Michael Lewis in The New, New Thing, as quoted from the Harvard Business Review page, reveals a simple explanation of this business model, namely "a plan for how you make money". Meanwhile, Investopedia reveals something like this about the business model, which is "the company's primary strategy for running a profitable business."
Yes, basically this business model is about how a business will do it to make money. By definition, this component is an important thing to do so that you can run your business with a clear direction.
However, although they may seem like an overlap, a business model and a business plan are two different things. The business model focuses more on how to get money and profit from the business that is being done. Whereas a business plan is how you do it and develop it. Hierarchically, the business model must be determined first, and then create a business plan.
According to Nerd Wallet, a business model can describe at least four things at its core, namely:
1. What products or services will you sell?
2. How to market it?
3. How much does it cost?
4. How to get profit?
Along with the times and trends that occur, this business model can develop dynamically. Things that have never been thought of before, can become new business models because of the times, for example, technological developments.
If you are a beginner in doing business, here are some examples of business models to make it easier for you to determine what business model to use for your business.
FREE MODEL
“
We watch our competitors, learn from them, the thing that they were doing for customers and copy those things as much as we can” Jeff Bezos
When it appeared for the first time, this business model was very confusing to many people. How can live easily free? where does the money come from? You yourself certainly feel it when using the Google search engine which has turned off the yellow pages business because it is easier and faster. now besides Google, there are also Facebook, Instagram, and Snapchat with similar business models that are not paid.
apparently, by attracting a large number of people for free, you will have a very large community. well, it is this large community that makes you a very important asset and its value continues to rise. like Buying land, gradually the nearby road is enlarged and this makes your land stand out because it is located on the edge of a busy highway, which becomes a rest stop. Whoever put up a billboard there would have to pay more in a quiet place out of the public eye.
data, public attention, and the opportunity to target individual markets are other sources of income, however, Can you build a long-breathing platform like Google? You won't get a large community in one year 2 years, It takes a very long time and continuous technological and ecological improvements. It seems that not many of us have the courage to sacrifice during that time.
DROPSHIP
Dropship is a business model that is often found in online buying and selling businesses. This model is very friendly for beginners because the capital required is not large and minimal risk. You also don't need to have a physical store or warehouse because the product will be sent directly from the supplier to the consumer's hands.
The profit obtained from this business model is the difference in price paid by consumers to suppliers. However, due to minimal risk and small capital, the profit from this dropship is relatively small.
FREEMIUM MODEL
“
You can get a Harvard education for free. It's the distraction that makes the biggest difference". -Nigel Kershaw
Initially, this business model was used to describe premium quality services, but provided free (of charge) or free. This is important because so far anything that is free is usually of poor quality. However, the digital world continues to improve itself so that services are basically capable of general quality.
Technology is constantly evolving. What we feel is good, it turns out there is something much better. Freemium isn't always premium, and premium quality isn't always free. The service is basically free, but you can be charged every time you upgrade. For example, if you subscribe to a TV cable that shouldn't have advertising, but after the price has been reduced a little, you find that there are advertisements when watching the HBO channel. HBO then introduced the HBO premium channel which was completely ad-free.
Why can it be free? of course, this is because the logic of the software or digital world is different from the logic of manufacturing. In the world of manufacturing, every sale or new production always has an additional cost (marginal cost). But in the digital world, the marginal cost of producing an extra unit to increase the number of subscribers is zero or minimal.
So if it's free, where will the money come from to maintain the business? The answer is, consumers who automatically provide data, express their opinions through choices, provide information to who they are, what consumers need in this life, and this becomes a large mass of people targeted by advertising, and even becomes a data mine for analytics that can be commercialized.
In the early stages, many software and IT manufacturers used this business model with the "Light" version among which many are currently developing are Google, Skype, DropBox, Spotify, and LinkedIn. Then join The New York Times which gives you free reading, but only for 20 articles per month. Some people may have had enough of this free one, but what about other readers? They can switch to paid products.
MARKETPLACE MODEL
This platform facilitates various parties as you would build a market to be a place for interaction between various sellers and their buyers. You provide space, and sellers with buyers. You provide the venue and the seller comes. You market your mall or marketplace. Then the buyers came. The more complete the people who trade there, depending on the positioning or segment you build from used goods to new goods, from small parties to wholesalers, and from local to global supplies.
