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BL Module 4 Business Models

The document discusses different business models including franchising, multi-sided platforms, cash machines, freemium, subscriptions, peer-to-peer, one-for-one, hidden revenue, razor and blade, and reverse razor and blade models. It provides descriptions and examples for each business model type.

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2020aisarevalopaolokit
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26 views13 pages

BL Module 4 Business Models

The document discusses different business models including franchising, multi-sided platforms, cash machines, freemium, subscriptions, peer-to-peer, one-for-one, hidden revenue, razor and blade, and reverse razor and blade models. It provides descriptions and examples for each business model type.

Uploaded by

2020aisarevalopaolokit
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Business

Models
Module 4
Business
Models
Franchising
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.
Multi-sided platform
Any company that offers services
to both sides of business carries
out a multi-sided business model.

The perfect example is 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
Also known as the cash conversion
cycle (CCC).

It basically means how quickly a


company converts cash to good and
services and then again into cash.

This model is used by the companies


who make low-profit margin but
survive in the market with
a disruptive position.
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.
Subscription
• This model allows the customer to 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.

• It allows companies to segment the


market and offer a specific number of
items in its content under different
plans and prices known as tiered
offerings.
Peer-to-peer
As per this model, a company acts as a
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.


One-for-one
The one-for-one business model can be referred
to as a social entrepreneurship business model.
It’s a hybrid solution, a combination of both profit
and not-for-profit services.

Although there are some debates about its long-


term sustainability, many companies are pivoting
their business models to cater to socially
conscious millennials.

The best example is TOMS Shoes that provides


shoes to underprivileged children globally for
every pair of shoes sold.
Hidden revenue
This model refers to a revenue
generation system in which users
don’t have to pay for the services
offered, but the company still earns
revenue streams from other sources.

Like, Google earns from advertising


money spent by businesses to bid on
keywords while users don’t pay for
the search engine.
Razor and blade
In this model, 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.

For example, the price of inkjet printer itself was


just a one-time expense, however, getting a new
ink cartridge replaced is an ongoing expense for
consumers.

The model is great if you have a loyal customer


base and if you can create some sort of lock-in
situation with customers.
Reverse Razor and
Blade
• The business model is contrary to the razor blade
model. It implies offering low priced products to
encourage customers to buy high priced items as
well.

• This business model uses the strategy with a one-


time offer for the premium product and acquires
more revenue from secondary items in the long
term.

• Example: Apple employs this business model


perfectly. Apple’s App Store and iTunes sell apps,
movies, songs, etc. at reasonable rates but
charges premium prices on its devices like iPhone,
iPad, and Mac.
Thank you very
much.

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