What The Best Business Models For A Service Business

Last updated: Jan 30, 2021

Are you looking for ideas to unlock your long-term business value? If you lot shook your head in yes, call up that business model is 1 of the ways to streamline your business procedure.

Precisely, a business model is a holistic framework to define, understand, and design your entire business in the industry. Often novice entrepreneurs do not understand the significance of the business models.

Check out 50 unlike types of business organisation models, forth with examples of companies for ameliorate insight. Try to adopt these business models in your startup.

1. Franchise model

Best for the company'south expansion, franchising allows the franchisor to license its resources, brand name. Intellectual holding and rights for a franchise to sell its products and services in exchange for a royalty.

McDonalds'due south is the best case, which has 93% of its franchised restaurants worldwide.

McDonald's is the leader in the global foodservice. It operates 36,059 franchised restaurants out of a full of 38,695 restaurants worldwide.
Its franchise restaurants have increased year-on-year for the final 13 years.

Case: Subway, McDonald's , Gold's Gym

2. Multi-sided platform model

Any company that offers services to both sides of business organisation carries out a multi-sided business model. The perfect example is LinkedIn, which provides subscription services to people to find job opportunities likewise every bit to HR managers to find candidates for their vacancies.

Instance: LinkedIn , Freelancer.com

three. Cash machine concern model

Also known as the greenbacks conversion cycle (CCC). It basically ways how apace a company converts greenbacks to good and services and and then once again into cash. This model is used by the companies who make low-profit margin but survive in the market place with a disruptive position. Like, Amazon generates a massive amount of cash from its online store earlier it pays to its suppliers. Another way to await is that Amazon runs its supply chain on vendor credit.

Cash Conversion Wheel: Greenbacks ==> Product & Services ==> Cash

Example: Amazon, Alibaba, Apple tree

Pro tip: This type of business organisation model is almost suitable for inventory type of businesses.

iv. Freemium business model

A mix of free and paid services, the freemium model is generally used by tech companies in the Software as a Service (SaaS) or apps business model. To grow business and larn customers, companies offer complimentary (lite) versions to customers simply for a express time or with limited features. To unlock the upgraded features, the customer has to opt for paid services.

Examples: Zoom, Dropbox, MailChimp, Evernote etc.

Pro tip: It's an excellent fashion to encourage customers to try the software or application.

v. Subscription concern model

This model allows the customer to go services by paying a fixed amount every calendar month or twelvemonth. In this example, the company has to provide enough value to its customer, and then they visit the website over and over again.

It allows companies to segment the market and offering a specific number of items in its content under different plans and prices known as tiered offerings.

For example, Netflix offers monthly subscriptions under the Basic plan for $8.99/month, Standard program for $12.99/month, and Premium plan for $15.99/month.

Examples: Netflix, LinkedIn, Amazon Prime, Dollar Shave Club, are few of its examples.

Pro Tip: This model is useful for content or service-based websites.

6. Peer-to-peer business model

As per this model, a company acts equally a middleman between 2 individual parties and create value for both demand and supply side. Information technology'southward different than a typical human relationship of a business selling its services to consumers (B2B or B2C). It makes coin through commissions. Airbnb is the right instance that allows transactions between hosts and hostees.

Instance: Airbnb, Uber, eBay , Offerup, Freelancer.com,

7. One-for-one business model

The i-for-one business organisation model can be referred to every bit a social entrepreneurship business model. It's a hybrid solution, a combination of both profit and not-for-profit services. Although at that place are some debates near 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.

Examples: TOMS Shoes, Warby Parker (donated eyeglasses), 2-caste Food, Soapbox Soaps.

This model refers to a acquirement generation organization in which users don't have to pay for the services offered, but the company nevertheless earns revenue streams from other sources. Like, Google earns from advertising money spent past businesses to bid on keywords while users don't pay for the search engine.

