10 Startup Business Models That Work
Introduction: Why reinvent the wheel? here are 10 Startup Business Models That Work, And Investors Love.
1/10 Freemium business model — 10 startup business models that work
Here you allow users to utilize basic features of a software, game, or service for “free”, and then charge for “upgrades” to the basic package.
Examples: Google Drive, iCloud and Slack.
2/10 Subscription business model
It is based on the idea of selling a product or service to receive monthly or yearly recurring subscription revenue.
Examples: Amazon Prime, Netflix and Slack.
3/10 Pay-as-you-go business model
This is a pricing strategy where users pay based on how much they consume.
4/10 Marketplace business model
A marketplace is a type of e-commerce site where product or service information is provided by third-party sellers and the company take a cut from the transaction(15%-25%).
Examples — Amazon, Fiverr, Urban Company
5/10 Fee-for-service (FFS) business model – 10 startup business models that work
FFS’s business model is based on charging customers a fixed and variable fee for every successful payment.
6/10 Transactional business model
The revenue is generated by directly selling an item or a service to a customer.
Widely used by e-commerce sites or any other product you purchase online. Ex Boat, Mama earth
7/10 Ad-based business model
Used by social media and search engine giants which use your search engine and interest data to show ads.
Example: Google and Meta
8/10 Hidden revenue business model
Job portals can make money by charging an upgrade both from the candidate and recruiter who is on the website.
9/10 Franchisee business model
Here the franchisee(local owner) is using the trademark, branding, and business model of a franchisor(company).
Examples are Dominos, KFC etc.
10/10 Razor blade business model – 10 startup business models that work
In this type of business model, one item is sold at a low price in order to increase sales of a complementary good, such as consumable supplies.
Examples: Gillet razor & blades, CCD Coffee machine & coffee beans, and HP Printer & cartridge for example.
In summary, we know of at least 10 startup business models that work. Your job is to match one of them to your startup idea, and then execute it as if your life depended on it!
About the Author:
James Spurway is an Angel Investor, Mentor, Advisor, Speaker, former Commercial Pilot, and Author who specialises in raising debt and equity capital. He strives to model diversity, equity, and inclusion in the founders he agrees to invest and work with. He has paused his angel investing activity to focus on raising his first US$ 50M venture capital fund, which will invest in startups that can accelerate the achievement of net zero emissions. James spent the past 33 years living in Hong Kong, Vietnam, Germany, Switzerland, Monaco, the USA, Thailand, the Philippines, Singapore, and Australia, his country of birth. In that time, he started 10 businesses, exited from seven, shut down two, and kept one. He has invested in a total of 50 startups since 2001 and had six successful exits.