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What is the business model

Put simply, a  business model it is the approach that is being taken to make money. It's how you deliver value to your customers, through products or services, in exchange for a set price.

A business model is an essential element of any new start-up, as it will help you understand your long-term value.

It is more than anything else the revenue model you are following.

For example, think of a company like Facebook. He started by making the platform completely free, and once the audience was large enough, he started monetizing through advertising. And this is just one of the models it could have adopted.

Others would have included charging a monthly subscription fee, or selling products and services.

Often the business model that is adopted depends on the market and on what potential customers are willing to pay. There's a good chance you'll end up adopting a different business model than the one you started with.

Consider Amazon, for instance. Today, Amazon AWS (Amazon Web Services) has become one of Amazon's largest sources of revenue by providing scalable cloud infrastructure solutions. However, when it was created, it had a completely different purpose.

It is important to remember that a business model is not a business plan.

The business model is the revenue generation approach you are taking, while a business plan is an in-depth document that outlines your future and what you will do to make it happen.

You can help streamline the process of choosing and evaluating a business model through templates and business model canvas.

9 types of popular business models

There are dozens of different business models out there. Typically, companies rely on a reference model and refine it according to their business needs.

The path you choose will depend on your industry, but even more on what your customers are willing to pay. That said, what are some types?

  1.  Advertising model.
  2.  affiliate marketing.
  3.  of the franchise.
  4.  freemium.
  5.  razor and razor blades.
  6.  razor and razor blades in reverse.
  7.  by subscription.
  8.  of the agency's business.
  9.  e-commerce business concept.

Let's take a deeper look.

1. Advertising business model.

The advertising business model has been around for a long time. Although print was the main advertising medium, today we have moved on to online formats and mixed formats.

The approach is simple: you create content that people want to see and use display advertising to be able to monetize it. You're not charging your readers or visitors, but instead monetizing their attention by selling advertising space.

If you are running a website, there are many types of ad networks you can partner with to manage ads. In this scenario, you usually get paid based on clicks or views.

2. Affiliate marketing business model

The affiliate model is another incredibly common and profitable business model, especially online. With the'affiliate marketing, products or services are recommended in exchange for a commission.

A very famous affiliate program is the Amazon Affiliate Program. Once you join this affiliate network, you can promote any Amazon product for a commission on the sale.

In addition to Amazon, there are thousands of additional products and services that you can recommend depending on your niche and audience.

Read also: Blogs and Affiliations: How to Make Money with Affiliate Marketing

3. Business model of the franchise

Most of the examples shown here refer to the online world, but they can also be reported in the offline world.

However, the franchise business model is primarily a offline model.

Almost every restaurant chain like McDonald's, Burger King and other fast-food restaurants is a franchise.

The franchisor (e.g. McDonald's) licenses most aspects of its business to a franchisee, who then sells those products or services for a royalty.

In some cases, the franchisor also gets a portion of the revenues.