5.

Revenue Streams

This section calculates how much money a business makes from every group of
customers. Consider the price points that each consumer category is willing to spend when
targeting them. You may develop several income streams that target to each of these categories
once you recognize that different consumer groups have varying payment thresholds. There are
only four kinds of revenue streams in a company model:

a. Transaction Revenues – This result from customers who make one payment for a
product or service. Examples are SM-Supermarket, Ford, American Airlines, Starbucks,
Grab
b. Recurring Revenues – These ongoing payments can include a prolonged value
proposition or post-purchase customer service. Examples are Netflix, Google Ads,
Lazada, Shopee
c. Service revenue - Revenues are generated by providing service to customers and are
calculated based on time. For example, the number of hours of consulting services
provided. Examples are Accenture, McKinsey, Outsource Accelerator
d. Project revenue - Revenues earned through one-time projects with existing or new
customers. Examples are Betchet, MDC, Megawide

Consider the following when choosing a revenue stream for a particular consumer segment:
How are they already paying? In what way do they want to pay? Does a certain income stream
contribute to total profits?

6. Key Resources

Which essential resources might make your company stand out from the competition? Which
assets are essential to delivering your value proposition? The significant resources that are at
your disposal and necessary to the achievement of your company strategy are known as key
resources. With the help of these tools, you may develop your own value proposition, keep up
vital client connections, expand into new areas, and generate income. These resources could
be in the form of human, financial, intellectual, or physical resources.

The first four blocks should be carefully considered while creating your Key Resources section.
Any recognized theories up to this point will need a thorough accounting of your resources; if
you lack the means to provide value, there is none. Having said that, a lot of the materials will
be clear and may not require much discussion. Big choices, like buying a piece of real estate,
should be carefully considered.

a. Physical – Buildings, vehicles, machines, raw goods, etc.

b. Intellectual – Brand, proprietary knowledge, patents, partnerships, etc.

c. Human – Creativity, experience, etc.

d. Financial – Cash, credit, stock, etc.

7. Key Activities

The important processes that a company must follow in order for a business model to succeed
are outlined in the key activities building block. These actions are necessary to keep up client
connections, expand into new markets, develop value propositions, and generate revenue—
much like essential resources. Three categories can be used to classify important activities:

a. Production: This core set of operations, which includes developing, making, and
delivering products, is the emphasis of manufacturing companies.
b. Solving problems: This includes knowledge management and instruction. Coming up
with novel solutions to client problems requires the ability to solve difficulties.
c. Platform/Network: This area covers service positioning, platform marketing, and platform
administration. This is based on a business that uses software, networks, and brands
that may serve as platforms.

8. Key Partnerships

The building block of key partnerships revolves around the network you build. This can include
suppliers, partners, or even other businesses in your industry to create an alliance with. There
are 4 main categories of partnerships:

a. Strategic Alliances with Non-competitors

b. Strategic Partnerships with Competitors
c. Joint Ventures to create new Businesses
d. Buyer-Supplier Relationships
With these 4 categories of partnerships, we find 3 main motives:

a. Economies of scale and optimization - This cost-cutting goal may entail pooling
infrastructure or outsourcing. This maximizes the distribution of resources and tasks so
that your business isn't dependent on having all the resources or doing all the tasks
internally.
b. Decrease in Risk and Uncertainty - This incentive stems from rivals forming strategic
partnerships in one domain while maintaining their competitiveness in other domains.
c. Acquisition of Activities and Resources - It is uncommon for any company to be able to
get all of the activities and resources required to provide the most value to its clients.
Understanding which assets may be outsourced more affordably and depending on
other companies to provide resources that you

9. Cost Structure

Every expense related to running a company model is outlined in the cost structure building
block. Your company will incur expenses at every stage as it determines how to produce
revenue, retain customers, and create value. A business's cost structure may be classified into
two types:

a. Cost-driven - The goal of this cost structure is to keep expenses as low as feasible. High
levels of automation, widespread outsourcing, low-cost Value Propositions, and the most
economical cost structure are all achievable in this process.
b. Value Driven - A company that adopts a value-driven cost structure concentrates on
finding the optimum value for each client group. A highly customized service and
premium services may be examples of this.

Key Components of Cost Structure:

a. Fixed Costs
b. Variable Costs
c. Economies of Scale
d. Cost Allocation
e. Cost pool
f. Economies of Scope
TYPES OF BUSINESS MODEL

1. Retailer Business Model

A retailer is the last link in the supply chain. These companies buy products from
producers or wholesalers and then resell them to consumers for a profit after deducting costs.
Retailers may stock a variety of goods or focus on a certain market niche.

Examples: Grocery shops, pharmacy, florists, and other establishments that you likely use on a
daily basis are all merchants.

2. Manufacturer Business Model

A manufacturer processes raw resources into finished goods. After that, they sell the
goods to retailers, wholesalers, or customers directly.

Examples: Manufacturing companies, for instance, produce anything from furniture to

medications. These might be businesses of any size operating in nearly any sector.

