A business model refers to the logic of how an entity develops, delivers, and owns value, in cultural, social, economic or other context-based ways.
The entire process of business model development and implementation is known as business model evolution and forms part of strategic business planning. In some cases, this form of planning may be referred to as strategic business planning or simply strategic business planning. A company’s business model is usually defined in one or more detailed plans that include strategies, timelines, risk management activities, target date or achievement, marketing programs, business development and other aspects. Although the company’s strategies are often discussed in public as part of the company’s strategy, they actually constitute part of the company’s business plan.
There are many key features that distinguish a premium business model from a revenue-oriented business model.
Freemiums, as premiums are more commonly known, are built on the principle of giving at little cost but expecting a lot in return. The concept behind the premium business model is not new. For instance, Apple has been successful with its free app store because of the free products and services that the users can enjoy. However, the key features of this business model have not been widely used until the rise of social media and apps.
Freemium business model definition essentially provides a way of testing the water before laying down any money in the business model itself. You can try out the subscription model first to see if it works for you. Once it proves profitable and popular, you can then experiment with increasing the subscription price and adding more value to the platform.
Crowdsourcing businesses and Internet businesses are two other good examples of premium business models.
These examples allow you to use the ‘crowdsourcing’ idea to generate revenue using the internet. When it comes down to it, crowdsource is a method where businesses solicit ideas, recommendations and projects from the general public. The projects could be about anything – how to make a website, designing an e-book or launching an information product. The key here is to get as many ‘crowdsourced projects’ as possible and monetize them via different payment methods.
On the flip side, if you’re looking to implement the ‘crowdsourced business model’ on a smaller scale, you can simply use an online auction website like eBay or Amazon to start getting bids for your product. Here, you would simply direct people to your online store where they can browse through your products. Once they find what they want, they can then place an order by making a payment through a credit card or PayPal account. After you receive the payment, you pay the seller immediately and you now have a thriving business model that is producing you a substantial gross profit.
There are various business models you can use to start building an online business.
But it’s important that you understand the difference between creating a value proposition, building a targeted market and crowdsourcing before you decide which business model is right for you. Always remember that in the end, only you know what your ideal customer wants.