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Do You Know What Is Your Business Model?

Business Model

As a #GenerasiPenemu who loves challenge and wants to be an entrepreneur, this is the time for you to know about the kinds of business models. Since you have known about Business Model Canvas in the previous article, therefore you need to know what are the recently popular business models in society, because by knowing the kinds of business model, you can consider what business model that you mastered and suitable for you and your business.

Business models itself are divided into several categories, which are business models based on the production, physics, source of revenue, pricing strategy, product strategy, partnership, and et cetera. If the business model is based on the production, then the suitable business will be manufacture, distributor, retailer, franchise, and white label. If one is based in the physics, then the suitable business will be bricks and mortar aka offline business, e-Commerce, bricks and clicks aka the combination of online and offline business, marketplace, dropship, and affiliate.

If the business is based on source of revenue, then the business model will be subscription, freemium, and hidden revenue. If the business is based on pricing strategy, then the most suitable business model will be razor blade, reverse razor blade, and nickel & dime.

If the business is based on product strategy, then the suitable business model will be blue ocean strategy, renting business, peer-to-peer, and social entrepreneurship. Lastly, if it is based on partnership, then the business model will be business to business (B2B), business to customer (B2C), consumer to business (C2B), and consumer to consumer (C2C).

Actually, there are still lots of other business models, but for now it is better for you to know what is the recently popular business models, before you continue to understand another business models.

Kinds of Business Model

So, what are the recently popular business models in society? Below are seven kinds of business models that are often used by entrepreneurs.

1. Manufacture

Manufacture is a business model when the company acts as a factory or producer of a product, and then sell it to consumer or to a third-party to get some profits. In this case, manufacture is a business model based on production.

2. Distributor

To make it easy, distributor is also called as intermediary between producers and consumers or smaller business unit called retailer. Distributor itself is a business model when you do not produce the product, but you get it from the factory/producer and then sell it again to get profits. This kind of business model is a business based on production.

3. Franchise

This business model is most seen in restaurant chain business but is not restricted to that industry only. The way a franchise works is that a company that wants to open a business needs to pay a number of fees to the company that originally created/built the business. This business model is easy enough to be adopted by newbie entrepreneurs because all business components are determined and provided by the franchisor. In this case, the franchise is a business based on production.

4. Marketplace

In this all-digital era, marketplace is a popular business model starting in 20th century. This business model is a bridge for seller and buyer on a website or an application that is connected to the internet. Some well-known marketplaces are Tokopedia, Bukalapak, Shopee, and many more. Not only that, marketplace can also be a self-built website for your own business. This business model is a business based on physics.

5. Dropship

There are many ways to operate a business, and not all business needs an office or physical store. Dropship is a business model where the seller sells the product to consumers through the online store that they have, but the sold product is from another party.

So, the seller does not need to keep the products in his place. Yet, the attainable profit or margin is quite smaller than other kinds of business models. Dropshipper is free to decide the product price. This business model is a business based on physics.

6. Subscription

Although sounds new to many people, this business model is actually has been used by many companies and pretty popular among start-up businesses. A business that used a subscription model is a business that will charge the subscription fee to customers so the customers can use the product or service from that business. The subscription fee itself is varied, from monthly, three-monthly, six-monthly, or yearly plans. Subscription is a business model based on the source of revenue.

7. Freemium

From the name itself, we all know that freemium is a combination of free and premium word, where it means this business is a combination between free products and premium products in one.

For example, DropBox or Google Drive. In the beginning, every customer is provided with a free service to use their cloud server to keep some data up to several gigabytes (here, this is called the free products), but then when the storage space is full, the customer can buy additional storage space without removing the existing data (here, this is called the premium products). This business model is a business based on the source of revenue.

8. Affiliate

Similar but not same with dropship, affiliate is a business model where it takes profits from promoting and selling products. The differences are, in the affiliate business model, profits are determined by the seller if you managed to sell the product, and the selling price cannot be changed. This business model is based on physics.

9. Peer-to-peer

This business model is uniting people who need the product/service with people who provide it, on a certain platform. Shortly, this business model is able to run because there is a supply-and-demand in society. Companies that use this business model are GoJek, Grab, Uber, and AirBnb. This business model is under the product strategy category.

10. Hidden revenue

You must have known this business model well because this business model is providing free products or services to consumers and gain profits from another feature, such as advertisements for example. Businesses that use this kind of business model are YouTube, Facebook, Instagram. These three social media gain revenues from their advertisements. This business model is under the source of revenue category.

Though many people say that a good business model is the original business model, but not every business could make its own business model from zero. Many businesses are following the existing business models in their own industry, and the results are quite good too. A good business model for #GenerasiPenemu is one that you can understand well. So, how well do you understand your business model?

To understand more about things and knowledge in the business industry, you can read the newest articles from Ideanation at www.ideanation.id, and also the newest post on Instagram @in.ideanation. Please keep following and supporting the journey of other #GenerasiPenemu that are currently in the semifinal stages of Ideanation Annual Competition 2021!

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