It is obvious that running any business well entails the selection of a strategy. What do you need to know to make a decision? Let’s figure out what
So, what exactly is a business model and what types exist?
Let’s find out!
What is a business model?
A business model is a strategy for the effective running of a business, identifying revenue sources, customer base, and types of products.
Most common types of business models
1.B2B (Business-to-Business) When a company offers its goods or services to other companies or organizations.
There are a few stages in a customary business. Above all else, a product is made in an organization, and after they offer its product to the distributor. Presently the following distributor offers those products to the retailers. This business-to-business kind of online business framework is exchanging between a producer, distributor, and retailer. All are doing their different organizations.
Example: IndiaMart, Alibaba, Sulekha, CRM systems, Salesforce
2. B2C (Business-to-consumer) When a company provides products/services to individual customers. B2C websites remove the need for middlemen and thus reduce the cost of the goods for the ultimate consumers and increase the competitive ability of the goods. Consumers find it profitable to receive goods without the middleman’s markup, and they will be more interested in purchasing products with the help of a B2C website.
Examples: Amazon, Facebook, Twitter, McDonalds
3. C2B (Consumer-to-Business)
A consumer to business model here a consumer sells goods to a company (mostly used goods). This type of site is the least widespread among the types of sites for business under consideration. C2B websites allow the consumers to set prices for the goods they want to purchase themselves.
Example: An American company Priceline is a typical example of C2B. Thus, the company is more like a broker, which searches for firms that are ready to sell goods or services for the bid (by the customer) prices.
4. C2C (Consumer-to-Consumer)
When a business acts as a matchmaker between sellers and buyers via a platform, earning money by taking a commission from each transaction. Consumer to consumer model. It is also called peer-to-peer. Here one individual provides service to other individuals. This type of site is suitable for the companies which act as mediators between the clients and sellers. C2C websites provide private individuals with an opportunity to sell or purchase goods directly.
Example: eBay, OLX, Craigslist
When a business makes a non-profit contribution to each sale of its products or services.
Example: TOMS Shoes’ business model is called one-for-one. It means that for each pair of shoes sold, the company gives one pair back to kids in developing countries. The one-for-one model allows the company to monetize through consumers’ word of mouth and social campaigns, with a minimum effort in terms of sales and marketing.
When a company provides a free product or service to customers but charges money for extra features. (Free+premium=Freemium). It is a popular tactic for companies just starting out as they try to lure users to their software or service.
Example: Spotify, Dropbox, Hinge, Slack, Asana
In addition to the business models mentioned above, there are many others. While these are most commonly used by companies today, you need to choose which one suits your business better.