What are the steps to creating a successful business economic model?

1 Define the value proposition

The first step is to define the value proposition, which is the unique benefit that your product or service offers to your customers. It should answer the question: why should customers choose you over your competitors? To define your value proposition, you need to understand your customers' needs, wants, and pains, and how your product or service can solve them. You can use tools such as customer interviews, surveys, or personas to gain insights into your customers.

2 Identify the market segment

The second step is to identify the market segment, which is the group of customers that you want to serve with your value proposition. It should be specific, measurable, accessible, relevant, and sizable, meaning that you can clearly define, quantify, reach, satisfy, and profit from your customers. To identify your market segment, you need to analyze your industry, competitors, and trends, and segment your customers based on criteria such as demographics, psychographics, behavior, or geography.

3 Design the revenue model

The third step is to design the revenue model, which is the way that you generate income from your value proposition. It should be aligned with your customers' willingness and ability to pay, and your competitive advantage. To design your revenue model, you need to decide on the pricing strategy, the payment method, the revenue source, and the revenue stream. You can use tools such as value-based pricing, subscription, freemium, or licensing to create your revenue model.

4 Estimate the cost structure

The fourth step is to estimate the cost structure, which is the amount of money that you spend to create, deliver, and sustain your value proposition. It should be optimized to reduce waste and increase efficiency, and reflect your business strategy. To estimate your cost structure, you need to identify the fixed and variable costs, the direct and indirect costs, and the economies of scale and scope. You can use tools such as break-even analysis, lean startup, or outsourcing to manage your cost structure.

5 Allocate the resources

The fifth step is to allocate the resources, which are the assets that you need to execute your business economic model. They include human, physical, financial, and intellectual resources. They should be adequate, available, and affordable, meaning that you have enough, timely, and cost-effective resources to achieve your goals. To allocate your resources, you need to plan, prioritize, and budget your resources, and monitor and evaluate their performance.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?