10.17-10.22 Business Model Almanac

0.99 Shops (Dollar Store)

How Does the 0.99 Shop Work?

A 0.99-cent shop/a dollar store is a retail outlet that specializes in selling inexpensive items, which cost a dollar or less. Some of the items may cost several dollars. They sell a wide range of common and niche items including toiletries, gift cards, balloons, and groceries. They appeal to a diverse customer segment by offering such a wide range of items. Normally the locations are far from major shopping centers.

How Does the 0.99 Shop Make Money?

It operates by selling smaller-sized items at pocket-friendly prices. However, those items may not be cost-effective when compared to larger packages purchased from retail outlets. 0.99 shops convince buyers to buy small packages at low prices are better than larger packages at a higher price.

The stores have minimal employees and small stores to minimize overhead costs. They prioritize long shelf-life, off-brand, and small-sized packaged items to maximize profits as well.

Companies that Use the 0.99 Shop Business Model

Dollar General, Dollar Tree, Family Dollar.

Accreditation

How does the Accreditation business model work?

It is based on the certification process of competency, authority, or credibility. It ensures people, businesses, or institutions behave ethically and employ suitable quality assurance.

It works by issuing or helping 3rd parties obtain credentials against the official standards of accreditation bodies. The accreditation types may include Educational/Email Sender/Personal Trainer/Professional and Quality Management System Standards.

How Does the Accreditation Business Model Make Money?

It usually charges a certification fee and annual certification maintenance to guarantee that the 3rd party still complies with standards.

Companies that Use Accreditation Business Model

AHPGS, AKAST, ACQUIN, AQ Austria

Ad-Free Subscription

How does the Ad-free Subscription Model Work?

It offers a service of subscription-based package that does not include digital ads. Usually, it also offers freemium models that allow users to access some or all of the features of the product, albeit with ads. The users can decide to use the free version or ad-free version by subscription monthly/yearly.

How does the Ad-free Subscription Model Make Money?

For users to gain access to the ad-free version of the service, they have to pay a monthly/yearly subscription fee to the business. Thus generates the bulk of revenue for the businesses.

Companies that Use Ad-free Subscription Business Model

YouTube, Hulu, Amazon Prime

Add-On

How Does the Add-on Business Model Work?

It works by charging users for offering additional features or benefits to a basic service/product. In addition to the cost of the product/service, users also pay for additional accessories they desire.

It works most successfully with products/services that have a long Lifetime Value and a high degree of customer retention. It ensures customers will continue to use the product and typically request more add-ons as well.

How Does the Add-On Business Model Make Money?

By charging customers for purchasing additional accessories. Companies work best by offering high-demand and high-margin benefits/accessories as add-ons to the basic products/services they provide.

The benefits are offered at only a fraction of the cost of the basic product/service. The model is popular among game developers, airlines, fast-food companies, auto-dealers, etc.

Companies that use the Add-On Business Model

McDonald’s, Apple, United Airlines

Advertising

How Does the Advertising Business Model Work?

It involves generating revenue by drawing consumer attention to a product/service to drive sales or awareness. Ads are usually hosted on a public medium like TV/Radio, or internet platforms like SNS, Websites, etc. Building a successful ad involves building a dedicated audience by creating content or encouraging interaction with your audience, revenue is generated by commercializing access to this audience for the purpose of advertising.

How Does the Advertising Business Model Make Money?

In several ways: one-time purchase or a subscription-based payment system, as commonly seen in traditional ad media such as radio and TV. Other methods include pay-per-click, pay-per-view, and a commission-based model based on the number of products/services sold through ads, etc.

Companies That Use the Advertising Business Model

Google, Facebook, Amazon

Adware

How Does the Adware Business Model Work?

Adware (advertising-supported software), is a model in which software is offered for free/reduced price for its users in exchange for receiving advertisements.

How Does the Adware Business Model Make Money?

Software authors generate revenue by selling ads displayed to their users. Ads may be displayed in many forms, such as banners, pop-ups, installation screens, etc.

Companies that use Adware Business Model

GenieToolbar, Appstrm.com, Total Toolbar

Affiliate Marketing

How Does the Affiliate Model Work?

It is a type of online business model where 3rd party websites indicate products or services of other websites in exchange for a percentage of the cost of the transaction.

It involves three players: Seller (e-commerce website), Affiliate/Publisher (websites that contain traffic and potential to be a referee), and Affiliate Network (which contains associated affiliated websites and product offers with a payment processing technology).

When a visitor clicks on a link at the affiliate website, the referral link has a tag for tracking the sale.

How Does the Affiliate Model Make Money?

Charing a small fee, usually a percentage of the cost of the transaction.

Companies that use Affiliate Model

Ambassador, Rakuten, ClickBank

Agency

How Does the Agency Business Model Work?

It is a model where a person/company (the agent) is authorized to act and negotiate on behalf of another (principal) to bring commercial/contractual relationships.

It is common in artistic and entertainment areas (brand agents), employment (recruitment), and financial advice (stock brokerage).

How Does the Agency Business Model Make Money?

By charging a percentage of the dealt contract.

Companies that use the Agency Business Model

Am Only, Creative Artists Agency, Paradigm Talent, Robinhood, TD Ameritrade, Charles Schwab

Aggregators

How Does the Aggregators Model Work?

This business model in which a website aggregates information from several online sources. Different types: Data Aggregator, News Aggregator, Video Aggregator, Smart Grid, Affiliate E-commerce Websites

How Does the Aggregators model make money?

By monetizing ads through clicks or impressions. Product or service aggregators make money using an affiliate marketing model (revenue share/commission from sales).

Companies that Use Aggregators Model

Shut Up and Take My Money, AllTop, Flipboard, Feedly, TheSnug

All You Can Eat (AYCE)

How Does the AYCE model work?

By letting customers use a company service for as much as possible for a fixed price. It works by offering the unlimited use of a product/service for a fixed price (one-time or recurring payment). It is very popular in the restaurant segment and digital world.

How Does the AYCE make money?

