What is Business Model?

What are the Types of Business models? 

1. Franchise model

Franchising is the best way for a firm to expand since it allows the franchisor to license its resources and brand name. 

For a franchise to offer its products and services in exchange for royalty, intellectual property and rights are required.

McDonald's is the finest example, with 93 percent of its outlets franchised over the world.

McDonald's is the world's largest foodservice company. 

Out of a total of 38,695 restaurants worldwide, it operates 36,059 franchised restaurants.

For the past 13 years, the number of franchise restaurants has risen year after year.

Subway, McDonald's, and Gold's Gym are just a few examples.

2. Model of a multi-sided platform

A multi-sided business model is used by any organization that provides services to both sides of the business. 

LinkedIn is a great illustration of this, as it offers membership services to people looking for jobs as well as HR managers looking for applicants for their open positions.

3. The business model based on a freemium model

The freemium model, which combines free and paid services, is most commonly utilized by software companies in the Software as a Service (SaaS) or app business models.

Companies offer free (lite) versions to clients to build their business and recruit customers, but only for a limited period or with reduced features. 

The customer must choose to pay for services to gain access to the improved features.

Zoom, Dropbox, MailChimp, Evernote, and other similar services are examples.

4. The business model based on subscriptions

This concept allows customers to receive services by paying a set monthly or annual fee.

In this instance, the company must provide sufficient value to its customers so that they return to the website regularly.

It enables businesses to segment the market and offer a limited number of items in their content under various plans and prices, referred to as tiered offerings.

Netflix, for example, provides monthly subscriptions for $8.99 per month for the Basic plan, $12.99 per month for the Standard plan, and $15.99 per month for the Premium plan.

Netflix, LinkedIn, Amazon Prime, and Dollar Shave Club are just a handful of the many examples.

5. Peer-to-peer business model

According to this concept, a corporation serves as a middleman between two parties, adding value to both the demand and supply sides. 

It's not like a traditional partnership when a company sells its services to customers (B2B or B2C). It earns money by charging commissions. 

Airbnb is a good example of a platform that facilitates transactions between hosts and hostesses.

Airbnb, Uber, eBay, Offer up, and Freelancer.com are just a few examples.

6. The business model with hidden revenue

This is a revenue-generating method in which users do not have to pay for the services provided, but the company still gets cash from other sources. 

Google, for example, makes money from advertising dollars spent by businesses to bid on terms, even though users do not pay for the search engine.

Google, Facebook, Instagram, and Twitter are just a few examples.

7. Business strategy based on razors and blades

In this paradigm, one item (the razor) is offered at a cheap cost, while another (the blade) is sold at a high cost. 

A printer and cartridge business model is another name for it. 

The cost of an inkjet printer, for example, was a one-time cost; nevertheless, getting a new ink cartridge updated is an ongoing cost for consumers. 

If you have a devoted customer base and can establish a lock-in scenario with customers, this strategy is ideal.

Xbox or PlayStation video games, HP printers, Nespresso coffee machines, AT&T mobile phones with a two-year commitment are just a few examples.

8. The business plan of the Reverse Razor and Blade

The business model is the polar opposite of the razor blade business concept. It entails selling low-cost items to entice people to purchase higher-cost items.

This business model employs a one-time offer for the premium product and, over time, generates more revenue from secondary items.

Apple, for example, is a master of this business model. Apple's App Store and iTunes sell programs, movies, songs, and other media at a reasonable price, while its hardware, such as the iPhone, iPad, and Mac, is more expensive.

9. The business model for affiliate marketing

Companies make money in this model by promoting, reviewing, and recommending the products and services of other businesses. 

Consider websites that provide product reviews. 

These websites are compensated based on the number of sales opportunities they generate for their sponsors.

NerdWallet, Capterra, MoneySavingExpert.com, and the wirecutter are among examples.

10. The business model for online education

This business model is aimed at the educational industry, including students and teachers, and allows them to access educational resources through flat course costs or subscriptions. 

It's a hybrid of freemium, course fees, and a subscription-based business model.

Khan Academy, LinkedIn Learning, Coursera, Udemy, edX, and others are some examples.

11. The business model for breaking news in real-time

This strategy focuses on sharing and updating news in real-time, without the involvement of a middleman.

This concept allows trusted primary or secondary sources to broadcast breaking news or important announcements directly to their audience through open and dependable channels.

Some social media sites have risen to prominence in recent years as go-to sources for breaking news from primary sources such as presidents, CEOs, and others.

Twitter is an excellent example. By examining the trending hashtags, users can get real-time news.

12. The business model based on e-commerce

E-commerce is a simple yet powerful business strategy that allows customers and sellers to connect and trade over the internet (online shop).

