5 Startup Business Models To Consider

Somewhere along the lines, you have grown tired of your monotonous job and the idea of owning a business has started to creep into your mind. In other words, you are fed up of the idea of the 9-5 work cycle and you want to start a business of your own. If the buzz is strong, then you first need a business model in place to make your dream a reality. 

A business model is like the skeleton that keeps your firm standing upright. Before you start, you should consider which business model best suits your company. Depending on the nature of your specific business, you can choose any model as long as it befits the financial threshold of running your company. In the end, it is your call to make on which business model best represents your brand's visions, spirit, and goals. 

1. Reverse Auction 

In reverse auctions, buyers who are very price-sensitive name their prices to the seller. If the seller accepts the price, then the buyers have to accept the terms and conditions of the seller. It is how Priceline works – it gives desperate and price-sensitive travelers the lowest price on accommodations, airline tickets and rental cars in exchange for convenience. Priceline benefits from this because the consumers feel as if they are winning with their bid when in actuality the price is a bit higher than what could have been too low for Priceline’s sellers to accept. And the financial statistics show how prosperous this business model is. Check out the figures yourself here: 22% revenue growth, 50% profit growth, and 46% increase in stock on average. Isn’t it fantastic? 

2. The “Warby Parker” Model 

In 2010, Warby Parker decided to enter into the eyewear market when Luxottica had monopolized it. Luxottica had control of the designer eyewear price. Due to the price bar being set high, Warby Parker saw a huge opening and realized this because most brands sold the rights to companies like Luxottica that had increased their manufacturing and design costs. So what was the solution to this? Warby Parker became a middleman and significantly reduced the price of its product. Along with being aided by the company brand’s cool factor, Warby Parker also provided their consumers with large savings. 

3. Establish Demand Aggregation 

Try to assemble all of the sellers and buyers for a couple of things in one virtual location. It will give sellers a large set of buyers and vice versa. That is the same mentality behind eBay as buyers and sellers give each other tough ratings and PayPal gives a sense of security in case things go south. The financial results show that the model works for eBay even though it’s not a very booming one. On average over the last decade, the revenue for the company went up by 17%, profit 14% and the stock rose to merely 5%. The revenue per employee was about $479,000 which is 40% more than the average of the retail industry. 

4. Marketplace Model 

Becoming a marketplace is an ever growing business model that continues to be highly effective. It is where two or more types of users meet to transact. The model derives its revenue from a marketplace rake which is a fraction of the transacted revenue on the marketplace. Instead of percentage rake, some marketplaces can charge fixed transactional fees. Some good examples of marketplaces include eBay, Airbnb, Instacart, and Uber. 

5. Ecommerce Model 

E-commerce is a simple model in which items and services are sold online and the revenue is extracted from the transactions through markups on the products sold or through other means. To some, it may seem like an age-old product. However, if we go by the figures of the running year, it takes out the share of about 7% of all the retailing commerce that happens online. Prominent examples of eCommerce startups include Amazon and Warby Parker. 

Eileen Burton works as a Business Consultant for Assignment Valley. She also holds an MBA degree and provides assignment help UK.

I hope you enjoyed this article about different business models to consider for your startup or SMB.

Interested in more articles about business planning?

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