Business Model Types Database | Description | Example |
Ad-Supported | In the ad-supported model the basic, entry service is offered for free and subsidized by advertising served to free accounts. An example is Spotify, which is a mixture of ad-supported and premium. The ad-supported model is used as a self-sustaining model. At the same time, free accounts are also prompted to convert to premium accounts. Therefore, in this specific case, the ad-supported model works both as a self-sustaining and freemium model. | Spotify |
Affiliate | In the affiliate model, the company can generate revenues by referring to other services and products, thus gaining a commission on each sale. At the same time, the affiliation program can be used as a growth engine for the company that enables affiliates to send referral traffic to the platform. Amazon has been among the tech companies that most have enjoyed initial traction thanks to affiliations. | Amazon |
Aggregator | In this business model, the aggregator becomes the middleman by removing all the other middlemen from the market. To understand more about this model and how it differentiates from platform business models, read the guide on the aggregator business model. | |
Agency-based | In short, Neil Patel Digital is the SEO and digital marketing agency that allows Neil Patel to monetize its traffic primarily by offering free content and free marketing tools. This is a mixture of a freemium business model, combined with an agency-based business model. | neilpatel.com |
Asymmetric | In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. | Google, Facebook |
Attention-Merchant | The attention-merchant main product is represented by the eyeballs of millions if not billions of users. Usually, the attention-merchant makes its core product free, and as open as possible, then it monetizes it through targeted advertising. | Google, Facebook |
Barbell | In this model, a company uses a barbell approach to product and distribution. You have a core product and business where most resources are spent and the whole organization structured around. On the other end, you place bets on new products that might renew your business model and make the old irrelevant. | Alphabet Other Bets |
Bidding Multi-Brand | A perfect example is a company like Grubhub, an online and mobile platform for restaurant pick-up and delivery orders. The company charges restaurants a pre-order commission and it generates revenues when diners place an order on its platform. | GrubHub |
Blitzsacler | Amazon e-commerce consumer platform (here we’re not referring to Amazon AWS). Amazon’s continuous, massive, investment in growth to dominate multiple markets is a perfect example of a business model with built-in growth. This is the combination of several elements (platform’s network effects + branding power + scalable financial model). | Amazon e-commerce |
Bundler | In bundling, a strong distribution power combines several products in a single offer to extract more from the market. For decades Microsoft has been able to bundle several products under the same umbrella (Office has been coupled from time to time to several other products) so the company extracts more from the market if it were selling a single product. | Microsoft |
Blockchain-Based | A blockchain is a distributed ledger that relies on cryptography to handle transactions, interactions, or anything that implies an exchange between people, which is decentralized and anonymous. Companies like Steemit have built a business model around enabling user-generated content by using a blockchain protocol. | Steemit |
Chain-Mixed To Franchise | This model is used to scale restaurants or food businesses while keeping a tighter grasp on the brand. The company keeps a higher percentage of chain restaurants primarily to control the customer experience, to research new products, and also develop operational efficiencies that can be passed along to franchised restaurants as best practices. Starbucks is a mix of operated vs. licensed stores. If we look at the revenue generation, company-operated stores make up 79% of the company’s revenues in 2017. | Starbucks |
Cash Conversion (Financial Model) | Have ever wondered how some businesses survive, nonetheless the thin margin they have? One great example is Amazon. A company that has made low-profit margins for most of its history and yet it has been very disruptive. In reality, Amazon can get its partners to finance the business by playing on the short-term liquidity of the business, what is called a cash conversion cycle. This unlocks short-term liquidity that coupled with massive investment back in the business made of Amazon an ever-expanding company (see also Blizscaler-Mode) | Amazon |
Discount-High-Quality | Leveraging on the price to gain a competitive advantage isn’t new. However, price wars are not the best way to create a sustainable business model. Instead, the supermarket chain – ALDI – has done just the opposite. One of the critical ingredients of the ALDI business model is to keep its prices low while maintaining its quality as high as possible. | ALDI |
Distribution-Based | A distribution-based business model is one in which a company’s survival depends on its ability to have one or a few key distribution channels to connect to its final user or customer. Most successful companies tie their business models with a core distribution channel, which becomes the so-called cash cow, for years if not decades. | Amazon, Apple, Google, Facebook, Microsoft and counting |