3. Fee-for-Service Business Model

A fee-for-service model is when a company charges a predetermined amount for a

certain service. A company using this strategy can boost its revenue by taking on more clients or
by raising its prices. Depending on the nature of the task, the company may bill on an hourly,
monthly, or commission basis. It could also provide a schedule of fees with predetermined
amounts for certain services.

Examples: Real estate brokers, accountants, and hair stylists all charge for their professional
services. They could operate on their own or as part of a salon, office, or brokerage that offers
resources in return for a cut of their revenue.
4.Subscription Business Model

E-commerce companies as well as conventional brick and mortar retailers can benefit
from using a subscription business model. In essence, the client pays on a regular basis to have
continuous access to a good or service. A business may charge you for its services or ship its
goods straight to you through the mail.

This enables businesses to charge customers for access to their product or service on a
monthly or annual subscription basis. This business model relies on these customers being
loyal to and using the service. To maintain customer satisfaction and monthly subscription
payments, businesses must continuously enhance their offerings to stay ahead of evolving
market trends or rivals.
Examples: Disney Plus, Netflix, and Spotify.

5. Leasing Business Model

In a leasing model, a firm purchases a good from a vendor. After then, for a recurrent
price, that business permits another firm to utilize the goods that they bought. Although some
businesses also lease smaller products, leasing arrangements work best for expensive items
like industrial and medical equipment.

The product-as-a-service business model and leasing are comparable; however, leases
often have longer terms—days or weeks as opposed to minutes or hours. It is improbable for
leasing firms to impose a membership or subscription fee in exchange for product access.

Example: A company that uses a leasing business model lends out equipment to individuals for
their home building projects, such as backhoes, augers, and dozers.

6. Franchise Business Model

A franchise is a pre-existing company model that a franchisee buys and duplicates. In

order to make sure the business runs as it should, the franchiser, or original owner, collaborates
with the franchisee to assist with finance, marketing, and other business operations. A portion of
the franchisee's profits are paid to the franchisor in exchange.

It gives one the feeling of working for themselves with the extra security of a company's
support and well-known brands and goods. The owner of the parent firm, the franchisor, and the
franchisee are parties to a legal and business relationship. In return for paying a royalty fee, the
franchisee is permitted to market the franchisor's goods and services.

Examples: Ace Hardware, Domino's, and Anytime Fitness.

7. Distribution Business Model

Distribution companies are in charge of bringing manufactured items to consumers.

Distributors purchase the goods in large quantities and resell them to retailers at a higher cost in
order to profit.

It makes it easier for customers to get goods or services that producers provide. By
using this approach, the company guarantees that the most direct and, more significantly,
economical method of distribution is used to bring the good or service to the customer.

Examples: Pharmacies, Restaurants, Grocery Store

8. Freemium Business Model

Customers who utilize a product or service under a freemium model can access more
sophisticated features only after paying for them. In the software-as-a-service industry, this
model is popular. Spotify, for example, offers a free tier that is ad-supported, but members may
listen without advertisements.

The terms "free" and "premium" are combined to form "freemium." Businesses that use
the freemium business model provide the most basic form of their good or service for free in an
effort to persuade customers to buy later on the more sophisticated features, functionalities, or
add-ons. For startups, the freemium business model is effective because it fosters close bonds
with clients. Additionally, internet-based service providers benefit most from it.

Examples: LinkedIn, Drop Box, Spotify

9. E-commerce and Peer-to-Peer Business Model

Businesses and people use electronic commerce, or "e-commerce," as a business

model in which they purchase and sell goods and services online. The company offers almost
infinite items and services because it is fully online. Companies can enjoy the added ease of not
requiring a physical store by operating an e-commerce firm. This broadens the range of items
that customers may choose from.

A business serves as a middleman between companies and clients looking to buy their
goods or services in a peer-to-peer business model. The businesses that employ this model
determine the prices for the goods and services, manage the legal requirements, and supply the
platforms.

Examples: Joyride, Angkas, Uber, and Grab.

10. User-Generated Content Business Model

A platform for distributing material where people provide the content is known as a user-
generated content business. Creating content is no longer necessary as the main strategy to
keep people interested in this paradigm. Another kind of business model that is frequently
coupled with the advertising model is this one.

Examples: Instagram, Facebook, TikTok, X(Twitter)

Other Business Model

a. Direct Sales Business Model

b. Affiliate Marketing Business Model
c. Drop-Shipping Business Model
d. Vertically Integrated Business Model
e. Consulting Business Model
f. Ad-Supported Business Model
g. Enterprise Business Model
h. Lock-In Business Model
i. Multi-Brand Business Model
j. Pay-As-You-Go Business Model
References:

https://online.hbs.edu/blog/post/startup-business-models

https://animasmarketing.com/9-building-blocks-business-model-canvas/

https://accilium.com/en/9-building-blocks-for-a-profitable-business-model/

https://www.nerdwallet.com/article/small-business/what-is-a-business-model