In the physical products/services cases, the business should charge more than the average consumption. if you are a restaurant and people on average eat 500g you have to fix your price on the cost of 1kg.

Companies that use the AYCE model

Fogo de Chao, Netflix, Spotify, Gym Centers (Pro-Forma)

All-Inclusive

How Does the All-Inclusive Model Work?

It is like AYCE but usually applied in the hotel & resort industry. All-inclusive hotels or resorts include meals, food, drinks, and many other services at their prices.

How Does the All-Inclusive Model Make Money?

The mathematics are the same as AYCE, charging more than the cost of the average consumption and operational costs of guests.

Companies that use All-Inclusive Business Model

Club Med, Hyatt

All-Pay Auction

How Does the All-Pay Auction business model work?

It is a type of auction in which both the person with the winning bid and all the other individuals possessing losing bids are required to pay the amount they bid for the item. Only the winner receives the prize. Most times those bids are made in secret, so no individual is aware of what the other is bidding. It is commonly seen in lotteries and raffle draws.

How Does the All-Pay Auction make money?

The revenue is by collecting money from both the winning and losing bids. Since all bids are kept secret, most individuals end up overbidding in an attempt to secure the prize.

Companies that use the All-Pay Auction

The Lotter, Lotto Agent, Jackpot.com

Alliance Model

How Does the Alliance Business Model Work?

The alliance model (collaborative/joint-venture) is one in which two distinct business entities pool together their resources in terms of capital, labor, tech, and intellectual property, to achieve a substantial increase in revenue.

It allows them to leverage certain inherent advantages of a collaboration (economies of scale, economies of skill, economies of risk, as well as vertical and horizontal integration). It requires significant planning and a strong degree of mutual trust to execute successfully.

How Does the Alliance Model Make Money?

It ranges from product-centric to service-centric business. Some popular monetization models are one-time payments, commission-based payments, subscription-based models, ad-revenue models, freemium models, licensing models, etc.

The main feature of such collaborations is that both business entities substantially increase profits by combining their respective resources.

Companies that use the Alliance Business Model

Verily and GlaxoSmithKline, Boeing, and Lockheed Martin

Art Dealer

How Does the Art Dealer business model work?

It is a term that refers to an individual who is involved in the buying & selling of artwork, or who acts as an intermediary in the process. If the dealer acts as an intermediary, they are typically paid a commission after the sale of the art. The buying & selling process is typically done through an Art Gallery.

How Does the Art Dealer business model make money?

Art dealers may be paid through one-time payment if they are the sole owner, or commission-based model if they are intermediary.

Private dealers also charge a membership fee, which allows members exclusive access to a wide range of private high-end art collections. Public dealers who utilize art galleries may also charge an entry fee and make additional revenue through advertising as well.

Companies that use the Art Dealer Business Model

Gagosian, Hauser & Wirth, Pace Gallery

Assembler

How Does the Assembler business model work?

An assembly line (progressive assembly) is a popular manufacturing technique in which pre-fabricated parts are added in a particular sequence to a semi-finished product. As it moves from one station to another until the finished product is achieved.

It was first utilized by Henry Ford in 1913 and has been significantly improved upon in a variety of ways. The assembly line is effective in terms of time and labor costs.

How Does the Assembler business model make money?

By selling the finished product to the consumer.

Companies that use the Assembler Business Model

Tesla, Samsung, Apple, Ford

Asset Sale

How Does the Asset Sale business model work?

It is a form of financial transaction in which a business sells assets to an interested buyer. The seller retains full ownership of the company, and the sale does not include company stocks. The assets can be tangible assets such as machinery/buildings/other inventory, or intangible assets such as leaseholds, IP, goodwill, trade secrets, licensing, brand rights, etc.

How Does the Asset Sale business model make money?

During the sale, the seller receives monetary compensation. Most times the asset sales are used as a way to get rid of unproductive parts of the business, raise funding, reduce legal liability, etc.

Companies that use the Asset Sale business model

Wachovia, Merrill Lynch, General Motors

Auction

How Does the Auction business model work?

It works as an intermediary between buyers & sellers that offer goods for bid and then sell to the highest bidder. The auction is a method for determining the value of a commodity that has an undetermined or variable price.

How Does the Auction business model make money?

Commission ranges from 12%-25% of the sales

Companies that use the Auction business model

Christie’s, Sotheby’s, Bonhams, Phillips de Pury

B2B

How Does the B2B business model work?

It is a strategy that involves the sale of a product/strategy directly from one business to another. Sometimes the buyer may act as merely an intermediary and resell the product to the final client.

It is commonly associated with supply chain business, but it can also be applied to eCommerce, IT, ad, communications, content marketing, health technology, etc.

Peculiarities are as follows: longer sales cycle, higher-order value, recurring purchases, complex pricing structure, long lifetime value, and intimate relationship between the buyer and seller.

How Does the B2B business model make money?

Selling products/services to other businesses, the process can be monetized through the use of one-time payments, subscription-based, digital ad-revenue, freemium models, licensing models, etc.

Companies that use the B2B business model

HubSpot, Salesforce, Techstars

B2C

How Does the B2C business model work?

It is the sale of products/services directly to end-users from businesses. It is also known as the direct-to-consumer model since it bypasses all intermediaries (retailers/wholesalers/other 3rd parties).

How Does the B2C business model make money?

Generating revenue by selling products/services directly to consumers. It can be monetized through the use of one-time payments, subscription-based models, digital ad-revenue models, freemium models, licensing models, etc.

Companies that use the B2C business model

Walmart, Target, eBay

B2C2B

How Does the B2C2B business model work?

It is considered a hybrid of B2B and B2C models, which is a product of the increased complexity and innovation associated with the business environment today.

It involves advertising your services to a potential client (another business) through their customers or employees (consumers). Those consumers act as internal influencers who may knowingly or unknowingly market your services to the target business. A good example is LinkedIn.

How Does the B2C2B business model make money?

The B2C2B businesses sell products/services directly to consumers. The process can be monetized through the use of one-time payments, subscription-based models, digital ad-revenue models, freemium models, licensing models, etc.

