10 Business Models for Every Entrepreneur
Summary
TLDRThis video script outlines ten distinct business models for revenue generation, ranging from free products supported by advertising to low-cost, disposable items with profits from recurring purchases. It covers the freemium model, average value pricing, tiered pricing based on volume, and subscription services, among others. The speaker also offers a PDF guide for further exploration and encourages viewers to subscribe for more entrepreneurial insights.
Takeaways
- đ The first business model involves giving the product away for free and generating revenue through advertising, as exemplified by YouTube.
- đ° The freemium model allows users to start with a free service but requires payment for additional features or upgrades, similar to LinkedIn's approach.
- đ The average value to customer model sets prices based on the average value a customer receives, which can sometimes result in some paying more and others less than their individual costs.
- đ The cost plus margin model is a traditional pricing strategy where the selling price is set above the cost price by a certain margin, such as buying pants for $20 and selling them for $30.
- đș The recurring low subscription model, like Netflix, offers a low monthly fee that accumulates to significant revenue due to a large customer base.
- đ Tiered pricing based on volume offers discounts or incentives for higher volumes of purchases, which can encourage more sales.
- đŒ Commission-based revenue is a model where the business earns a percentage of each transaction, making the income variable and dependent on sales volume.
- đ Low product price with additional support costs is a model where the initial product is affordable, but ongoing support or services come at an extra cost.
- đ A low entry price with additional priced features model is common in industries like automotive, where basic models can be upgraded with various add-ons.
- đȘ The disposable model involves selling a low-cost primary product with the expectation of ongoing sales of related consumables, like razors and their replacement blades.
- đ The script suggests that businesses can choose from various revenue models to suit their strategy, emphasizing the importance of selecting the right model to generate income effectively.
Q & A
What is the first business model mentioned in the script for generating revenue?
-The first business model mentioned is giving the product away for free and making money on the back end through advertising, like YouTube does.
Can you explain the 'Freemium' business model using an example from the script?
-The 'Freemium' model is exemplified by LinkedIn in the script. It allows users to use the service for free, but they have to pay a subscription fee for additional features or an upgraded experience.
What does 'Pricing based on average value to customer' mean, and how is it applied in the insurance industry?
-This model means setting a price point that averages out to the value a customer receives from the product or service. In insurance, this could mean charging a single rate that accounts for both high-risk and low-risk customers, with the healthy subsidizing the less healthy.
How does the 'Cost plus margin' pricing model work, as described in the script?
-The 'Cost plus margin' model involves setting the price of a product by adding a margin to the cost of production. For example, if pants are bought for twenty dollars, they might be sold for thirty dollars to include a profit margin.
What is the significance of the 'Recurring low subscription payment' model, and how is it used by Netflix?
-This model is significant because it provides a steady, recurring revenue stream. Netflix uses it by charging a low monthly fee, which adds up to a substantial amount due to their large customer base.
Can you describe the 'Tiered pricing based on volume' model and how it's applied in real estate?
-The 'Tiered pricing based on volume' model involves offering different prices depending on the quantity or volume of the product or service purchased. In real estate, this could mean offering lower commission rates for higher volumes of property sales.
What is the 'Revenue as a percentage of every transaction' model, and what does it imply for the business?
-This model, also known as a commission model, implies that the business earns a percentage of every transaction it facilitates. It's a common practice in industries like real estate or affiliate marketing.
How does the 'Low product price but support is extra' model work, and where is it commonly seen?
-This model involves selling a product at a low price but charging extra for support or additional services. It's commonly seen in software and technology industries where the initial product is inexpensive, but ongoing support or updates cost extra.
What is the 'Low entry price with priced features' model, and how does it apply to the car industry?
-The 'Low entry price with priced features' model offers a basic product at a low price but allows customers to pay extra for additional features or upgrades. In the car industry, this could mean a base model is affordable, but adding features like heated seats or a sunroof increases the cost.
What does the 'Low price but money is made on disposables' model involve, and how is it exemplified by Procter & Gamble?
-This model involves selling a durable product at a low price and making money on the consumables that go with it. Procter & Gamble exemplifies this with their razors; the razor handle is inexpensive, but customers must continually purchase replacement blades.
How can someone get the PDF mentioned in the script, and what does it contain?
-To get the PDF, one can either text the provided number and request it by saying 'business models' or subscribe to the newsletter through the link in the video description. The PDF likely contains information on the different business models discussed in the script.
What are the two other videos suggested in the script, and what topics do they cover?
-The two other videos suggested are 'Size versus Positioning', which discusses how to differentiate oneself in the marketplace, and 'How to Become an Entrepreneur', which is aimed at employees considering entrepreneurship within or outside their current company.
Outlines
đĄ Introduction to Business Models
The video script begins with an introduction to various business models for generating revenue. The speaker invites viewers to subscribe to the channel and then delves into a list of ten distinct business models. The first model discussed is giving the product away for free, with advertising as the main revenue source, exemplified by YouTube. The second model is the freemium model, where users start with a free service but can upgrade to a paid version, as seen with LinkedIn. The third model is pricing based on average value to the customer, which balances costs for different customer profiles, such as insurance rates for drivers with varying risk levels. The fourth model is pricing based on product cost plus margin, a traditional retail approach where a markup is added to the cost of goods sold.
