You do not need to establish a business model in order to proceed, but the trick is for you to determine which business models would suit your style of business and thus prove beneficial in the long run.
Table of Content:
- Marketplace Model
- Subscription Model
- Freemium Model
- Reverse Auction
- Virtual Goods Model
People, in the right state of mind, often come up with such spectacular business ideas that have never been thought of before. These unprecedented ideas could go on and shape the future of many, ultimately making you one of the most successful business figures out there. But rather the business, even though it was a brilliant idea, goes down the drain and you do not achieve the goal of being a “successful business figure”. Why did that happen? It is because an idea does not hold credibility without good business models. That sounds like a big word. So what is a business model?
A business model is a strategy that provides core strength to your business startup idea and helps in developing a manner in which a business is to be run. It is the extraction of product information with the goals determined for the business. You do not need to establish a business model in order to proceed, but the trick is for you to determine which business model would suit your style of business and thus prove beneficial in the long run.
There are a number of fruit-bearing business models and as the founder, it is your duty to determine which one would go best with your business. But do not worry; we are here to make things easier for you. Following are the top 6 business models that have proved to be profitable in recent times:
Marketplace Business Model:
Becoming a marketplace is one of the most effective forms of business in recent times that have seen businesses grow exponentially in terms of traffic and revenue. The business is a simple yet unique idea of the present-day market that makes you wonder why didn’t you think of it first? The business simply thrives on supply and demand and provides a platform for all businesses and customers to carry out their needs. Daraz.pk is a prime example of a marketplace business that has seen phenomenal growth all over Pakistan. The basic concept of the idea is to arrange a system where a buyer meets a seller and the business charges from the transactions made, in terms of percentages cut or flat fees. The marketplace owners are not held accountable for the product, unlike the conventional shop owners. Buyers tend to approach such platforms for the options they are provided with in order to make a purchase for example having the luxury to study and choose from different vendors and go for the best price.
Owning a business is all about being creative. As the trend of mobile payments gained popularity, business owners brought in a format of customer subscription. Such models of businesses thrive upon the interaction between the seller and the buyer. Do the sellers tend to study the requirements of the buyer based on interaction, requirements like what do they need? How often do they need it? The customers are then encouraged to subscribe for a timely product deliverance. Customers love the idea of this for it saves time and hassle for conventional shopping. Dollar Shave Club is an example of such a model that wreaked havoc on the razor production industry. They got in and took down the big names by providing quality razors, all for a dollar every month.
You might have made your way in a store or an online website that is willing to provide you with their initial services calling it a “One Month Free Trial.” This is an example of Freemium business models where the seller provides a product or a service for free for a specific amount of time while encouraging you to move to premium by paying a fee. The customers are sold on the idea of using the services for free for a month or so before they are asked to make a purchase, and it works wonders. Online streaming websites like Netflix and Amazon Prime rose to the peak of success by making use of this exact model of business. While adopting this business model, it is absolutely essential for the owner to determine which services must be given for free to attract the traffic while which services should be kept for the ones on premium.
Reverse Auction Model:
Reverse Auction is another unique model of business that might have not met a great deal of acquaintance as of yet. This business model is the exact opposite of Daraz.pk where the roles of seller and buyer are reversed. On this platform-based business, the sellers or the contractors approach the consumer in an effort to out-bid their competition in order to make a sale. For example, someone needs to buy a ticket. Now you own an airline, but so do plenty of other people. So how do you get that person to travel with you and not with your competitor? You convince him by providing him the services he needs and the price he would consider. Agencies use this format to attract contractors for construction. It helps the consumers to have an insight and then go for the job while the seller profits from access to the marketplace.
Virtual Goods Model:
Imagine you are playing a video game and you finally make it to the level where you have to defeat that horrible boss. You work your way to the end where you are about to defeat the boss but you lose. You get provided with two options, to go back or to “buy” a revival and continue the game. The virtual goods model focuses on the artsy requirement of the consumers. Spend $1 to send a greeting card. Buy a cool skin for your character for only $5. This is a creative form of business in which the goods do not have a physical existence, but the cash is very real. The idea is to attract the consumers with something they don’t actually need, but would be great to have. Recent figures involving the transactions made with such a model have labeled it as the ultimate art of selling.
These are the 5 most profitable business models of today that guarantee success if put to use. So that spectacular business idea we talked about earlier, it is time to put that to use.