Companies that use the B2C2B business model

LinkedIn, Slack, Zoom

Bait & Hook

How Does the Bait & Hook business model work?

It works by offering a product with a very low margin or at a loss (the bait) and profits from selling a higher volume of specific and higher-margin refills (the hook).

It is also known as the Razor & Blade business model as a reference to its use by Gillette. The model uses a variant of a pricing strategy known as penetration pricing.

How Does the Bait & Hook business model make money?

By selling refills with very high margins.

Companies that use Bait and Hook business model

Gillette, Schick, HP Printers, Nestle, Nespresso

Bargain Basement (Bargain Bin)

How Does the Bargain Bin business model work?

It is a part of a large store where goods are sold at reduced prices, typically in an underground cellar. Nowadays, it is used to refer to a part of the store that sells merchandise at lower prices than the standard retail cost. The goods may include off-brand items, small-sized packages, promo products, overstocked products, last season’s merchandise, or products near the expiration date.

In most cases, it is not the main focal point of the stores’s business model, but a way to get rid of unwanted merchandise and attract more customers who also purchase higher-priced items.

How Does the Bargain Bin business model make money?

By selling normal-priced items and using the bargain-basement model as a method of getting rid of unwanted or old merchandise without incurring a total loss.

Companies that use the Bargain Basement business model

Walmart, Target, Dick’s Sporting Goods

Bargain Subscription

How Does the Bargain Subscription Business Model Work?

It is a type of business strategy whereby a business entity receives a regular, recurring income in exchange for continually providing a service or product. The income may be received on a weekly, monthly, quarterly, or even yearly basis.

How Does the Bargain Subscription Business Model Make Money?

A business that utilizes a subscription model and receives a regular, recurring income in exchange for continually providing services or products.

Companies that use the Bargain Subscription Business Model

MagazineBargains.com, Discountmags.com, Women’s Health Magazine

Barter

How Does the Barter Business Model Work?

It works by helping people/companies exchange goods/services for other goods/services without using money. Barter transactions account for 23% of the total value of worldwide business transactions.

How Does the Barter Business model make money?

B2B bartering businesses charge an admission, transaction, or monthly fee.

Companies that use the Barter Business Model

Miroma Ventures, BarterNews, BookMooch, BzzAgent, uSWAP, Trade Away, Swap Treasures

Bidding Fee Auction

How Does the Bidding Fee Auction Business Model Work?

It is a type of all-pay auction model where all bidders are required to pay a non-refundable fee to gain the right to participate in each round of bidding.

How Does the Bidding Fee Auction business model make money?

The auctioneer profits from both the amount bid for the item and the bidding fees paid by the participants

Companies that use Bidding Fee Auction model

HappyBidDay, Bidurway, iBid2Save

Bricks and Clicks Model

How Does the Brick and Clicks business model work?

It is also known as Online2Offline when a company integrates both offline and online channels. Some companies may integrate over than 2 channels which are called Multichannel/Omnichannel.

How Does the Brick and Clicks business model make money?

The company generates revenue by selling products through a physical retail location (offline) and e-commerce (online).

Companies that use Brick and Clicks business model

Argos, Carrefour, Clinique, Disney, Sephora

Bricks and Mortar

How Does the Bricks-and-Mortar Business Model Work?

It is used to describe a business that generates revenue through face-to-face transactions carried out at a physical location (office, store, warehouse). It is the most common type of business model seen in the retail industry, where it makes up 94% of retail business. It is plagued with the constraints of limited space and a customer segment within a convenient distance.

How Does the Brick-and-Mortar business model make money?

By selling their products/services directly to consumers. It can be monetized through the use of one-time payments/multiple payments, subscription-based revenue, ads revenue, licensing revenue, etc.

Companies that use the Brick-and-Mortar business model

Walmart, Trader Joe’s, Home Depot

Broker-Dealer

How does the broker-dealer business model work?

It is a general term that is used to refer to any entity, whether an individual or a company, which is responsible for trading securities. The service can be performed privately or on behalf of another individual (a client). A security is any tradable financial asset such as bonds/stocks, etc.

A significant number of broker-dealers are independent entities, many also exist as subsidiaries of larger financial corps such as investment/commercial banks, other forms of investment firms, etc.

How does the broker-dealer business model make money?

Broker-dealers purchase securities at a particular price and sell them at a higher price in the future.

Companies that use the broker-dealer business model

Charles Schwab, Fidelity Investments, Interactive Brokers LLC

Brokerage

How does the brokerage business model work?

It works by arranging transactions between a buyer and a seller in exchange for a fee or commission. It is extensively used in the insurance/real estate industry, the brokerage has many different forms in the digital world: Marketplace (Orbitz), Buyer/Sell Fulfillment (Carsdirect) & Auction Broker (eBay), Transaction Broker (Paypal), Search Agent (Kayak).

How does the brokerage business model make money?

By charging a fixed fee or commission when the deal is successful.

Companies that use brokerage business model

Marketplaces (Amazon), Christie’s, Kayak, Paypal, Zopa

Build to Sell Model

How does the build-to-sell business model work?

It refers to building and rapidly upscaling a business to sell the business for a profit later on. The model is popular among e-commerce companies, SNS platforms, fintech firms, etc. A key feature is that they can run independently of the founder.

How does the build-to-sell business model make money?

By offering products/services directly to the consumers, the process can be monetized through the use of one-time payments, subscription-based models, digital ad-revenue models, freemium models, licensing models, etc.

Companies that use the build-to-sell business model

Instagram, WhatsApp, Oculus VR

Cooperative

How does the cooperative business model work?

It is based on an autonomous association of people who voluntarily cooperate for their mutual social, economic, and cultural benefit.

How does the cooperative business model make money?

They usually charge an admission fee to become a member (in order to buy shares of it) and a monthly fee to cover operational costs. Some cooperatives may pay dividends to their members.

Companies that use a cooperative business model

Credit Agricole Group, Rabobank Group, CHS Inc, Suma

Buy & Sell

How does the buy & sell business model work?

