Module 6 - Lesson 1

ENTREPRENEURSHIP
Learning Objectives
After going through this module, you are
expected to:
define the business identify the different kinds

01 02
model of business model
03 explain the importance of 04 design a business model

designing a business that is suited for an
model in a business entrepreneurial venture
plan
LARANA COMPANY
Business Model
The term business model refers to
a company's plan for making a
profit. It identifies the products or
services the business plans to
sell, its identified target market,
and any anticipated expenses.
Business models are important for
both new and established
businesses.
The Business Mododel
The business model describes how the
business will generate revenue and
support financial projections. It will greatly
help in describing the importance of the
business in gaining profit and sales. It is a
description of the means and methods a
firm employs to earn the revenue
projected in its plans. It views the
business as a system and answers the
question, “How are we going to make
money to survive and grow?”
Subscription Business
Model
In the subscription business
model, customers pay a fixed
amount of money on fixed time
intervals to get access to the
product or service provided by the
company. The major problem is
user conversion; how to
convert the users into paid users.
Freemium
Business Model
“Freemium” means “Free” and “Premium”
service. It offers two types of services to
the customers, ‘free service’ and ‘paid
service’. The free service users have
limited access to the basic features
whereas the premium services are
unlocked when the person buys the paid
service.
Open Source Business
Model
Open source business model
provides a service/product offered
for free and a business/enterprise
version that is paid. In the
freemium and business model, the
free product is built, developed,
and maintained by the company
centrally.
Consulting
Business Model
Unlike traditional businesses that have a clearly
defined product or tool to sell, a consulting or
agency business model provides a specific set of
services for a fee. While this business model can
be applied to almost any industry, the main
drawback of consulting business models is that
you should have expertise and authority around
your brand.
Distributor Business
Model
A distribution-based business
model focuses on a company’s
ability to have one or a few key
distribution channels to connect to
its final user or customer.
Aggregator
Business Model
An aggregator business model involves an
aggregator that might act as a middleman. In
an aggregator model, it’s the aggregator that
keeps interacting with the two or more parties
involved.
Conceptual Business
Model
A conceptual business model is a
diagram that demonstrates to us
how an industry or business
functions. It shows an essential
element in the business and tells
how those elements relate to
each other.
Razor and
Blade Business
Model
In the razor and blade model, the basic product (hook) is offered
cheaply or free while the complementary product or refill (bait) is
sold expensively. We cannot use the basic product without a
corresponding product. It is easy to attract customers with the
“bait” product because it seems to them like they are getting a
bargain. This model is one of the Small business strategy
examples.
SaaS Business Model
SaaS or Software as a Service business
model is a centrally-hosted software that is
hosted on a cloud infrastructure.
Customers pay a subscription fee to utilize
the software.
Zendesk is a customer service ticketing

system famous for its usability by small,
medium, and even large businesses. It
provides a better customer service
experience.
Direct Sales
Business Model
When it comes to the small business model, the direct sales
business model involves selling a product directly to the targeted
customer. Chubbies adopted a direct sales
Advertising Business
Model
The advertising model works by providing
a free product or service that people want
to consume. Later, it displays ads to those
readers or viewers. Youtube is following
the ad-based business model.
Affiliate
Marketing
Business Model
An affiliate business model allows a firm to sell the products of
other companies on its website. Like this company named
Khojdeal is selling bluestone products with the help of discount
coupons or the famous Amazon Affiliate Program follows the
affiliate marketing business model.
Peer-to-Peer Business
Model
A P2P business is a platform between
consumers and individual service
providers. It provides revenue by taking a
percentage of all sales made through its
platform. Airbnb follows a peer-to-peer
business model by charging guests a
service fee between 5% and 15% of the
reservation, while the commission
from hosts is generally 3%.
Franchise
Business Model
A franchise exists when a parent corporation creates
a unique product, a strong brand, and a replicable
business model. Later, it sells it to others to own and
operate independently. Starbucks is a retail company
that sells coffee-related beverages.
Amazon Business Model
The Amazon model includes online stores

(which account for 52% of Amazon
revenues), as well as physical store
locations. It also includes AWS services
like site hosting, subscription services,
third-party sellers, and advertising
revenue.
Ecommerce
Business Model
The eCommerce model focuses on selling products by
creating a web store on the internet (online shop).
Amazon, Alibaba, eBay, olx, and Walmart are some of
the big companies that have adopted an ecommerce
business model.
On-Demand Business
Model
The on-demand business model is based
on the “Access is better than ownership
rule”. The products & services are easily
accessible to the customer in less time.
On-demand laundry & dry cleaning service
of uber is evolving & has radically mixed
well.
Uber Business
Model
Uber runs according to a ‘two-sided’ marketplace
business model. The company acts as the middleman
or broker between the drivers and those who need a
ride. The company earns profits from each
transaction, taking a percentage from gross
booking.
Business models are helpful for analysis to
understand how businesses work. Though
they have found customers, the model fails
because of a lack of resources. According to
Bill Gross, the founder of Idealab, “timing is
the most important factor”
The success of a business model depends
on the timing, context, and market
conditions. Successful and profitable
business models generally have substantial
brand equity with a strong distribution
THANK
YOU

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ENTREPRENEURSHIP

define the business identify the different kinds

03 explain the importance of 04 design a business model

Zendesk is a customer service ticketing

The Amazon model includes online stores

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