Examples: Google, Facebook, Instagram, Twitter

9. Razor and blade business concern model

In this model, one detail (Razor) is sold at a low toll while another associated item (blade) is sold at a premium toll. It is also known as a printer and cartridge business concern model. For case, the toll of inkjet printer itself was just a i-time expense, withal, getting a new ink cartridge replaced is an ongoing expense for consumers. The model is not bad if you accept a loyal customer base and if you tin can create some sort of lock-in situation with customers.

Example: Xbox or PlayStation Video Games, HP Printers, Nespresso coffee machines, AT&T Mobile phones with ii-twelvemonth contract.

Pro tip: Employ this model, if at that place is a need for recurring auction of an associated detail, which can generate a continuous flow of acquirement.

ten. Reverse Razor and Bract business concern model

The business model is reverse to the razor bract model. It implies offering depression priced products to encourage customers to buy high priced items likewise.

This business organization model uses the strategy with a one-time offer for the premium product and acquires more than acquirement from secondary items in the long term.

Case: Apple tree employs this business model perfectly. Apple tree's App Store and iTunes sell apps, movies, songs, etc. at reasonable rates but charges premium prices on its devices similar iPhone, iPad, and Mac.

11. Directly sales business concern model

In this model, products are direct sold to the stop customers either in a one-on-one conversation or small gathering, call up Tupperware house parties? The salesperson gets a share of every sale. Although technology has superseded the direct sales method in many ways, still many companies prefer to give a personal touch to its customers.

Examples: Tupperware, personal care & nutrition brands (Avon, Arbonne, and Herbalife)

12. Affiliate marketing business organization model

In this model, companies make money by featuring, reviewing, and recommending other company's products or services.  Call back nigh production review websites. These websites are paid based on sales opportunities that they bring to their vendor companies.

Examples: NerdWallet, Capterra, MoneySavingExpert.com, and thewirecutter.

13. Consulting business organisation model

Companies that provide consulting services past hiring experienced and qualified people and having them assigned on client's projects follow the consulting business model. These companies tend to charge on the hourly basis and/or they take a pct share based on the successful completion of the project (cost reduction project). Mckinsey and Boston Consulting Group are multi-billion-dollar businesses that are based on this model.

Examples: Deloitte , Mckinsey , BCG, software or website development firms

Pro tip: if yous are a subject affair expert (SME) in a field, and when the duration of the projection is uncertain (based on the change in client's requirements) and then consulting concern model is an excellent mode to accuse your clients.

xiv. Bureau-based business model

This is a project-based business model, where an outside firm is hired to complete a specific chore. Traditionally, businesses that lack internal expertise hire agencies to get a customizable solution for their needs. Remember Mad Men? Acclaimed Netflix series that focuses on advertising agency and their clients. Some niche agencies are digital marketing, design & architecture, survey, promotion, media, public human relationship, branding, website evolution, social media, etc.

Case: TBWA\Media Arts lab (Apple'due south go-to ad bureau), Leo Burnett Company (United Airlines, McDonald'due south, Kellogg's are some of their notable clients)

fifteen. User-generated content business organization model

Allowing users to generate quality content on websites for free to answer other users' questions and provide reviews, this business concern model is new yet fast-growing.

This model is driven by a wide range of digital commodities, from videos to reviews, pictures, blog posts, testimonials, and any other type of content created past users of a brand. And made accessible via social media.

User-generated content is compiled and sold to companies seeking to exploit consumers' ideas and content to promote their brands.

Examples: The meridian examples are YouTube, Quora, Yelp, Yahoo Answers, Reddit.

16. Online educational business model

Targeting the educational industry, including students and teachers, this business model allows them to get admission to educational resources via apartment form fees or subscription. It can be said every bit a combination of freemium, grade fees, and a subscription-based model.

Examples: Khan Academy, LinkedIn learning, Coursera, Udemy, edX, etc.

17. Instant news business model

This model focuses on sharing and updating news instantly without whatever intermediary.