A business purchases new or used items and sells them to a customer at a higher price. It has a wide range of applications such as stores/supermarkets/e-commerce platforms, financial securities, etc.

How does the buy & sell business model make money?

Generating revenue through the use of one-time payments for goods/services, or multiple payments. It also generates revenue through licensing fees and advertising revenue as well.

Companies that use the build & sell business model

Walmart, Target, Home Depot

Buy One Give One (B1G1 or BOGO)

How does the B1G1 business model work?

It works by selling products with an embedded charity, for every product bought another one is donated to those in need.

How does the B1G1 business model make money?

By cutting out the middleman and going straight to customers. The products donated are cheaper than the ones bought by customers. Both strategies allow businesses to be profitable.

Companies that use the B1G1 business model

Toms Shoes, Warby Parker, Soap Box, Two Degrees, Good Spread, Everything Happy, Smile Squared

Buying Club (Worker Co-Op)

How does the buying club business model work?

It is the model in which individual members pool together their resources and purchase goods/services at lower than retail prices. They can get the goods cheaply due to the ‘economies of scale’ of such a deal and greater bargaining power with the supplier afforded by their collective purchasing power.

How does the buying club business model make money?

They buy the goods in bulk at lower prices and resell the goods at retail prices. Thus the price gap between bulk price & retail price is their profits.

Companies that use the buying club business model

REI, ACE Hardware, Carpet One

Car Dealership

How does the car dealership business model work?

It is a retail business that sells new/used cars, through a contract with a car manufacturer or its sales subsidiary. It may also involved in the sale of spare parts/accessories/services/warranties, etc.

How does the car dealership business model make money?

Car dealerships sell the vehicles over the dealer’s invoice price, hence pocketing the difference as profit. They may also make money by selling spare parts/accessories/services/warranties, etc.

Companies that use the car dealership business model

Carmax, Paragon Honda, Bradshaw Automotive Group

Careware

How does the careware business model work?

It is a type of software that is specifically designed for the benefit of a charity or any other form of philanthropic activity.

How does the careware business model make money?

The careware can be divided into commercial and non-commercial services. Commercial services are usually paid a fee for their services, while non-commercial careware services may provide the services as freeware or ask the users to donate the proceeds to another charity.

Companies that use the careware business model

Peazip, Product Red, FireFTP

Car-Sharing

How does the car-sharing business model work

It allows people to rent cars for short periods of time, usually by the hour. The model offers great value to users who need occasional use of cars and has been boosted by the population’s mindset shift about the car ownership and increasing concern with planet sustainability.

How does the car-sharing business model make money?

Car-sharing businesses charge an hourly fee which includes the car with fuel, insurance and cleaning, and maintenance taxes. The final profits above 35% to 40% of occupancy.

Companies that use car-sharing business model

BlueSG, Car Next Door, Delimobil, EvCard, Cambio CarSharing, GoCar, Greenwheel

Charity/Donation Crowdfunding

How does the donation crowdfunding business model work?

Crowdfunding is the process of raising funding for a business venture using contributions from a large number of people, most ventures are hosted online. There are four types of crowdfunding: Rewards, Donation, Debt, and Equity.

How does the donation crowdfunding business model make money?

Donation crowdfunding companies take a percentage of the donated funds as a commission.

Companies that use the donation crowdfunding business model

Kickstarter, Indiegogo, GoFundMe

Charity Shop Model

How does the charity shop business model work?

A charity shop (thrift store/opportunity shop) is a type of retail establishment that is usually created and run by a charitable organization for the purpose of generating revenue.

How does the charity shop business model make money?

By selling the items which are donated to the organization, since those items are donated for free.

Companies that use the donation crowdfunding business model

British Heart Foundation, Salvation Army, Goodwill Industries

Chemical Leasing

How does the chemical leasing business model work

It is an innovative approach to the sale of chemical compounds which focuses on a shift from a volume-centric model to a function-centric one. The aim is to encourage more sustainable practices both environmentally and in the aspect of public health by promoting the efficient use of those chemical products.

How does the chemical leasing model make money?

It generates revenue through the sale of chemical compounds to buyers. As the global shift toward more sustainable practices, they have shifted from a product-centric, volume-dependent sales model to a service-centric, functional unit model that focuses on the efficiency of the products.

Companies that use chemical leasing business model

Coca-Cola, Ecolab, Airbus

Classified Advertising Model

How does the classified advertising business model work?

It is a type of short-form ad that was popularly used in newspapers and periodicals but is now widely used on online platforms. It is used to advertise businesses, items for sale, and job opportunities.

It is a low-cost and effective advertising method. It is seeing increasing usage online, especially on SNS platforms, where social classifieds are increasing in popularity.

How does the classified advertising business model make money?

Traditional classified ads such as newspapers charge Per Line of Text. Online classified ads businesses may charge based on other parameters such as level of engagement, pay-per-click, pay-per-conversion, or pay-per-view.

Companies that use the classified advertising business model

Craigslist, Subito, Adpost.com

Clickbait

How does the clickbait business model work?

It is a type of online content that is purposefully designed to attract attention and encourage visitors to access a particular website through the link and increase traffic. Most clickbait headlines are sensational, and the main aim is to incur an emotional response from the reader or pique their curiosity through the outlandish statements or titles.

How does the clickbait business model make money?

It is used by blogs/online platforms, which generate revenue by increasing traffic to their platform and ads. Clickbait businesses are paid based on the amount of new traffic they can direct to other platforms.

Companies that use the clickbait business model

Buzzfeed, BestBuy, The Guardian

Collaborative Business Model

How does the collaborative business model work?

It also refers to an alliance/joint venture in which two distinct business entities pool together their resources in terms of capital, labor, tech, and IP, to achieve a substantial increase in revenue. It requires significant planning and a strong degree of mutual trust to execute successfully.

How does the collaborative business model make money?

Generating revenue ranges from product-centric to service-centric business, monetization models used by such businesses are one-time payments, commission-based payments, subscription-based models, ad-revenue models, freemium models, licensing models, etc.

The main feature of such alliances is that both business entities substantially increase their profits by combining their respective resources.

