There is no doubt that the business model is one of the main cores if you build a startup company. Because you must have a way to earn an income that you’ll use for the long-term investment and to survive your business. Having a good idea for a business is not the main core. A business model that you would use must be corresponding with the main problems of your customers. It must be able to run better than your competitors. In fact, there are many types of business models out there, but the most important thing is to choose the one that suits your business.
One of the fatal mistakes a startup founder could do is building a new business model. With the other words, the founder builds a new way to get the flow of money which has never been applied before. Based on the perspective of most investors, a new business method will not recoup their investment because it has not proven to be able to work.
Therefore, instead of developing a new business model, the following are the proven business models that you can use for your startup company. These business models have been tested and used by many startup companies.
Best Business Models for Startups
The word of “Freemium” derived from merged words; “free” and “premium”. This business model has become widely used by startups in recent years.
Freemium business model works to provide basic services to the customers for free but charges a tariff for a premium service package with its complete features.
Some startup companies that use Freemium business model are Wistia and Mailchimp. Both allow the users to access basic services and charge differently to enjoy the additional features in the services.
The shortcoming if Freemium business model is if the users are quite satisfied with the basic services, they are less likely to upgrade or purchase the premium services.
Subscription Business Model
Commonly, the “Subscription” business model is applied to web companies with a lot of content or products. In which, the content will be used constantly by the visitors. The most suitable web companies are e-books providers, music streaming providers, or movies streaming providers.
This business model works to impose tariffs to certain users with monthly or annually subscription before they can enjoy the real services. Read also the art of selling strategies.
A good example of a subscription model is Scribd. It’s a startup company that provides various types of books and magazines. By using the subscription business model, Scribd allows the users to enjoy all of the e-books at a given subscription price.
If you consider using this business model, you have to know the challenge, which is a more intense competition. A startup company using the subscription business model must be able to compete by providing a wide range of content. To know more about the challenge, you can learn from the competition between Spotify and Apple Music as the streaming music service providers.
Marketplace Business Model
Generally, the marketplace is a business model that works like a middleman to conjoint shoppers and sellers. The sellers would get a benefit from accessing a marketplace is by having a store page on the site. With such feature, the shoppers can look for a wide range of goods they would like to buy. With such way, the sellers could boost up online sales.
There are several types of marketplace business model based on the market source and target. An example is a B2B marketplace like Alibaba, which provides a wide variety of products for a big business. Thereupon, a C2C marketplace is a good choice. The C2C marketplace business model allows the users to open an online store page and connect with the customers. Learn e-commerce strategies to understand how to apply marketplace business model to your startup company.
On-Demand Service Business Model
The on-demand business model is arguably beginning bustling in modern countries. Particularly, this business model is booming in large cities those with busy inhabitant’s tendency such as New York, Los Angeles, Chicago, Houston, etc. Therefore, they take the advantage of instant service to help their daily activities.
Some examples of on-demand services are UBER, Lyft, Curb, Didi Chuxing, Grab, and Ola. The customers can order the service simply from the application on their smartphone. There are also other types of on-demand services for households’ purposes, such as Bark in the UK, and Airbnb in the USA.
The on-demand business model could be able to survive because of the growing in the people needs. Meanwhile, the customers who use the on-demand service would be more efficient thanks to the rapid infrastructure development. For example, the transportation services are already available in advance. Using this business model, as a startup you just need to create a new product that can win the customers’ hearts.
In addition to the above business models, still, there are many powerful business models that have been proven and widely used by technology companies. So, keep in touch with us to improve you startup skills! We’ll update the list of business models that you can opt to adopt to your startup company.