What is a business model?

A business model is needed so that a site or company understands how it plans to make money and what its expenses are. It makes it easy to figure out the target audience, what the product will look like and how to sell it. This is a definition you encounter in any business model generation book.

The company's business model is needed by potential investors. If an investor wants to invest in a company, then he studies its business model - it is necessary as one of the markers of return on investment. With a business model, a project is much easier to start up because its leaders have an idea of what is to be worked on.

Typically, a business model has three interdependent parts. Everything depends on the product being created, because it is through it that the company makes a profit:

Product creation - its production, design work;
Product promotion and sale - this includes marketing, advertising and PR, as well as the sales channels themselves;
Monetizing a product - its cost, how customers buy it, and what the price depends on.

So, how to build a business model - what should you pay attention to first of all? Modern Swiss business theorist and consultant Alexander Osterwalder believes that a business model should consist of 9 key components. Each of these components is very important and participates in generating profits. To build a successful business model according to Osterwalder, each of these components must be filled in with answers to critical questions.

List of blocks of the Osterwalder business model and key questions:

The key partner - who is it and what do we get from them?
Key activities - what will we do and in what format?
Key Resources - What resources do we have and what do we need for sales? What should be the sales and distribution channels for the product or service?
Value propositions - what do we offer customers and why should they choose us? What needs do we meet and what problems do we solve?
Customer Relationship - How will you find customers and keep them loyal?
Consumer segments - who is our target audience that will generate the most profit?
Cost structure - without what costs the company cannot exist?
Revenue Streams - What Will Customers Pay For? Will it be a one-time purchase or a subscription, for example?

The main principle of building a business model is extremely simple - you need to know and understand who your consumers are and what your USP (unique selling proposition) is capable of interest them. At the same time, it is important to understand that the modern world is changing rapidly, and therefore the business model of a company or website can also be adjusted. This is especially true for online business modeling. Some monetization methods have emerged recently, as opposed to the advertising model, which is as old as the world.

There are several ways to generate profit that you need to focus on when building any business model:

Selling assets

Selling assets is a very common type of profit among all business models, it can be both the sale of books and music, and cars; Pay per use - the principle is extremely simple: the more people use a service, the higher the final price tag. This includes mail delivery, mobile communications, hotels, and so on.

Subscription fee

Subscription fee - or a subscription through which a customer gets access to a service or product; Rent or lease - formed from the payment for the temporary use of the asset, an obvious example is car sharing, apartment rental and professional equipment rental; Licensing is a form of profit that is popular in the intellectual and tech sectors. The owner retains the copyright, but is paid for using the product or technology;

Content subscription

Typically, in this case, access to documents, videos, music or other content is provided - for a month or a year. For example, you can subscribe to a news or analytical resource and get access to the materials of publicists and prominent experts. For ordinary users, such content is not available or is displayed in a limited amount. This business model can be an alternative to the advertising model.