The Main Aim or Motive of Every Small or Large Scale Company Is to Make Money With High-Profit Margin Rate That Where The Business Model Enters In. It’s a Secret Recipe Of a Companies On How They are Going To Make Money With High-Profit Rate By Selling There Services or Products.

What Is a Business Model?

Business Model Is a Basement For Finding Ethical Way To Enable The Long Term Value For a Company or Any Organisation While Providing Services To Customer and Capturing Value By Monetizing Strategies. A Business Model Is a Circular Framework To Understand, Design, and Test What Services or Products To Be Sold To Consumer By Receiving Value Through Monetization. A Robust Business Model  Can Make The Company Super Rich Like Google, Apple, Amazon, Etc.

business model
Image Credits ” Four Week Mba “

Key Points:

  • A Business Model Is Any Company’s or Organisation’s Crore Strategy For Profitably By Doing Business.
  • The Startups With Robust Business Model Can Attract More Investors.

” Note: B-Model = Business Model “

Business Model Simplified:

A Business Model is a Comprehensive Planning For Company’s Profitability In a Specific Market. A Key Component of the Business Model is the Description of The Goods or Services That a Company Offers and How Are They Different From There Competitors.

Startups Business Model Should Cover Their Projected Costs and Capital Sources, Their Targeting Customers For Their Services or Products To Be Sold Also Their Marketing Strategy, Competition Analysis, and Their Expenses and Revenue Source Analysis. Also, They Should Able To Work With Other Companies. Ex: Every Company Should Be Working With an Advertising Agency To Boost Their Business.

Robust Business Model Should Focus To Fulfil Their Client’s Need By Providing Services At Sustainable Price Compare To Their Competitors In Their Marketplace. Many Companies Changes Their Business Model Time To Time Respectively Depending On Market Demands and Business Environment.

Startups Should Implement a Robust B-Model In Descent Or In Clear Manner, That’s Understandable To Investor. Because Every Investor Needs Complete Idea Of How This Company Is Making Money. a Bad B-Model Can Lead To Disaster Of That Company.

 

Types Of Business Model:

  1. Advertising: This Type Of B-Model Using Companies Will Be a Most Profitable One Then Other Models But Services or Products Should Be Offered For Free In Returns Company Will Use Ad-Breaks In Between.  Ex: Google, Facebook, Youtube Etc. Ours Is Also an Advertising Model.
  2. Subscription: This Type Of B-Model Using Companies Will Provide There Services Or Products To Consumer By Charging At Sustainable Prices Monthly or Yearly. Ex: Netflix, Youtube RED.
  3. Affiliate: The affiliate B-Model is Related To The Advertising B-Model But Has Some Specific Differences. It’s Also Most Used Model The Affiliate Model Uses Links Embedded In Youtube Description and Blogs It Is Commission-Based Income. Ex: toptenreviews.com and Other Review Sites.
  4. Freemium: This Type Of B-Model Using Companies Provides There Services or Products For Free and Subscription Based. Ex: Youtube.
  5. Brokerage: This Type Of B-Model Is Used Most By Stock Brokers Charges Commission For Their Services. Ex: Robinhood, Zerodha Etc.
  6. Franchise: This Type Of B-Model Is Used Most By Restaurants and Other Fashion Companies, Instead Setting Up There Own Store They Sell There License For Using Their Brand Name. Ex: McDonald’s, Zara Etc.
  7. Low-touch: This Type Of B-Model Is Used Most By Airlines and Furniture Sellers, They Demand Customers Pay More For Additional Services Else They Have Do Somethings Themselves. Ex: Ikea, British Airports
  8. Marketplace: This Type Of B-Model Is Used Most By Reselling Platforms, It Allows Sellers To List Their Items For Sales and Provide Customers With Easy Tools To Connect With The Sellers. Ex: eBay. This is More Like Wholesale
  9. Aggregator: This Type Of B-Model Is Used Most By Travel Companies, Where the Company Provides an Online Platform To Sellers To Sell Their Services or Products Under Its Brand Name. They Earn Money By Charge Fee For Using Its Platforms. Ex: Airbnb, Oyo.

Let’s Take Netflix Business Model As An Example: Many Of Us Would Have Experienced Netflix In Our Life Especially During Covid-19 Lockdown. Netflix Started Producing Their Original Content From 2013. But Have You Ever Wonder How They Earn Billions Of Money, Let’s See How They Earn Money.

Netflix Is OTT Video Streaming Platform Based On Subscription B-Model Which Means They Earn Money By Providing Video Content To There Consumer For Sustainable Price.

At Present Netflix Offers Content Through Simple Three Subscription Plans Which Sustainable For Both Company and Consumers

Netflix Subscription Plans

With Simple Packs and Three Subscriptions ( Basic, Standard, and Premium Plans ) You Can Get The Access To Their Movies, Web Series and Documentary Etc.

Netflix Also Uses Low-Touch B-Model For Consumers Based On Plan They Subscribe, By Providing Priority Service For Consumers Who Pay For Premium Plans.

Netflix’s Revenue For Financial Year 2020 Was Around $22.628 Billion Which Is a 28% Increase From Last Financial Year 2019 Which Is Around $20.156 Billion and Netflix Reported Just a $2.682 Billion Profit For Financial Year 2020.

Now Many Of You Questions Yourself Why Netflix is Getting Less Profit?

Netflix As To Produce Content To Attract Consumer For That Content They To Spent Huge Amount Of Money Or Else They Going To Lose Their Consumer. Two Ways Netflix Uses To Create Content On Their Library

  1. Content Licensing: By Buying The Movie Rights From The Production House.
  2. Original Content: and By Producing They Own Series and Movies.

Nowadays OTT Space Became Heavy Competitions Because Every Production Houses Starting Their Own Like Disney, Amazon Prime, Discovery Etc. Soon HBO Is Also Going To Launch There Own OTT Platform. To Beat The Competition Netflix Has To Spent Huge Money On Producing High-Quality Content or Buying Movie Rights That Were The Netflix Loses There Profit Margins Rate.

Thanks For Reading.

Author

Hi Guys 👋, I am Mohanraj, Budding Digital Marketer and Aspiring Entrepreneur With a Vision to Make People Around the World Understand How Businesses Works and Earns in a Simplified Way.

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