Companies that use the collaborative business model

Molson Coors & SABMiller, BMW and Brilliance Auto Group, Microsoft and General Electric

Collective Business Model

How does the collective business model work?

It is another form of business alliance in which individuals/companies/other business entities pool together their resources in terms of capital, labor, tech, and intellectual property, to achieve a substantial increase in revenue. Such popular forms include trade associations, trade organizations, franchises, worker cooperatives, unions, etc.

How does the collective business model make money?

Using franchises: franchise owners make money from the royalties and fees paid by their franchisees. In return, the franchisees can increase their revenue by leveraging on the brand, upfront investment, lower risk, and increased technological aid.

Companies that use the collective business model

Indego Africa, FAIR, Ethicando Stores

Combinatorial Auction

How does the combinatorial auction business model work?

It is a type of auctioning system in which individuals place bids on a combination of heterogeneous items instead of individual items. Each bid is submitted as a bundle of items and the bid price, with auctioneers having the option of submitting multiple variations of bundles and prices.

This type of auction is quite common in real estate, procurement of transportation and logistical services, allocation of radio frequencies, etc.

How does the combinatorial auction business model make money?

It runs just like traditional auctions, and the auctioneer makes a profit by selling the auction items to the winning bid at a price higher than the invoice value. There may also be additional revenue generated from entry fees and advertising as well.

Companies that use the combinatorial auction business model

Home Depot, Sears, Walmart

Commission-Based Model

How does the commission-based business model work?

A business entity is paid a predetermined fee in addition to the cost of the service rendered or product. The fee may be calculated: flat rate, percentage, and tiered commission. Commission-based business gives the advantage of having an easily predictable revenue stream, however, it also faces significant challenges with scalability. It is popularly seen in the service industry: financial services, real estate, sales rep, travel agencies, tax systems, etc.

How does the commission-based business model make money?

Their services may come at a Flat Rate [a fixed sum of money is paid for every transaction]. Percentage [total cost of the transaction itself]. Tiered Commission [depends on the volume of the transaction itself.]

Companies that use the commission-based business model

Airbnb, Uber, Ticketmaster

Community Commerce

How does the community commerce business model work?

Shifts away from a profit-centered ideology and adopts a more value-centered and people-centered model. It supports more partnership and collaboration between different individuals and sections of the community. Most of them are hosted through various SNS platforms.

How does the community commerce business model make money?

The key feature is their ability to leverage their strong sense of community, their value-centric goals, and the fact that their goals are aimed toward improving the community as a whole.

Companies that use the community commerce (Pyramid) business model

TikTok, Instagram, Bianace

Consignment

How does the consignment business model work?

It works by selling goods for an owner. The goods are brought to the store by the seller and owned by the seller until the sale occurs. The model avoids costly inventory purchasing costs associated with most retail businesses as consignment stores do not purchase any of the goods they sell.

How does the consignment business model make money?

By receiving a percentage of the sale, it keeps 60% of the sale price and gives 40% back to the general owner of the item (percentages may vary).

Companies that use a consignment business model

Michel’s Consignment, The Real Real, 2nd Time Around, Yoogi’s Closet, Fashionphile

Consignment Sales Model

How does the consignment sales business model work?

It is a form of retail in which personal goods are sold by a business entity (consignor) through a 3rd party vendor (consignee) to the final buyer. The consignee gets a commission after the deal.

How does the consignment sales business model make money?

It involves the sale of goods by a business entity to a buyer through a 3rd party vendor, who is paid a commission for each successful sale.

Companies that use the consignment sales business model

Poshmark, Buffalo Exchange, Mercari

Consumables Subscription Model

How does the consumables subscription business model work?

It works by offering regular deliveries of products that people naturally run out in a subscription-based payment. It focused on consumable products: diapers, razors, flowers, etc.

How does the consumables subscription business model make money?

By offering a subscription to a product that the customer needs to replenish on a regular basis, like a razor blade (consumable product).

Companies that use the consumables subscription business model

Dollar Shave Club, Diapers, BirchBox, PetFlow, Amazon Subscribe & Save q Honest

Consumer Cooperatives

How does the consumer cooperatives business model work?

It refers to a business entity owned and managed by consumers for the purpose of achieving a specific goal that is beneficial to its members but not always profit-centered. It comes in a variety of forms: food cooperatives, credit unions, farmer cooperatives, utility cooperatives, health cooperatives, etc.

How does the consumer cooperatives business model make money?

Membership fees, contributions, stocks, bonds, loans, donations, grants, etc.

Companies that use the consumer cooperative business model

Alliant Credit Union, Navy Federal Credit Union, Consumers Credit Union

Content Community Commerce (CCC) Model

How does the CCC business model work?

It is based on the leverage of 3C’s to help consumers make purchase decisions. Content for inspiration and information, Community for social validation and recommendation, and Commerce for purchasing.

How does the CCC business model make money?

Ad Revenue (Banner Displays), Premium Listings of Professionals/Service Providers, e-Commerce Commissions/Affiliate

Companies that use the CCC business model

Polyvore, Motoroso, Food52, Purch, Lush, Citrus

Credit Card Model

How does the credit card model work?

It allows customers to purchase goods/services in advance, with the condition that they pay back the money. Plus additional interests and fees as per terms and conditions. It involves five participants:

Customer: the cardholder, who makes the payment online or offline with the credit card.

Merchant: who sells goods/services to the customer and accepts payment with the customer’s card.

Issuing Bank: It is the bank that provides the card to the customer.

Acquiring Bank: it is the merchant’s bank, and they are liable to make payments to the merchants.

Payment Network: it is responsible for processing credit card transactions. They act as a bridge between issuing banks and acquiring banks. Such as Visa/Mastercard/American Express, etc.

How does the credit card model make money?

The issuing bank, acquiring bank, and payment processor involved in the credit card business model make money in different ways.

How do credit card-issuing banks make money?