Direct-To-Consumer | A direct-to-consumer business model is primarily based on direct access from a brand or company to its final customers. Indeed, the more a company is able to tap into its customers without the need of an intermediary, the more this model will work in favor of the brand, which is able to control the perception of its customers via massive marketing campaigns. While this is similar to the distribution-based model. The direct-to-consumer is mostly B2C (targeting mass markets). Where instead the distribution-based can be also B2B or enterprise. | Unilever |
Direct Sales | In a direct sales model, the whole company is organized around a complex salesforce able to understand the motivations that drive customers to buy. This salesforce is also able to manage complex relationships which can involve entire departments of an organization, thus generating from simple to more complex deals. Thus, direct sales can be a powerful way to develop a business if done correctly. One of the secrets to a successful direct sales strategy is the qualification of your target audience. | Apple (in part), Tesla |
E-Commerce | As building up a website and e-commerce has become inexpensive, and it buries no particular cost for the traditional brick-and-mortar business, more and more small businesses join in and make the marketplace their primary source of revenues following Amazon leadership at a global scale. In fact, in many cases, brick-and-mortar stores opt to become Amazon sellers. The e-commerce industry now has other key players that go from Shopify to Etsy. And many other tech players are entering the space. Also, Google has its Google Shopping and Facebook has Facebook Shops (a branded integration with Shopify). | Amazon, Shopify, Etsy, Google Shopping, Facebook Shops |
Educational-Based | Built by one of the smartest persons on earth (Stephen Wolfram), Wolfram Alpha is a computational engine, able to provide complex mathematical questions and way more advanced (at least until a few years ago) compared to any other search engine. | WolframAlpha |
Family-Owned | The family-owned integrated model starts from the assumption that even if you’ve built a multi-billion dollar company you can control it in its entirety, while you also keep an agile decision-making process based on an ownership structure that keeps the control of the organization in the hands of the family. | Prada, LVMH |
Feeding | As platforms arise, they create ecosystems, becoming unexplored markets. Those markets can be surfed by feeding your business model on top of that. A good example is how HyreCar feeds its business model on top of Lyft and Uber networks of drivers. | HyreCar |
Freemium | Free can be a powerful weapon for growth. Many in the tech industry and more specifically in the SaaS business model use Freemium to grow their business. The freemium is a mix of free and paid services. | |
Feeterprise | As consumer brands showed the freemium model could be both a great go-to-market strategy and generate a continuous flow of qualified leads (however, only after the whole organization would be organized around identifying those opportunities), other B2B/Enterprise companies (those primarily selling to other companies or larger corporations) also mastered the freemium model but on a B2B/enterprise scale. | Zoom, Slack |
Gatekeeper | In the gatekeeper model, the dominant company has become the main middleman between the market and millions if not billions of potential customers. In the previous era, many middlemen captured value and retained distribution power, by fragmenting the market. The gatekeeper then becomes the provider, enabler, and also the pipe for millions of small businesses. | Amazon, Google, Facebook, Spotify |
Heavy-Franchised | McDonald’s follows what could be defined as a “heavy franchised business model.” 92% of its restaurants are franchised. With a long-term objective to reach 95% of franchised restaurants. | McDonald’s |
Humanist Enterprise | The most prominent advocate for the humanist enterprise business model is Brunello Cucinelli. Indeed, Brunello Cucinelli’s business model is based on three key pillars: 1. Italian Craftsmanship, 2. Sustainable Growth, 3. Exclusive Positioning and Distribution. | Brunello Cucinelli |
Enterprise | In an enterprise business model, a company focuses on large clients, usually Fortune 500 clients that have a massive budget of millions or billions of dollars. This kind of business is primarily based on complex sales. | SalesForce |
Instant News | Twitter has based its fortune on short messages (until 2017 140 characters, then extended to 280) which allows anyone to share the news but also updates that become news. | Twitter, Google News |
Locked-In | Apple is famous in the business world (beyond launching beautifully crafted tech products) for its philosophy in keeping its ecosystem as enclosed as possible. Apple devices will talk to each other in a seamless way, to create a great experience. | Apple |
Management-Consulting | As one of the most successful consulting companies in the world, Accenture makes money by selling consulting services in several industries (from financial services to communication and technology). A consulting business model is often based on hiring talented people and having them work on multiple client projects. | Accenture |
Market-Maker | Some platforms create liquidity by removing hundreds of intermediaries that are used to lock in the market. When that happens the market gets bigger and more liquid over time. That enables the platform to work as the market maker, or the maker of the price, by making it liquid. | Uber |
Multi-Brand | Luxury groups like LVMH and Kering today follow a multi-brand strategy based on creating economies of scale at a central level; while keeping the Maison and Houses part of the portfolio operated and run independently. | LVMH, Kering |