Business to Business (B2B), Business to Customer (B2C), Customer to Customer (C2C), and Customer to Business (C2B) are all examples of e-commerce business models (C2B).

Amazon, Alibaba, eBay, OLX, Walmart, and others are examples.

13. Business concept based on the distribution

This model is used by a company that integrates with its ultimate clients through one or a few main distribution channels.

Companies that follow this approach provide dealers, brokers, supermarkets, retailers, and other channels for enterprises to sell to customers.

Unilever, for example, devotes a significant portion of its revenue to ensure proper distribution.

14. Drop-shipping is a type of business model.

A company plan that is both cost-effective and entertaining. When a business owner uses drop-shipping, he or she contacts several different suppliers/wholesalers to sell their product on the website. 

A wholesaler drops-ships products straight from the manufacturer to the client once an order is placed on a business owner's website. 

In this situation, the business owner does not need to keep any inventory and instead delegates all shipping and logistics to a third party.

Examples include Doba, Oberlo, Dropship Direct, and Wholesale 2B.

15. Enterprise business model

The enterprise business model is entirely dependent on obtaining huge transactions by focusing on and targeting only large clients. 

It is based on complicated sales with a small number of potential customers. Fortune 500 clients, for example, typically have multi-billion dollar budgets.

Boeing, Raytheon, SpaceX, and Goldman Sachs, for example, are examples of Enterprise business models since their sales efforts are directed at very large business enterprise customers or governments.

16. The business model based on family ownership

A family-owned firm is governed by a family whose decision-making procedures are overseen by two or more family members.

The company's leadership is passed down to the heir, who will transmit the baton to their children.

Examples include Ford, Walmart, Estee Lauder, Prada, and Comcast.

17. Business models based on the blockchain

Blockchain, the most advanced, futuristic, and current technology, has transformed the entire landscape of global transactions utilizing decentralized network systems.

Consumers can transact peer-to-peer using a decentralized network, which increases confidence. Tokens are used by blockchain-based enterprises to generate revenue and to provide Blockchain as a service.

The Blockchain technology-based business model is used by many cryptocurrencies, including Bitcoin, Ethereum, and Litecoin.

18. A business model with a vertically integrated supply chain

This strategy entails the corporation owning and operating its supply chain (manufacturing, distribution, and retail) for its products. 

When a corporation has more control over how a product is manufactured and supplied to end-users, it can offer products to customers at lower prices (with a higher profit margin).

For instance, if a corporation just manufactures a product and relies on a distribution and retail partner. The additional cost is then applied (markup) at each step of the supply chain until the product reaches the final customer.

Consider companies that have both factories and retail/online stores. Amazon, Tesla, Luxottica, Apple, Walmart, and other food stores are among the companies involved.

19. Business Model with Nickels and Dimes

The lowest price strategy for the basic product or service is used in this company model. 

Because the base price is kept as low as possible, an additional fee is paid for the additional perks and services that come with the core basic service.

Spirit and Frontier Airlines, for example, are budget airlines that charge fees for extra services such as printed boarding passes, carry-on/check-in luggage, seat selection, priority boarding, Wi-Fi, beverage, meal/snack, phone booking costs, and so on.

20. Business Model for API Licensing

Application programming interface (API) is a term that refers to a set of (API). 

It's essentially a collection of subroutine definitions, communication settings, and program development tools. 

API licensing is a business strategy that provides licensing mechanisms that enable third-party plugin/add-on programs for well-known platforms to be created by the developer community. 

Developers must also pay a fee to gain access to APIs.

Microsoft, Apple, LinkedIn, and Twitter, for example, all offer API licensing options.

21. Business Models Based on Auctions

The idea is built on the option to purchase a product or service through bidding. 

Although the concept is no longer widely employed, it is still used in industries such as antiques, real estate, collectibles, and business transactions.

On online sites that trade new and used items, such as eBay and Amazon, the current version of the auction model can be seen.

22. Business Model for Reverse Auctions

This business model adheres to a tight pattern of setting the highest pricing and allowing consumers to bid accordingly until the prices begin to fall.

Businesses looking for suppliers frequently employ a reverse auction. At each subsequent round, eligible providers bid lower and creators to allure the business and win the contract.

Bidding for government contracts, for example.

23. Business Model for Reverse Auctions

This business model adheres to a tight pattern of setting the highest pricing and allowing consumers to bid accordingly until the prices begin to fall.

Businesses looking for suppliers frequently employ a reverse auction. At each subsequent round, eligible providers bid lower and cheaper to allure the business and win the contract.

Bidding for government contracts, for example.