3 Practical Examples of Business Model
The business model helps us understand how a company operates, what its value proposition is, how it relates to its customers, who its partners are, what its costs or sources of revenue are. When a company fails in the first few years of start-up, it is often due to the inadequacy of its business model.
In this article, we propose to demonstrate 3 examples of a proven successful business model. We have divided this business model into a 9-point structure, as you can see in the image below.
If you have a business idea and it has the potential to become a startup, we also advise you to discover the Lean Canvas Model. This model, which you can find out here, was specifically created to test and evaluate the potential of a startup.
1# The business model of a SaaS company
A SaaS (Software as a Service) company provides access, support, and maintenance services for a specific software over the internet.
Among examples of this type of companies is Adobe, known for its design and editing software, such as Adobe Photoshop or Adobe Premiere. A customer who hires Adobe’s services knows that they don’t need to worry about anything else regarding Adobe’s software. All bug fixes, updates to new versions and support will always be provided by Adobe.
So, what is the business model of a company like Adobe? See right away.
– Key partnerships: providers of essential infrastructure for the provision of a SaaS, such as cloud services and cloud computing.
– Key activities: development and maintenance of software platforms; sales and support.
– Key resources: Technical team and source code.
– Value propositions: access to specific and essential software for carrying out a certain activity (in the case of Adobe, design), guaranteeing all support, maintenance, and updates.
– Relationship: self-service and dedicated support; presence at conferences and trade fairs.
– Channels: website, app stores, API (to connect to other platforms) and sales force.
– Customer segment: companies
– Cost structure: platform development and maintenance; partner infrastructure; team and sales.
– Revenue source: monthly or annual subscription.
2# The Business Model of an All You Can Eat Company (AYCE)
No, we are not talking about a restaurant business model. An AYCE company is a company that provides a product or service where the customer can consume whatever he wants for a subscription fee. Two well-known examples are Netflix and Spotify.
Below we explain the business model of an AYCE company:
– Key partnerships: studios and content producers.
– Key activities: negotiation and availability of new content on its platform.
– Key resources: digital platform, an extremely large and diverse number of contents and team.
– Value propositions: consume as much content as you want, when and where you want.
– Relationship: self-service.
– Channels: app, website, and presence on hardware partner channels, such as Smart TVs or consoles.
– Customer segment: mass market.
– Cost structure: platform maintenance and copyright.
– Revenue source: monthly subscription.
3# The Business Model based on Collaborative Economy
To better define a company that works on collaborative economy principles, we start by giving real examples of these companies. Airbnb and Uber are two examples of collaborative economy companies.
What does this mean? These companies are platforms that aggregate a specific service from an individual to another individual. In the case of Airbnb, the company makes available to a tourist the house or room of a local inhabitant. In the case of Uber, especially in its initial phase, the platform allowed an individual to work as a taxi driver and provide this service to any customer who used the Uber app.
Below we will analyze the basic Business Model of a collaborative economy company.
– Key partnerships: individuals providing services/products (e.g., Airbnb hosts or Uber drivers).
– Key activities: making a product or service available on a platform in a simple way and at more attractive prices than the common market.
– Key resources: digital platform, technical team, service providers.
– Value propositions: providing an unused service or product and selling it to someone who needs it, e.g., in the case of Airbnb, the value proposition is very simple: there are many travelers and many empty houses that can host these travelers.
– Relationship: self-service.
– Channels: app and website.
– Customer segment: tourist destinations and metropolises.
– Cost structure: platform maintenance.
– Source of revenue: commissions levied on service/product providers:
