Types of business models 

Business models come in a variety of forms and they fit different businesses. Some of the basic types of business models are:

  • Manufacturer takes raw materials, creates a product, and sells it directly to end-consumers or to another business that acts as a middleman.
  • Distributor purchases products from manufacturer and resells them to retailer or the public.
  • Retailer purchases products from retailer or wholesaler and sells them directly to the public.
  • Franchising is the practice of adopting a business model of a franchise company while paying royalties to it.

Here are the most common business model options used by online services and e-businesses.

Free or nearly free for users:

  • Early exit strategy
  • Pay-what-you-want (PWYW)
  • Tip jar/donation
  • Freemium model


  • Commission-based model:
  • Auction model

Third party options:

  • Advertisement (ad-based) model
  • Affiliate/referral fee
  • Get-one-give-one model (G1G1)
  • Franchise model

Mixed business models:

  • Razor and blade model
  • Crowdfunding
  • Open source model
  • No frills model (discount or budget model)

Paid/ direct sales business models:

  • Subscription model
  • Premium model
  • Pay-per-use model
  • Add-ons/In-app purchases
  • License fees
  • Single purchase model
  • Pay-as-you-go model (PAYG)

Business model sample 

When choosing a business model for your company, there are lots of options to explore. If you find an interesting business model sample, you can use it for inspiration and copy the ideas that fit your needs. Let’s take a look at some innovative revenue models used by successful companies. 

23andMe is a privately-owned personal genomics and biotechnology company that provides direct-to-consumer genetic testing service. The company makes money with personal genetic tests and provides reports on health conditions and lineage discovery. They are also planning to make their DNA research studies and surveys an additional way of making money, focusing mainly on B2B instead of B2C.

TransferWise is a peer-to-peer transfer service that allows consumers to transfer money globally and offers the multi-currency money wallet called “Borderless account”. The company makes money by using an innovative P2P transfer system and charges fees from senders or recipients 1.5% on the amount to be transferred, with minimal fee of 2 Euro.

Uber is an example of shared economy. It’s an on-demand ride service which connects passengers with drivers of cars through app. Uber makes money by charging a 25% commission on all the rides made through its service. Since payments are done automatically through the app, Uber ensures to capture a part of the transaction.

How To Create your Business Plan without Excel


by: Eckhard Ortwein, CEO and Founder of Lean-Case 

How to Make a Business Model

Here are 8 steps that you should follow for establishing the right business model for your startup.

  • Validate a business opportunity (a large customer segment willing to pay money to solve real problem)

  • Determine the price of your new product for the target segment, taking into account your gross margin, competitors prices, and market demographics.
  • Make sure that your product or service solves the problem exposing your prototype to real customers.
  • Pitch the entire business model to a group of customers or a specially selected focus group to test your channel and support strategy.
  • Ask industry experts for unbiased feedback and talk to potential investors.
  • Plan and execute a pilot to validate a business model.
  • Collect references from your first customers.
  • Target national trade shows and industry association groups to finally validate your business model in the context of major competitors.

Alternatively, you may one of the popular business model frameworks like Business Model Canvas or Lean Canvas, which will put you up to speed really quick.

Small Business Model

As you see, there are many different types of business models out there, and it’s important to choose one that is best suited to your business. Don’t try to reinvent a model or create something new because there are many proven options to generate revenue. When you are starting a new business, you should figure out which small business model works best for you. If you don’t know where to start, here is a short list of business models that are used by successful startups and business ventures across the globe:

  • Subscription model
  • Marketplace
  • The middleman model
  • Modernized direct sales model
  • On-demand model
  • Reversed auction
  • Freemium model

Business model helps you increase chances for success of your business. It makes you focus on the most important parts of it instead of continually putting out fires. Creating a business model is a complex task, especially if you are doing it for the first time. Use Lean Case to make sure your estimations are correct, aligned and easy to present.

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