What are different types of Business Models?

What is a Business Model?

Every company or organization creates a plan for making money. They develop a model to determine the goods and services to sell, the market they wish to target, and the costs they expect to incur. These are referred to as business models.

A plan must be prepared regardless of whether the firm is new or already established. Businesses must regularly revise their plans and strategies in order to account for the challenges and emerging trends for future business models.

Importance of Business Model-

The company's consumer base can be targeted with the aid of the business model. It aids in developing marketing plans and budget projections while taking into account the various business models and target markets.

Reviewing the business model will help investors understand the competitive advantage of the company. Investors benefit from a clearer understanding of the business model and financial data.

Types of Business Models-

• Business to Business Model B2B:

This form of business model is referred to as a business-to-business model when interactions or transactions happen between two companies or businesses.

Both market predictability and stability are higher. Since B2B sales are made in bulk, this business model results in lower costs for the companies.

The clearest illustration of this type of business strategy in India is the wholesale B2B marketplace IndiaMart InterMesh. It provides its customers with millions of products, including consumer electronics, equipment, clothing, and many more.

• Business to Consumer Model B2C:

Businesses that offer their goods or services directly to consumers, who are the final users of the goods or services, are said to be operating under the business-to-consumer model.

The products are always in demand because they offer the necessities. Thus, the risk of demand fluctuation is eliminated, and this promotes company stability. Information is shared with customers directly and easily because there is direct touch with them.

For the business to succeed, customers receive things at a lower cost than their rivals.

Avenue Supermart is a good example of a business-to-consumer model because it sells products directly to its clients.

• Subscription-Based Model:

Any company that develops software or applications has a subscription-based business model. They provide their goods as a one-time purchase, and in exchange, the business receives monthly or yearly earnings.

By allowing customers to pay for their purchases over the course of 12 equal payments rather than all at once, this form of business strategy enables the company to generate consistent revenue.

Infoedge is one of the best instances of this kind of business model.

• On-Demand Model:

It is the most recent model that is created by promptly responding to the necessity. This type of business model is set up so that all questions may be quickly and easily resolved with the press of a button.

Customers find it to be incredibly convenient and simple because they may reserve hotels or other accommodations even before they travel to the specific city.

Make My Trip is one example, which enables clients to schedule their vacations and make reservations in advance.