Companies that use this model provide open up and reliable channels allowing trusted primary or secondary sources to communicate breaking news or urgent announcements directly to their audience.

In the past few years, some social media platforms have emerged as the get-to pick for instant news from principal sources like presidents, CEOs of companies, and and then on.

Case: Twitter is the best example. Users can admission the news in real-time by checking the trending hashtags.

18. Multi-brand business model

This model is based on marketing more than than two products, most similar even so competing with each other and come up nether a single organization but having different make names. Information technology is done to create economies of calibration and to build an empire.

Examples: Procter & Risk, Unilever, and Nestle are a few examples.

19. Due east-Commerce business model

A uncomplicated yet most promising business organisation model, e-commerce allows buyers and sellers to connect and transact using an online platform (online shop).

At that place are several types of east-commerce business organization models, including Business to Business (B2B), Business concern to Customer(B2C), Customer to Client (C2C), and Client to Business organisation (C2B).

Example: Amazon, Alibaba, eBay, OLX, Walmart, etc.

20. Distribution based concern model

A company that works by having one or a few central distribution channels to integrate with its last customers follows this model.

Companies that use this model provide channels for businesses to sell to customers via dealers, brokers, supermarkets, retailers, and so on.

Example: Unilever spends its major part of acquirement in maintaining a proper distribution.

21. Drop-shipping business model

A cost-effective as well equally an exciting concern model. In drop-aircraft, a concern owner contacts many different suppliers/ wholesalers to sell their product on the website. One time an lodge is placed on a business organisation possessor'south website, wholesaler drop-ships the products direct from the manufacturer to the customer. In this case, the business owner does non have to concur any an inventory and uses the third party to manage all the shipping and logistics needs.

Pro tip: Information technology'southward an excellent manner to commencement a niche e-commerce business website with a limited upfront cost.

Examples: Doba, Oberlo, Dropship Direct, and Wholesale 2B are few examples.

22. Enterprise business model

Targeting and focusing only the large clients, enterprise business organization model is all based on getting big deals. It is built on complex sales with a good few potential clients. Like the clients of Fortune 500 usually have multi-billion dollars upkeep.

Example: Boeing, Raytheon, SpaceX, Goldman Sachs is an example of Enterprise business organisation model because their sales motion is targeted towards very large business enterprise customers or governments .

This model is based on the fundamental that companies should brand profits without causing whatsoever damage to anyone, and a part of it should be spent in humanitarian works to improve human living conditions.

Example: Brunello Cucinelli is an Italian luxury brand that donates near 20% of its profits towards a social cause.

24. Straight-to-consumers business organization model

This model allows companies or brands to sell their products to last customers directly. Highly effective marketing campaigns and advertising activities are required to retain customers.

Example: Unilever is the all-time example while being i of the world's largest advertisers.

25. Family unit-owned business model

Any concern that is run by a family, and its decision-making processes are controlled by ii or more family members is a family unit-owned business.

The leadership of the company is passed to the heir, who will hand over the reins to their children.

Examples: Ford, Walmart, Estee Lauder, Prada, Comcast are few examples.

26. Blockchain-based business models

The near advanced, futuristic, and modern applied science of Blockchain has changed the entire mural of transactions, involving decentralized network organisation on a global scale.

Using a decentralized network enhances trust and allows consumers to transact peer-to-peer. Blockchain-based businesses make a profit using tokens and offering Blockchain as a service.

Many crypto-currencies like Bitcoin, Ethereum, and Litecoin use Blockchain engineering science-based business concern model.

27. Vertically integrated supply chain business model

This model is well-nigh owning and managing the supply chain activities (manufacture, distribution, and retail) for its products past the company itself. When a visitor has better command over how a product is produced and delivered to end users, it can provide products at lower prices (with better margin) to consumers.

