Published on May 13th, 2017 | by Guest

A Visual Lesson on Eight Business Models [Infographic]

So you’ve had the best idea for a tech start-up. You’ve got the coding know-how, you’ve got great partners, and you’re sure you’ve got a product or service that people will want to pay money for. The question is: how do you get them to pay?

There are any number of business models used by start-ups today to greater or lesser success, and what works for business idea ‘A’ won’t work for business idea ‘B’. Accounting may not be your thing but, like it or not, the business model you choose for your start-up may be the most important decision you’ll make.

Luckily, you can get a good idea of which models to look into without signing up for Economics 101. The basic premise of each business model is actually pretty simple – it’s only when you start entering figures into it that it becomes more complicated. And that you can do much later.

Take the ‘Freemium Model’ for example. This is how Dropbox, Mailchimp and many others make their bucks. It begins with the idea that you give away a core service for free – yes, for free, like most of the internet – but then once you’ve got people hooked on your product, you begin to offer extra services at a price – a premium. With Dropbox, it’s generally greater storage space.

Or how about the subscription model? This is used by all those sites you’ve never paid for and never used – and that handful of sites you use religiously, and pay for monthly. Instead og one initial payment, you make a commitment – subscribe – to a long term contract. This is how Netflix got rich.

There’s a simple way to make a comparison between all these different business models, and that is to imagine a scenario where a farmer has one cow and he wants to make a buck from the milk. How would he do so using each of the business models? This new graphic from The Business Backer illustrates how in a series of simple new explanations. Figure out which one fits your start-up idea, and you’ll be ready to take it to the next level.