Multi-Business Model | The core of Amazon has always been the e-commerce platform, however over the years, as a side effect of developing adjacent parts of the business, to sustain its core. Amazon built successful programs (Prime and AWS are examples) that turned into self-standing businesses. | Amazon (E-commerce, AWS, Prime) |
Multi-Sided Platform | On a multi-sided platform, the company operates services to both sides. For instance, LinkedIn sells subscription services to HR managers to find candidates to fill vacancies. At the same time, LinkedIn provides another subscription service to people looking for job opportunities. | LinkedIn |
Multimodal | Lyft is a transportation-as-a-service on-demand marketplace that allows riders to quickly find a driver and get from one place to another. However, Lyft has also expanded with a multimodal platform that gives more options like bike-sharing or electric scooters. | Lyft |
Multi-Product | In its expansion strategy, OYO started from India, yet it quickly moved to different verticals. From there it built up a portfolio of products, each launched in parallel to its expansion strategy, to cover larger geographical areas, but also different segments of the market. | OYO |
On-Demand | We now give for granted that we must watch our favorite shows and series on-demand. Yet, for decades the traditional media business model has relied on fixed schedules. You either watched the Late Show at the time it was going on air, or you were supposed to wait for the next replica of that episode. | Netflix |
One-For-One | Have you ever heard of TOMS Shoes? As you can understand from the name, this is a company making shoes. What’s new about it? The founder of TOMS Shoes founder has come up with a model, in which, for a pair of shoes sold, another pair is given to kids around the world that cannot afford them. | TOMS |
Open-Source | Where in a freemium and freeterprise the free product is built, developed, and maintained by the company centrally. On an open-source model, the free product is built, developed, and in part maintained by an open community of developers. | GitHub, Fastly, GitLab |
Peer-To-Peer | A peer-to-peer business model is built on the premise of creating value for both the demand and offer side, while the company that acts as a middleman monetizes through commissions. | Airbnb |
Platform | A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success. | |
Platform-Agnostic | Grammarly’s CEO explained to TechCrunch as one of the key advantages of Grammarly is its “platform-agnostic approach.” In short, Grammarly focuses on being anywhere the user needs to be. Grammarly instead is trying to be anywhere, independently from the platform, thus making the user free to choose the platform. | Grammarly |
Privacy-As-Business-Model | With the rise of the web and the rise of companies that make money by harvesting users’ data, privacy has become a concern. As many businesses start from people’s concerns, privacy has become an industry. | DuckDuckGo |
Razor-And-Blade | Companies like Apple, for instance, use an inverse razor and blade, business model. Apple has created platforms like the App Store and iTunes, which sell apps and songs, movies, or tv series at a convenient price. While Apple charges premium prices on its devices (iPhone, iPad, and Mac). | Gillette |
Self-Serving | A self-serving model is a freemium-based model able to convert quickly and with low-cost free users in paid accounts. Dropbox’s business model is a great example of acquiring new users efficiently and built-in prompts in the products instead make it possible to convert, with low-touch and automated funnels users in premium accounts. | DropBox |
Space-As-A-Service | While the main carrier of this model (WeWork) had massive backlashes due to its unsustainable business model. The question of whether this model will be possible in the future still holds. | WeWork |
Subscription-Based | In a subscription-based model, the company needs to build a continuous relationship with its users/members/customers, and in turn, the customer commits a subscription to sustain the business in the long-term | NYTimes/Netflix |
Surfer-Model | Small businesses then will need to master how the gatekeeper works and aligns with its business model to reach potential customers. This is at the core of the surfer model, where the small or medium business builds a strong brand by complementing the gatekeeper’s value proposition. | SMBs |
Three-Sided-Marketplace | Uber Eats is a great example of a three-sided marketplace, where the company facilitates interactions between eaters, delivery partners, and restaurants to develop a solid marketplace. | Uber Eats |
User-Generated | There are a few interesting aspects of Quora. First, it uses a mixture of AI combined with human intelligence. Quora allows users to write content while using advanced algorithms to make the platform scale up. Second, people writing on Quora do not get paid. | Facebook, Quora, Reddit |
User-Generates-AI-Amplified | For many, TikTok is just the next generation of social media. However, there is more to it. TikTok is a continuous feed that shows short video formats, where users engage in all sorts of dances, memes, and more (for now). | TikTok, Instagram, Facebook |
Unbundler | Unbundling is the process of breaking the value chain to take over the most valuable part of it, without owning or bearing the total cost of ownership of maintaining it. In phenomena like showrooming, the customer browses the physical shop, yet it buys from the online retailer, which has more competitive pricing. | Amazon |
Vertically-Integrated | Yet now that is the most successful company in the optical industry. Instead of being acquired by a large American company, the Italian-based Luxottica was the one acquiring brands like Oakey (the California-based eyewear company). | Luxottica |