Interchange Fees, Sign-up Annual Renewal Fees, International Transaction Charge, Interest Charges and Late Payment Fee, Cash Advance Fee, Reward Points Redemption Fees, Interest on the conversion of outstanding amount to Equated Monthly Installment (EMI), Balance Transfer Fees, Co-Branding and Marketing Revenue, Card Replacement Fees

How do credit card acquiring banks make money?

Acquirer Fees, Merchant Settlement Cycle Interest, POS Terminals

How do credit card payment networks make money?

Service Earnings, International Transaction Revenues

Companies that use the Credit Card Model

Visa, Mastercard, American Express

Credit Union

How does the credit union work?

It is a member-owned non-profit financial institution that provides banking services to members. Its members can access the same kind of products and services offered by traditional banks like loans, credit cards, checking, and savings accounts. Credit unions are referred to as co-operative societies.

How does the credit union make money?

It gives loans to members. Interests are charged on those loans to generate revenue for the union. Other sources: Credit and Debit cards interchange and fees, Mortgage sales, Service rights, Real estate lending fees, Mortgage sales, Investment and insurance sales.

Companies that use Credit Union

Consumer Credit Union (CCU), Alliant Credit Union (ACU), Pentagon Federal Credit Union (PenFed), Navy Federal Credit Union (NFCU)

Crowd Business Models

How does the crowd business model work?

It is a model of a community of contributors from outside the traditional firm boundary, the use of digital peer-to-peer platforms, and the transfer of value-creation activities to a crowd. It typically entails external contributors having access to resources and processes of the company, often resulting in stronger interaction with those contributors and their resources.

How does the crowd business model make money?

Membership Fee, Licensing Fee, Product Sales, Subscription

Companies that use crowd business models

Wikipedia, Skillshare, Quora

Crowd Renting

How does crowd renting work?

It involves hiring a group of people to give the immediate impression that a rally, protest, business, or other public event is very popular and well-supported. It is commonly used by companies to promote new products, and by politicians to drive public interest in their campaigns, as well as by interest groups to stimulate broad public interests on issues they care about.

How does the crowd renting make money?

It provides rent-a-crowd services for a fee, often charged at an hourly rate or per gig.

Companies that use crowd-renting

Crowds on Demand, Crowds for Rent, Easy Crowd

Crowd Creativity

How does the crowd creativity model work?

It works by reaching a pool of designers and other creatives to develop original art, media, or content usually through a competition marketplace. The model is mostly used in designer services platforms to deliver graphics, logos, or web designs, etc.

How does the crowd creativity model make money?

By retaining a percentage of the money transferred from the customer to the creative winner.

Companies that use crowd creativity business model

99Designs, Crowdspring, Design the Crowd, Arcbazar, Tongal, Zooppa

Crowdfunding

How does the crowdfunding model work?

It works by helping projects/ventures get funded through money donations from a large number of people in exchange for unique rewards.

How does the crowdfunding model make money?

It makes money with commissions on funds raised.

Companies that use crowdfunding business model

Kickstarter, Indiegogo, GoFundMe, Teespring, Patreon

Crowdgifting

How does the crowdgifting model work?

It is the raising of funds for a particular purpose through donations from a large number of people in small amounts over a short period of time.

How does the crowdgifting business make money?

It charges fundraisers a percentage of the total amount, typically about 15%.

Companies that use crowdgifting business model

IndieGoGo, GoFundMe, Kickstarter

Crowd Innovation

How does the crowd innovation model work?

It is also known as Open Innovation, which works by helping companies solve problems and find innovation opportunities using external contributors. The system is based on contests and prizes.

How does the crowd innovation model make money?

It makes money by charging a listing fee and a commission of the paid prize.

Companies that use crowd innovation business model

Innocentive, Chaordix, IdeaConnection, Innoget, NineSigma, Ideaken

Crowd Knowledge

How does the crowd knowledge model work?

It works by leveraging the wisdom or intelligence of a group of people in order to help research or decision-making. Also known as Distributed Knowledge, Collective Intelligence, Collective Wisdom or Wisdom of the Crowd.

How does the crowd knowledge model make money?

By selling the information gathered in its online communities without exposing private data.

Companies that use the crowd knowledge business model

Patients Like Me, Trend Watching, Organized Wisdom, Trend Hunter, Cure Together

Crowd Labor

How does the crowd labor model work?

It is the most popular type of crowdsourcing and works by leveraging a pool of on-demand professionals.

How does the crowd labor model make money?

By charging a small fee from the transferred money between the customer and the service provider.

Companies that use crowd labor business model

Task Rabbit, Elance, Mechanical Turk, uTest, UpWork, Crowd Flower, Freelancer, Crowd Content

Crowd Learning

How does the crowd learning model work?

By allowing people to learn from the expertise of others, and connecting a variety of teachers with learners, the model benefits from the long tail.

How does the crowd learning model make money?

It generates revenue by offering the expertise of teachers/experts to the end consumers, so the end consumer will pay to learn from the expert.

Companies that use crowd learning business model

Skillshare, Duolingo, Pow How

Crowdlending

How does the crowdlending model work?

It allows individuals/businesses to raise money through the small amounts of money contributed by a group of people (the crowd) in exchange for returns.

How does the crowdlending model make money?

The investors get interest paid on the loan, The platform gets commissions from the transaction, The platform makes money through ads, Platforms charge sign-up fees from users

Companies that use the crowdlending business model

Mintos, Swaper, PeerBerry

Crowdsourcing

How does the crowdsourcing model work?

It works by leveraging the power of the crowd to deliver services or funding to customers through an online platform.

How does the crowdsourcing model make money?

By facilitating payments between customers around the crowd, retaining a small percentage of the money transfer.

Companies that use the crowdsourcing business model

99Designs, Innocentive

Cutting Out The Middleman

How does the COTM model work?

It works by removing intermediaries in the distribution network and selling directly to the final client. The model makes great use of technology and economies of scale.

How does the COTM model make money?

By selling products and charging a price to the final client, they increase margins with fewer layers of distribution (intermediaries).

Companies that use COTM business model

Tesla, Warby Parker, Dell, Brygt, Crane & Canopy

D2C

How does the D2C model work?

