Biz models Flashcards
Franchise model
Best for the company’s expansion, franchising allows the franchisor to license its resources, brand name. Intellectual property and rights for a franchise to sell its products and services in exchange for a royalty.
rev model: royalty
example: mcdonalds
Multi-sided platform model
Offers services to both sides of business carries out a multi-sided business model.
Example: LinkedIn, which provides subscription services to people to find job opportunities as well as to HR managers to find candidates for their vacancies.
Cash machine business model
How quickly a company converts cash to good and services and then again into cash. This model is used by the companies who
rev: low-profit margin but survive in the market with a disruptive position.
Example: Amazon generates a massive amount of cash from its online store before it pays to its suppliers. Another way to look is that Amazon runs its supply chain on vendor credit.
Freemium
A mix of free and paid services, the freemium model is mostly used by tech companies in the Software as a Service (SaaS) or apps business model. To grow business and acquire customers, companies offer free (lite) versions to customers but for a limited time or with limited features. To unlock the upgraded features, the customer has to opt for paid services.
Example: Spotify
Subscription biz model
get services by paying a fixed amount every month or year. In this case, the company has to provide enough value to its customer, so they visit the website over and over again.
Example: netflix
Peer-to-peer
middleman between two individual parties and create value for both demand and supply side. It’s different than a typical relationship of a business selling its services to consumers (B2B or B2C). It makes money through commissions.
example: airbnb
one-for-one model
social entrepreneurship business model. It’s a hybrid solution, a combination of both profit and not-for-profit services
example: toms
hidden revenue
users don’t have to pay for the services offered, but the company still earns revenue streams from other sources
example: google, fb
razor and blade model
printer & cartridge
one item (Razor) is sold at a low price while another associated item (blade) is sold at a premium price. It is also known as a printer and cartridge business model
rev: premium, one-time fee to buy this; smaller fee to keep up the purchase
example: quip
Reverse Razor and Blade business model
one-time offer for the premium product and acquires more revenue from secondary items in the long term.
example: apple (iphone)
Direct sales
products are directly sold to the end customers either in a one-on-one conversation or small gathering, remember Tupperware house parties?
rev: the salesperson gets a share of every sale.
example: avon
affiliate marketing
make money by featuring, reviewing, and recommending other company’s products or services. Think about product review websites.
rev: These websites are paid based on sales opportunities that they bring to their vendor companies
consulting
charge on the hourly basis and/or they take a percentage share based on the successful completion of the project (cost reduction project)
ex: IDEO
agency-based
project-based business model, where an outside firm is hired to complete a specific task. Traditionally, businesses that lack internal expertise hire agencies to get a customizable solution for their needs.
niche agencies are digital marketing, design & architecture, survey, promotion, media, public relationship, branding, website development, social media, etc
ex: Leo Burnett Company (United Airlines, McDonald’s, Kellogg’s are some of their notable clients)
user-generated content
generate quality content on websites for free to answer other users’ questions and provide reviews
rev: User-generated content is compiled and sold to companies seeking to exploit consumers’ ideas and content to promote their brands.
