales of businesses. However, several examples of auctions based business models for frequently traded, new and used items exists (e.g. eBay, Amazon). Auctions types include ascending English auctions, descending Dutch auctions, first-price sealed-bid, Vickrey auctions, and others
Bricks and clicks business model
Business model by which a company integrates both offline (bricks) and online (clicks) presences. One example of the bricks-and-clicks model is when a chain of stores allows the user to order products online, but lets them pick up their order at a local store.
Collective business models
Business organization or association typically composed of relatively large numbers of businesses, tradespersons or professionals in the same or related fields of endeavor, which pools resources, shares information or provides other benefits for their members.
Cutting out the middleman model
The removal of intermediaries in a supply chain: "cutting out the middleman". Instead of going through traditional distribution channels, which had some type of intermediate (such as a distributor, wholesaler, broker, or agent), companies may now deal with every customer directly, for example via the Internet.
Direct sales model
Direct selling is marketing and selling products to consumers directly, away from a fixed retail location. Sales are typically made through party plan, one-to-one demonstrations, and other personal contact arrangements. A text book definition is: "The direct personal presentation, demonstration, and sale of products and services to consumers, usually in their homes or at their jobs.
Distribution business models
Distribution is the process of making a product or service available for use or consumption by a consumer or business user, using direct means, or using indirect means with intermediaries.
Fee in, free out
Business model which works by charging the first client a fee for a service, while offering that service free of charge to subsequent clients.
Franchising is the practice of using another firm's successful business model. For the franchisor, the franchise is an alternative to building 'chain stores' to distribute goods and avoid investment and liability over a chain. The franchisor's success is the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.
Freemium business model
Business model that works by offering basic Web services, or a basic downloadable digital product, for free, while charging a premium for advanced or special features.
Low-cost carrier business model
This doesn’t have to apply to airlines, but the term originated there. A firm that generally has lower fares and fewer comforts. To make up for revenue lost in decreased ticket prices, the firm may charge for extras like (using airline examples) food, priority boarding, seat allocating, and baggage etc.
Loyalty business models
A business model used in strategic management in which company resources are employed so as to increase the loyalty of customers and other stakeholders in the expectation that corporate objectives will be met or surpassed. A typical example of this type of model is: quality of product or service leads to customer satisfaction, which leads to customer loyalty, which leads to profitability.
Monopolistic business model
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity. Monopolies are thus characterized by a lack of economic competition to produce the good or service and a lack of viable substitute goods.
Multi-level marketing business model
A marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant's downline, and can provide multiple levels of compensation.
Network effects business model
The effect that one user of a good or service has on the value of that product to other people. When network effect is present, the value of a product or service is dependent on the number of others using it.
Premium Business Model
The concept of offering high end products and services appealing to discriminating consumers. Brand image is an important factor in the premium business model, as quality is often a subjective matter. This business model seeks a higher profit margin on a lower sales volume.
Professional open-source model
An open source software business model where an open source software vendor generates revenue from paid professional services, maintenance and support provided along with the software. Some open source software vendors also provide commercial licenses of open source software or customer specific versions of open source software to customers.
Pyramid scheme business model
A non-sustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public.
Razor and blades business model
This is a business model wherein one item is sold at a low price (or given away for free) in order to increase sales of a complementary good, such as supplies (inkjet printers and ink cartridges, "Swiffers" and cleaning fluid, mobile phones and service contracts) or software (game consoles and games).
Subscription business model
A business model where a customer must pay a subscription price to have access to the product/service. The model was pioneered by magazines and newspapers, but is now used by many businesses and websites.