Business Model - A Step by Step Guide

What is Business Model?

A business model is an outline for companies to plan for making money with the products and customer base in a specific industry. The business model can be explained by 4 key points that are- What product service a company will be selling, how the targeted market will accept the service and product, what kind of cost it will face and how it will expect a benefit or profit. In simple terms, it is a basic plan of a company to make a profit by selling services and products to individuals. Nowadays, any business needs to have a proper business model to establish its position in the market.

What are the Types of Business models?

There are different types of business models which can be identified in business industries like-

The subscription model- applies to both traditional brick and motor businesses and online businesses. Mainly it provides services by taking payment from the customers every month.

Bundling model- It is a type of model that involves bundling services for selling two or more products together by offering a lower price than the two products would cost individually.

Product to service model- In this model, the companies allow the customers to purchase a result rather than the main equipment that provides the result. It allows the different types of values to be delivered to the customers.

Leasing model- In this model, the company buys a product from a supplier and allows another company to utilize the product they purchased with a specific fee.

One-for-one model- In this type of model, a company donates one item for a charitable cost for each item which will be purchased. This model focuses on charity to encourage customers to purchase products for a good purpose.

Franchise model- In this model, companies work with franchisees to help the individual with marketing and other business operation to ensure the business function. The franchise pace the main franchiser in a profit percentage; also, it is known as one of the most common and familiar business models.

Share Your Need

Business Model Example

As mentioned in the previous section, there are different business models. similarly, there are different types examples for each type of model, which can be stated as follows-

Subscription model- Netflix takes a specific subscription fee from the customers every month to allow them to use the services.

Bundling model- Burger king provides bundling services for a lower price than the products will cost separately.

Product to service model- Uber and Zipcar, allowing the customers to get the service for a specific fee.

One-for-one model- TOMS, which donates one item for one purchase.

Franchise model- Starbucks and McDonald's provide services by paying the franchisor.

Essential Components of a Business Model

Even though a company or specific industry can maintain a certain aspect of a business model, there are key components which a business model requires, like-

• High-level vision- this is the first component of a business model where it states that a company must have a higher vision stating the position in the industry.
• Key objects- once a company establishes the vision, it is important for the individual to maintain the key objective and goals and plan to evaluate those. The objectives can relate to buying early sales revenue, marketing strategies, staffing decisions, and operating costs.
• Targeted customers and challenges- while utilizing the business model, it is important for a company to identify the different types of customers that the company will be targeting with the specific type of products or services. This component also includes the list of challenges targeted customers may face while using the company's offers.
• Solutions- an effective business model also includes the proper list of solutions for customer issues.
• Value- it is also related to the business model and refers to the main aspect of solutions, making them unique.
• Pricing- wall maintaining the business model for the production service, it is important for a company to maintain the pricing strategy as well as keep the market position of the product in mind.

How to Choose the Best Business Model For You?

Choosing a business model can sometimes be complicated. They are a few points which need to be followed while choosing a business model -

• Considering the customer needs, the model that will be chosen should be aligned with the customer's needs and the expectation that you are planning. For example, if you want to take a subscription model, you should be sure about the customer's preferences for which they will be ready to pay.
• Considering the market potential and competition is important while using a model. Before choosing a model you should spend some time analyzing the exact market that your brand is representing together idea of the current market and its competition. Considering value proposition is another point of choosing the best model where you need to ensure that your brand is standing out in the market place, for example, if you are running an e-commerce business you should know the competitors that are present in the industry.

What are the Key Components of a Business Model?

There are nine key components in a business model that essays and describe a business. These key components are also used in making BPM (Business process model). These key components are- Key partnerships, key activities, value proposition, customer relationships, customer segment, channels and key resources. By analyzing the key components in a business process model, a company successfully gains a high-level vision for the business maintains objectives also successfully helps in understanding the targeted customers and provides the products with better value in the market.

How Business Model Is The Stepping Stone To Plan A Relevant Marketing For A Firm?

Business process models are stepping stones for planning the relevant marketing strategy for forms by providing the companies are coast planning to profit in the market. It provides the business heads with the knowledge about competitors in the marketing and provides a detailed in sides for working on those factors to improve the business. It helps a company target a proper customer base where the individual can present specific products. It also helps in making marketing strategies and revenue models and analyzing the cost and expenses for the business. 

Hire An Expert