On the contrary, for instance, if a company just manufactures a product, and uses a distribution and retail partner. Then at every step of the supply chain, the additional cost is added (markup) by the fourth dimension the product reaches the end customer.

Examples: Call back about companies having both factories and retail/online stores. Amazon, Tesla, Luxottica, Apple , Walmart, and other grocery stores.

28. Combination of chains and franchise business model

This model is just a mix of operated chains and licensed stores (franchising). Starbucks is the most famous instance that owns both company-operated stores and licensed stores.

In Starbucks' model, all 15,041 stores in the U.Due south. are company-endemic, and all international stores are franchised.

29. Data licensing business organization model

A business concern model of 'data' has gained a new significant in this modernistic globe, especially in the technology sector. Data is a critical component in web technology where companies require critical data to carry out operations and earn revenue.

Example: Twitter sells existent-time data to its partners, which is then used for advertizement and client insight.

30. Attention merchant business concern model

Attending merchants or influencer operate through advertizing model and make money by grabbing the attention of their target audience.

Apple CEO Tim Cook one time wrote, "When an online service is free, you are not the customer. Yous are the production."

Examples: Snapchat & Instagram allows brands to marketplace themselves through advertising on their platform.

From YouTube to Tik Tok and other social media platforms, yous can sentinel videos for free, simply you will be targeted past endless adverts.

31. Discount with high-quality business model

This kind of business concern model is usually practiced past supermarkets and departmental stores that get products in bulk and sell on the wholesale rate.

Examples: discounted products with high quality like ALDI, Tesco, Lidl, Ross Stores, and ASDA Stores.

32. Pyramid Scheme Business organization model

A pyramid scheme is a business model frequently considered illegal or controversial. The model functions on the sole principal of recruiting members by promising them a reward in the shape of payments or services if they agree to enroll others into the scheme, rather than supplying investments or sale of products.

As the recruiting circle grows with infinite speed, the actual recruitment becomes quickly impossible, which leaves member without whatever profit.

Example: Amway is a billion-dollar visitor which has used these pyramid schemes.

33. Nickel and Dime concern Model

This business model consists of the lowest cost strategy for the basic product or service. Past keeping the basic cost equally low every bit possible, an additional amount is charged for the other perks and services that are offered with the master basic service.

Example: Spirit and Frontier Airlines are a upkeep airline that charges the lowest possible price for the flight tickets and charges fee over boosted services like printed boarding pass fees, carry-on/ bank check-in baggage, seat preference, priority boarding, Wi-Fi, drink, repast/snack, phone booking fees, etc.

34. Aggregator Business Model

Aggregator Business Model is a network model which provides collective information virtually a item service and sell them nether their brand name.  Under this business model, most companies provide information and sources on a single industry.

Instance: Companies like Zillow and Oyo for Hotels, Uber for taxi service, Yodlee for fiscal service, all use Aggregator business model.

35. API licensing Business Model

API stands for application programming interface (API). It is basically a set of subroutine definitions, advice setups, and tools for developing software. API licensing concern model provides licensing protocols which allow developers' customs to create third-party plugin/add-on apps for well-known platforms. And developers pay a fee to get API access.

Case: Microsoft, Apple, LinkedIn, and Twitter, they all provide API license services.

36. Crowd Source Concern Model

Crowdsource business Model facilitates companies with access to operational solutions like ideas and technologies, upgraded consumer interaction, opportunities for co-collaboration, performance optimization, and reduced costs.

Example: Companies like Wikipedia, YouTube , Kickstarter, LEGO ideas, Unilever, Coca Cola (new flavor of beverage) are involved in crowdsourcing.

37. High Touch Business Model

In the high-impact business model, customers' interaction and interest are on the highest level to make the feel personalized. It is a phenomenon in which a client gets involved in a kind of partnership with the concern. High touch is needed for larger accounts because they pay more and are gluey.

Example: Buying a car at Motorcar dealership, house, enterprise SaaS requires multiple interactions with the salesperson.

