Common Business Models That you Must Adopt to Maximise a Profit

Common Business Models That you Must Adopt to Maximise a Profit

By Olatuja Gabriel-Wealth (Marketing and Business Strategist)

In this article, I classified business models base on

1. Marketplace Model. This is where your business is conducted. The location-based business models here are
   1. Online, Digital or Technology Driven Model: An online business is one that is conducted strictly only. Example is e-banking, e-learning business, e-store etc.
   2. Bricks and Clicks or Hybrid Model: A clicks and bricks is one where a company conducts business both offline and online. Example of such business is a businesses that combine internet retail with brick-and-mortar store.
   3. Traditional Business or Bricks and Mortar Model: Business can be conducted only offline, outside the internet. Examples include direct sales, franchising, advertising-based, and brick-and-mortar

2. Target Audience Model. This model talks about the type of market you are targeting. Depending on your service offering, you can focus on any or some of these models:
   1. Business to Consumer (B2C) Model in which your business/company targets and sells to individual customers.
   2. Business to Business (B2B) Model in which your business/company targets and sells only to businesses (end-user). In a B2B business model, a business sells its product or service to another business.
   3. Consumer to business (C2B) Model in which a trader or individual or sole proprietor sells to businesses/companies.
   4. Consumer to Consumer (C2C) in which a trader or individual or sole proprietor sells to individual consumers or end users.

Common Business Models to Make a Profit

1. Advertising Model: Product is free, revenue is from advertisers. This model is based on creating content which people would like to consume and then offering advertisers space on your platform to advertise their product. We can see this model used on YouTube, blog sites, tiktok, skits which have advertising on the side of the blog, and in podcasts. People consume the contents for free but revenue comes from the advertisers on the platform.

2. Freemium model – where a software company hosts and provides a proprietary tool for their users to freely access, such as an app or tool suite. The company withholds or limits the use of certain key features that, over time, their users will likely want to use more regularly. To gain access to those key features, users must pay for a subscription. Examples include LinkedIn, Skype and MailChimp are all users have access to freemium and required to upgrade to access more features.

3. Razor blades model – where companies offer a cheaper product with the understanding that customers will continue to purchase more expensive accessories or composites. Examples for such are printer and ink companies. You buy a printer at 35,000NGN and you pay 21,000NGN to get ink every 2 months.

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4. Subscription Model which can be applied to both traditional brick-and-mortar businesses and online businesses alike. Customers pay a recurring payment on a monthly, quarterly, annual basis for access to a service or product. Example are Netflix, internet service providers etc

5. Bundling model which involves companies selling two or more products together as a single unit, often for a lower price than they would charge selling the products separately with the aim of generating a greater volume of sales and market products or services that are more difficult to sell. Examples include fast-food companies that offer value meals or deals.

Contact the Author via olatujagabriel@gmail.com