Direct-2-Customer is an eCommerce wherein the manufacturer or producer sells directly to consumers. It cuts out the middlemen and allows the D2C company to offer its products at lower prices than traditional retail businesses.

How does the D2C model make money?

D2C businesses make the majority of their revenue through product sales to end consumers. They also earn through ads spread by the platforms.

Companies that use the D2C business model

Apple, Nike, Revelry

Daily Deals

How does the daily deals model work?

It is an eCommerce wherein businesses offer products for sale for a period of 24-36 hours at heavily discounted prices. It is often used by businesses to reach new customers. Newcomers need to register as members to participate in the deal-of-the-day offer.

How does the daily deals model make money?

The businesses make money through the commission they receive on every sale made by businesses through the deal platform. They also sell vouchers and car-linked deals, and some daily deal companies also sell products directly to consumers.

Companies that use the daily deals business model

Groupon, GroupPrice, LivingSocial

Dealership

How does the dealership work?

It works as a sales agent, intermediary, or distributor of products. Dealers have authorization/contract to sell products from a specific company. It is commonly used in Antiques, Arts, Automobile, Finance (securities and derivatives) Gambling, Drugs, etc.

How does the dealership make money?

Price gap by selling at a higher price than it has bought. Commission or Incentives. Add-on services or products, such as maintenance, insurance, or financing.

Companies that use Dealership

Toyota, Dave Smith, grays Antiques

Debt-Based Crowdfunding

How does the debt-based crowdfunding model work?

When a number of investors (crowd) loan money out to a business or individual with the expectation of repayment plus interest over time. It tends to offer lower interest, rapid approval time, more favorable terms, and a simpler process in general.

How does debt-based crowdfunding make money?

Borrowers pay a percentage fee to debt-based crowdfunding platforms if the fundraising campaign attains success.

Companies that use debt-based crowdfunding business model

Funding Circle, Zopa, Lending Club

Demand-Side Platform

How does the demand-side platform model work?

A demand-side platform DSP is an advertising technology (AdTech) that uses an automated programmatic advertising platform that allows advertisers to purchase ad space on an impression basis from multiple ad sources via supply-side platforms and ad exchanges. A DSP simply allows the purchasing of advertising with the help of automation.

How does the demand-side platform make money?

DSPs charge a minimal monthly fee to cover the cost per mile (CPM) for services rendered.

Companies that use a demand-side platform business model

Basis Technologies, Google Marketing Platform, Amazon DSP

Dematerialized Services

How does the dematerialized service model work?

Dematerialization Service (DEMAT), is the conversion of physical shares and securities into electronic form. It increases the safety and security of shares and prevents their loss and forgery. It has become the norm in the financial industry.

How does the dematerialized service model make money?

By charging an annual issue fee from issuers as decided by the market regulator, they charge a transaction fee on every transaction conducted by investors.

Companies that use the dematerialized services business model

CDSL, Kotak Securities, Central Securities Clearing System PLC (CSCS)

Department Stores

How does the department store model work?

Offering a wide range of merchandise in different areas of the store, each department specializes in a product category.

How does the department store make money?

Mostly through the sale of goods, also make additional revenue by holding major seasonal sales. They also fetch revenue from advertising and branding carried out by manufacturers in the store.

Companies that use department store business model

Macy’s, JCPenny, Bloomingdale’s

Destination Club

How does the destination club business model work?

It is also called a vacation club and provides access to an array of high-quality, luxurious, spacious, and fully serviced vacation homes in different locations. Members pay a one-time membership fee and annual membership dues to maintain their membership and gain access to the club’s properties.

How does the destination club business model make money?

Earning income from vacation ownership sales, rental, resort management, and other services.

Companies that use destination club business model

Inspirato, The Hideaways Club, The Ritz-Carlton Destination Club

Digital Transformation

How does the digital transformation business model work?

It is the use of computer-based tech to transform existing processes, goods, and services, or create new ones to meet the ever-evolving business and customers’ requirements. Its aim is the remaking of management and operations of businesses and how value is delivered to customers, with the intent to make them more efficient, accessible, and scalable. It involves a 5-step process: [Digital Documents] [Organize Documents] [Automate Processes] [Streamline Processes] [Transform Processes]

How does the digital transformation business model work?

It increases the efficiency in acquiring new customers through better-targeted ads, and revision and extension of their existing portfolio of products and services, therefore increasing sales.

Companies that use the digital transformation model

Brick by Brick: Lego, Delivery by Data: DHL, Smart City through Sound Transit

Direct Selling

How does the direct selling business model work?

It works by creating a marketing and sales system directly to customers and away from a retail store. It relies on a salesforce of independent professionals enabling entrepreneurship & opportunity for people.

How does the direct selling business model make money?

By selling products/services, using salespeople, who sell directly to customers.

Companies that use a direct selling business model

Avon, Natura q Amway, Herbalife, Mary Kay, Tupperware

Directory Model

How does the directory model business model work?

A directory is a registry of indexes of businesses that promotes interaction and exchange of information between businesses and consumers. Listings in a directory are grouped into categories (yellow pages).

How does the directory business model make money?

It makes money through a paid listing of businesses, i.e., businesses pay to get listed in the directory.

Companies that use the directory model

Yell.com, Whitepages, Touch Local

Discount Clubs

How does the discount club’s business model work?

It is a business that offers goods/services at a discount to only its members. They usually have a huge catalog of products to attract customers, and customers have to pay a membership fee.

How does the discount club’s business model work?

Sales of products and membership fees.

Companies that use discount clubs’ business model

Aldi, Costco, BJ

DIY/Power to the People

How does the DIY business model work?

It means people doing something themselves instead of paying someone else to do it for them.

How does the DIY business model make money?

Through product sales.

Companies that use DIY business model

IKEA, Home Depot, Lowe’s

Donationware

How does the donationware business model work?

It is based on the offer of fully operational and unrestricted software to the public for free but requesting an optional donation to its developer.

How does the donationware business model make money?

It makes money by asking for donations from its customers.

Companies that use a donationware business model

VLC Media Player q FileZilla, AdBlock, GetSocial

Double Auction

How does the double auction business model work?