Mindmap
Keywords
đĄBusiness Model
đĄFree Product
đĄFreemium
đĄPricing Based on Average Value
đĄCost Plus Margin
đĄRecurring Subscription
đĄTiered Pricing
đĄCommission
đĄSupport as a Service
đĄLow Entry Price
đĄDisposables
Highlights
Introduction to ten different business models for generating revenue.
The first model: Giving the product away for free and making money through advertising.
Example of the free model: YouTube's business strategy.
The second model: Freemium model with paid upgrades, exemplified by LinkedIn.
The third model: Pricing based on average value to customer, like health and auto insurance.
The fourth model: Pricing based on product cost plus margin, a traditional approach.
The fifth model: Recurring low subscription payment, common with services like Netflix.
The sixth model: Tiered pricing based on volume, used in real estate and insurance sales.
The seventh model: Revenue as a percentage of every transaction, a commission-based model.
The eighth model: Low product price with additional support costs.
The ninth model: Low entry price with priced features and additional add-ons.
The tenth model: Low price but making money on disposables, like razors and replacement blades.
Offer to receive a PDF on business models by texting or subscribing to the newsletter.
Additional resources: Videos on size versus positioning and becoming an entrepreneur.
Encouragement to subscribe to the channel for more content.
Transcripts
every business has a different model of
how they make money today we're going to
talk about the ten different business
models of how to build your business
around all right before I get into it if
you haven't yet subscribed to the
channel please do so so let's get right
into these are ten different business
models of how to generate revenue
there's many ways of doing it but these
are ten different models the first one
is you give the product away for free a
lot of times people wonder why are they
giving away the product for free because
they make the money on the back end of
advertising example YouTube many
companies do this this is one of the
models the second model is the freemium
model with the pay for upgrade LinkedIn
is free but if you want to upgrade you
got to go and subscribe to a certain
cost that they have right it's an
upgrade 24.95 49.99 ninety nine ninety
five but you start up as a freemium so
business model number three is pricing
based on average value to customer
meaning so you got you got five
different customers right and maybe
health insurance it may be auto
insurance somebody may be a great driver
they don't have any issue somebody may
be a terrible driver they have a lot of
issues they average that out and come up
with a price point that's average to the
customer and some may be paying a little
bit higher some may be paying a little
bit less but it is what it is like the
health insurance when it came out
recently they said well why am i paying
so much insurance when I'm younger and
I'm healthy I don't have any issues
you're kind of paying for the insurance
or the people that are not healthy
but they're getting it so it's the
average cost for the product they're
selling fork model its price based on
product cost plus margin this is
traditional you buy these pants for
twenty dollars you sell them for thirty
dollars you buy this you know whatever
product you get for fifteen bucks you
sell it for 40 bucks right number five
is price with recurring low subscription
payment hence Netflix it's a very common
model today people say Netflix $7.99 999
1290 that's not a lot of money times 850
million customers it's a lot of money
number six is very basic tiered pricing
based on volume so real estate how much
you buy how much is your volume the more
you buy the less we charge you you know
if you're if I'm getting a commission
contract with an insurance company if
you sell this much policies will give
you this much but if you sell more will
give you more so it's all volume based
the more you do the more leverage you
have for an
Oshin the more you do the more the less
the cost is going to be to the customer
because you're banking on volume number
seven is revenue as a percentage of
every transaction Commission okay that's
a commission that they're doing the
revenue comes from a commission base
that they're paying out number eight low
product price but support it's extra
this is everywhere the product isn't
that much but you want the extra support
here's $99 per year or 999 dollars all
that stuff that additional that they
tagged on number nine low entry price
with priced features additional so
you're buying a car this car right here
I just bought a car and it's being
delivered right now
but if you want to add this and if you
want to add this and if you get this
it's all the additional add-ons that you
have right that's the additional adults
and last but not least number ten is
very simple low price but money is made
based on disposable so I sell this razor
stick and I sell it to you for 10 bucks
but I know I you got to come and buy the
razors every time you don't shave it
because it goes from green to white you
gotta buy I'm making my money on
disposable it's a very very big Procter
& Gamble type of a business model but
it's very effective again
it's all about how you want to set up
your business model to generate revenue
there's many different ways of doing it
these are ten of the ways to do it if
you want the PDF today either text me on
three one zero three four zero one one
three two and text me and say business
models and we'll text you back the link
to the PDF where you can print out and
kind of see what kind of a business
model you want to create and if you're
not in this state you still want to get
the PDF to this click on a link below in
the description go subscribe to my
newsletter we'll also send you the PDF
to this I got two other videos I want
you to watch that have to do with this
topic one of the videos is size versus
positioning you want to go on the
marketplace and compete what what do you
want to compete with who do you want to
compete with how do you want to
differentiate yourself to go up against
the bigger companies that's what this
video is about and the other video is
for you that's watching the same I'm an
employee right now and I'm thinking
about becoming an entrepreneur or I'm an
employee right now I'm thinking about
becoming an entrepreneur within my
company but I want to get better out and
see what I could do this video is titled
how to become an entrepreneur so if you
want size versus position click on this
how to become an entrepreneur click on
this video over here and again if you
haven't subscribed to the channel please
do so thanks for watching everybody
take care bye bye
you
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