38. Low Touch Business concern Model

Depression touch business model is, of course, the reverse of loftier touch business organisation model where the product or service is delivered by minimum customer interaction. Low touch is good for low toll software tools where acquiring customers is easier.

Example: Companies like Amazon, Zendesk, SurveyMonkey uses low touch on business organisation model.

39. Flex Pricing Business Model

Flexible pricing model operates through a concern strategy in the final toll of an detail is negotiable. In short, buyers and sellers can deal the price to suit their purpose the best.

Example: Letgo

40. Sale-Based Business Models

The model is based on the biding selection to purchase a product or service. The model is although non very common at present, it is nonetheless used for industries like antiques, existent estate, collectibles, and the sales of businesses.

The modern version of the auction model can be witnessed on online platforms merchandise's new and used items like eBay and Amazon

41. Contrary Auction Concern Model

This business model follows a strict pattern of setting the highest prices and allow the buyers bid accordingly until the prices kickoff to driblet.

A contrary sale is popularly used by businesses seeking suppliers. Eligible suppliers bid lower and lower at each subsequent round to entice the business organisation and win the contract.

Instance: Behest for regime contracts

42. Brokerage Business Model

Brokerage business model provides a single platform to buyers and sellers for communicating the deals. Information technology charges a fee for any transaction between the parties either from the heir-apparent or the seller depending on the featured category.

Case: Expedia, Century 21

43. Bundling Business Model

Bundling is a business concern strategy that combines products or services to offer a bundle gathered as a single combined unit of measurement to sell at a insufficiently low toll. Information technology is the form of convenient purchasing for several products and services from a single concern unit.

Example: Microsoft Office 365 (PowerPoint, Excel, Discussion, OneNote, Outlook) Value repast at Burger King or McDonald's, Printer and ink

Disintermediation Model removes the capacity of outsourcing or a 3rd-party intermediary. In fact, the organizations following this model bargain with the clients and customers directly via different channel like the internet.

Example: Dell, Tesla are skilful examples of companies which follows disintermediation model.

45. Fractionalization business model

Fractionalization model is selling a product or service for partial usage or separate parts. It'south a strategy which divides products and services into further subcategories to introduce diverseness in the products, charging for each category separately.

Example: You can sell a pizza by the box or individual slices of unlike varieties( cheese/ pepperoni)

Fractionalization business organisation model

46. Pay as Go (Utility) Business organisation Model

The business model charges as per the usage of the product or service.

In contempo years, the Pay-As-Y'all-Get model has been adopted past governments and organizations to distribute mutual goods like solar panels to rural communities, which they pay for gradually over a long period.

Example: This model includes electricity, water, and jail cell phone companies and Amazon Web Services

47. Product as a service

Product equally a service means to sell the service of a product rather than selling the actual production.

Case: Zipcar, Fedex Printing service follows the product as a service business concern model.

48. Standardization business model

Standardization ways to make a service universal, which was in one case a customized i. This attracts customers due to convenience and low prices.

Example: MinuteClinics (a subsidiary of CVS health) is a good instance of Standardization.

49. User Base Communities

User base communities earn by developing an interactive platform where users communicate on their ain with each other and can advertise at the same fourth dimension. The model generates revenue with both subscription and advertising fee.

Case: Craigslist, Angie'south list

fifty. Leasing business model

Leasing refers to renting large or high-profile items similar machines and electronic equipment instead of them selling information technology.

Example: Home Depot (Tool rental) MachineryLink, Hertz, Enterprise, etc. have adopted a similar business model.

In add-on to the business models mentioned to a higher place, there are many others. While these are virtually usually used by companies today, you demand to wisely and smartly choose i or combination for your business.

Tell united states of america what you recollect? Did you lot find this article interesting?
Share your thoughts and experiences in the comments section below.

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Source: https://bstrategyhub.com/50-types-of-business-models-the-best-examples-of-companies-using-it/

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