How to choose the right business model

An overview of the different revenue model options, business model types, and drivers why people pay.
Boardofinnovation-choose-the-right-buisness-model

Who is this guide for?

This playbook provides tips and tricks relevant to those who are looking for monetization options by focussing on different business model types. 

 

In this +100 slides deck, we’ve gathered 5 categories of business models ranging from free-, over paid-, mixed- and broker-models to third-party models.  

Each category comes to life with our real business examples. 

5 examples from this guide.

1. FreE - for the user. 

One of the most powerful techniques available for customer acquisition is giving away a free product or service. You can see the success of this with companies like Google and Facebook. 

The trick of doing free business models right is to ensure that the product/service you freely give away is of very high value to the customer, which should result in both high customer satisfaction and a likelihood that they’ll tell others about you, leading to viral effects. The usual temptation is to stop short of this and take out the valuable features that would make the product interesting and valuable. This brings us to the second category.

2. Paid - The user = client. 

The key driver here are the reasons why people upgrade from a free alternative to a paid one. Often the basic offer is free, but customers are ‘prepared’ to pay for extra features or get stuck in a ‘lock-in’. Just think of the hassle you have to go through when you want to change to a competitor.

The client is the user when he/she has to pay

3. THIRD PARTY - PAYS THE BILLS. 

In an ad-based model usually, a third party pays the bills and the user becomes the product. The ad-business flow of ‘(1) offer content, (2) control eyeballs, (3) steer attention to ads, (4) profit’ is straight-forward and in fact very hard. 

Third party pays the bills

4. Broker - matchmaking. 

A broker/matchmaking business model can be a mix of the three aforementioned models. It’s often a multi-party arrangement where a firm identifies two (or more) different customer groups and brings them together on its digital or physical marketplace. 

Many dating platforms are based on this model. In some models women even get paid to date – a bit controversial of course -. Other platforms on their turn experiment with other rewards than money.

broker/matchmaking as revenue model

5. Mixed model - subsidized.

Mixed models can take on many forms, just think of Ryanair-like no-frills models, open source models with paid consulting support or models where users pay for recurring upgrades/consumables. 

How to choose the right business model

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