Skip to content
SuperMoney logo
SuperMoney logo

What is a Business Model? Types, Examples, and Strategies

Last updated 03/15/2024 by

SuperMoney Team

Edited by

Fact checked by

Summary:
A business model is a plan for how a company will generate revenue and make a profit. It defines the value that a company offers to its customers and how it plans to deliver that value and earn money. There are four main types of business models: B2B (selling to other businesses), B2C (selling directly to consumers), freemium (offering a basic version for free and charging for premium features), and subscription (charging a recurring fee for access to a product or service). Understanding these different models and choosing the right one for your company is key to its success.
Whether you’re part of a corporate giant, a small-team startup, or are just setting up your own business, you’re working within a business model. Not only does a business model define how team members work together, but it also outlines the company’s profit goals and how they’ll be achieved.
But what business model works best for your business? Keep reading to learn more about business models, how they work, and which type of model will work best for your business.

Get Competing Personal Loan Offers In Minutes

Compare rates from multiple vetted lenders. Discover your lowest eligible rate.
Get Personalized Rates
It's quick, free and won’t hurt your credit score

What is a business model?

A business model outlines the way a company operates and generates revenue. It includes the products or services offered, the target customers, the channels used to reach those customers, and the revenue streams developed.
A well-defined business model is essential for a company’s success, as it provides a roadmap for how the company will achieve its goals. It helps the company understand its target customers, the value it offers to them, and how it will make money. It also helps the company decide how to allocate resources and manage risks.

Business model examples

In today’s rapidly changing business environment, having a well-defined business model is more important than ever. A clear business model can help a company attract and retain customers, generate revenue, and achieve sustainable growth.
Here are some examples of well-known companies and their respective business models:
  • Amazon. Amazon operates as an e-commerce platform, offering a wide range of products and services directly to consumers. The company generates revenue through sales of products and services, as well as through advertising and subscription services.
  • Google. Google operates primarily as an advertising platform, generating revenue through the placement of ads on its search engine and other platforms. The company also offers cloud computing services and digital marketing solutions.
  • Netflix. Netflix operates as a subscription-based streaming service, charging customers a monthly fee for access to its library of movies and TV shows. The company also generates revenue through the production and sale of its own original content.

What are the different types of business models?

There are many different types of business models, and companies often use a combination of models to achieve their goals. And since each business model has unique features, benefits, and challenges, companies often experiment with different models until they find the one that works best for their specific needs.
Here are four of the most common types of business models, along with examples of companies that use each model:
  1. B2B (business-to-business). A B2B business model involves selling products or services to other businesses rather than to consumers. Examples of B2B companies include wholesalers, manufacturers, and software providers.
  2. B2C (business-to-consumer). A B2C business model involves selling products or services directly to consumers. This model may include retail stores, e-commerce platforms, and food and beverage companies.
  3. Freemium. A freemium business model offers a basic version of a product or service for free, but charges for premium features or additional usage. This model is common among software and mobile app companies, like Dropbox or Adobe.
  4. Subscription. A subscription business model involves charging customers a recurring fee for access to a product or service. This model is common among media companies, such as online magazines and streaming services like Netflix.

Why is choosing the right business model important for a company’s success?

Choosing the right business model is important for a company’s success because it defines the value that a company offers to its customers and how it plans to deliver that value and earn money. The right business model can help a company achieve its goals and be profitable.

Key Takeaways

  • A business model is a plan for how a company will generate revenue and make a profit. It also defines the value that a company offers to its customers and how it plans to deliver that value and earn money.
  • There are four main types of business models: B2B, B2C, freemium, and subscription.
  • Choosing the right business model is key to a company’s success. This means you may have to try out a few different models before picking the best one for your business.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

Loading results ...

Share this post:

You might also like