This is the business model used by Kaskus, Bukalapak. eBay, Alibaba, Priceline, and even peer-to-peer lending clubs are Lending Clubs that bring together those who want to borrow money with individuals who want to lend it directly without intermediaries.
HYPERMARKET
From a segmented market, service providers continue to enlarge it to become a hypermarket. You still remember, don't you? In the past, Amazon was just a place to find books. Now Amazon has become a hypermarket that provides anything and is ready to be delivered from the nearest location in minutes or hours, no longer days or months like buying old things. Amazon is really turning into a competitor to retailer Walmart, but exploiting the potential of young people in the online world.
The large scale has enabled them to find sources of production at low prices which are profitable for the wholesale buyers who are widespread throughout the universe. Now, apart from Amazon, there are also Zalando and Coolblue
ACCESS OVER OWNERSHIP MODEL
This is a business model that has been widely discussed so far, regarding the potential for sharing in cyberspace from those who are tired of accumulating ownership. For them, if it is enough to have open access and can be used at any time, why should they have it? Why should it be controlled by the ownership of one person which results in the goods purchased being idle and unused? That's the sharing economy philosophy that is now widely used in providing anything, from unused or leftover rooms or workspaces, motor vehicles, electric drills, household furniture, time (to accompany tourists or teach someone), and garages where the car is not being used. in place to excess home cooking. Apart from Uber, Grab, and Go-Jek, this model is used, by Parkcirca, Peerby, and Zipcar.
ON DEMAND MODEL
"
Technology supply may not equal market demand." Clayton M. Christensen
Slightly above the sharing economy, this model emerged. All thanks to technology reaching consumers and reading their minds through real-time Analytics Statistics. Thus, what the current customer wants can be read very quickly. where you are now, what you want, at what price, and what you don't want can be read and developed into a product or service that is instantly where you need it.
A few years ago, someone asked for a video he made that illustrated a need like the following.
A driver reads an email that appears transparently on his car's windshield. All instructions can be given voice (voice) by the driver so as not to interfere with movement or driving concentration. Shortly thereafter the computer read that there was a vehicle transmission that was experiencing interference. The computer screen gives instructions for the driver to pull over immediately and look for the nearest repair shop. The internet network shows where the driver has to go using the rest of the vehicle's power, telling how much it will cost.
The driver decided to go there. As soon as they arrived at the repair shop, the officer had read the data on the vehicle and its owner. He greeted her kindly and handed over the car keys. The driver was still in a daze imagining how it all could happen. However, at that time it also occurred to me to find a taxi for travel trips.
However. While he was thinking, the taxi he wanted to be arrived, and knew the direction he wanted to go because all the interrelated systems in data analytics on the internet network between the customer and the vehicle were written on the monitor screen.
Maybe you think there is still a long way to go to get here. But you are wrong, because that is the on-demand model that has been implemented by Grab, Uber, and GO-JEK. They develop systems and analytics in such a way that the fleet needed, the supply consumption has been previously deployed to locations around demand.
Currently, the on-demand model has been implemented combining the sharing economy with this technology so that it is not only used in transportation, but also banking and urgent needs at work (eg Task Rabbit) and others.
EXPERIENCE MODEL
This business model leverages through its experiential approach. the world of tourism and culinary has already exploited the experience of its customers. Consumers not only want to pamper their stomach (or tongue) for food, but also all their five senses (eyes, nose, ears, skin, and feelings). even certain consumers want to join in cooking for something of value with their friends or peers.
see, hear, smell, touch, feel, act and do. all combined in one product. Disney Parks, for example, have been doing this for a long time. there are also four and five-star airlines that sell more than just transportation (function). the newly founded automotive company of this century, Tesla, is also offering driverless electric-based vehicles. So is Apple Computer and various other new services.
All of these business models were formed due to the times and advances in technology, and new business people as competitors are looking for more effective and efficient alternatives to live a better and easier life.
If you are an entrepreneur today, what business model do you use for your business?