It is a process of buying/selling goods where buyers and sellers submit prices they deem acceptable.

How does the double auction business model make money?

Sellers earn money by selling above cost,, and buyers earn money by buying below value. Auction houses earn their money through commission on sales.

Companies that use a double auction business model

Christie’s, Sotheby’s, Beijing Poly International Auction Company

Dutch Auction

How does the Dutch auction business model work?

It is an auction process where the auctioneer starts with a high asking price and then reduces it until there is a bid for the item, or it reaches a predetermined reserve price. It is frequently used to sell goods that need to be sold quickly such as flowers.

How does the Dutch auction business model make money?

Sales commission paid by buyers, auction houses charge a commission on each finished sale.

Companies that use the Dutch auction business model

Christie’s, Sotheby’s, Phillips

E-Procurement

How does the e-procurement business model work?

It is the requisition, ordering, and buying/selling of supplies, equipment, works, and services online. e-Procurement centralizes and automates interactions between all the value chain partners, including the organization and customers. It works in 5 steps: [The users identify goods/services from the website and submit their purchase request] [The system obtains quotes/bids from suppliers by RFQ] [Bid received and a supplier is selected, the purchase is authorized through the approval process] [The purchasing team carries out the PO to the supplier by email/fax] [The supplier prepare the products for delivery]

How does the e-procurement business model make money?

Mainly commission, it makes the purchase process easier for B2B customers, thus they are more likely to buy more and the company gets paid faster.

Companies that use e-procurement business model

SAP Ariba, Basware, Jaggaer

Early Exit Strategy

How does the early exit strategy business model work?

It is an emergency plan typically used by traders/investors/venture capitalists to liquidate their assets in order to safely exit from the market upon meeting certain predetermined criteria. It is HOW an investor plans to leave an investment.

The strategy is often executed to maximize profits in a successful business or minimize the loss in a struggling business.

How does the early exit strategy business model make money?

IPO is a popular exit strategy used to make money for business stakeholders.

Companies that use an early exit strategy business model

Intel Acquires Mobileye, Facebook IPO, Disney bought 21st Century Fox’s Assets

Embedded Finance

How does the embedded finance business model work?

It is the provision of financial services to the public by non-financial providers. Such services include payments, lending, and insurance. It makes it easier for the public to access financial services anytime, and anywhere they need them.

How does the embedded finance business model make money?

It helps companies to create new revenue streams in payments, commissions, subscriptions, interest on loans, and improved customer retention and engagement.

Companies that use embedded finance business model

Lendflow, Hydrogen, Paystack

Embedded Social

How does the embedded social business model work?

It refers to the integration of media content like images/videos/links into social media posts or other web media platforms. It increases the engagement around your platform.

How does the embedded social business model make money?

It leads to increased sales of goods and services for businesses.

Companies that use an embedded social business model

Embed Social, SmarterQueue, Zoho

Employment Agency Business Model

How does the employment agency business model work?

It is an organization that helps people to find jobs and helps companies to fill their staffing needs. They simply help to match job seekers and companies.

How does the employment agency business model make money?

By billing a percentage of the annual basic salary of the successful candidate, 15%-30% normally.

Companies that use the employment agency business model

Adecco, Randstad NV, Kelly Services Inc.

English Auction

How does the English auction business model work?

It is a sales method on a single quantity of product where different buyers place their bid for the product at increasing prices and the highest bidder gets the product and pays for it.

How does the English auction business model make money?

Auction houses retain a percentage of the proceeds from the sale of merchandise. Auctioneers receive a commission or fee from the seller of the merchandise.

Companies that use the English auction business model

Sotheby’s, Christie’s, Phillips

Equity Crowdfunding

How does the equity crowdfunding business model work?

It is a method of raising capital from investors in exchange for a proportionate amount of shares in a company. The model is often used by startup businesses looking for investments to achieve establishment, investors give money to them for some shares of the company.

How does the equity crowdfunding business model make money?

The business generates capital from money given to it by investors. Investors get a return on their investment if the business succeeds.

Companies that use the equity crowdfunding model

Wefunder, SeedInvest, CircleUp

Factoring

How does the factoring business model work?

It works by purchasing accounts receivables at a discount from customers of other businesses.

How does the factoring business model make money?

They make money by charging a discount fee which includes an interest rate and the credit risk assumed and by offering supportive services such as creditworthiness info and collection calls.

Companies that use factoring business model

Capital Plus, Charter Capital, American Receivables, Crest Mark, Factor Funding

Fair Trade

How does the fair trade business model work?

It is a system aimed at helping producers in the developing world achieve sustainable and equitable trade relationships with their trading partners. It is designed to offer better trade terms to producers.

How does the fair trade business model make money?

The license fee is paid by companies using the FAIRTRADE, the money is paid to the Fairtrade Foundation, and it constitutes over 85% of income. Donations and grants make up 10%-20% of income.

Companies that use a fair trade business model

Tesco, Starbucks, Nestle

Fast Fashion

How does the fast fashion business model work?

It refers to the design/manufacturing/marketing method aimed at replicating trendy designs through mass production at low cost and supplying them to retail stores when demand is high.

How does the fast fashion business model make money?

Most of their revenue is based on the sales of the products

Companies that use fast fashion business model

Zara, H&M Group, Forever 21, SHEIN

Financial Intermediary

How does the financial intermediary business model work?

It refers to a 3rd party acting as a middleman between two parties in order to facilitate a financial transaction. Financial intermediaries reallocate excess or uninvested capital to sectors or parties in need of these funds.

How does the financial intermediary business model make money?

They generate profits from interest on loans and service charges/fees.

Companies that use the financial intermediary business model

Banks, Credit Unions, Pension Funds

Flash Sales

How does the flash sales business model work?

It is also known as One Deal a Day or Deal-Of-the-Day, it works by offering one single product for a limited period (usually 24 hours) at a huge discount. It is a great way to quickly sell surplus inventory or to promote your business to a new base of customers.

How does the flash sales business model make money?

By charging a commission (20%-50%) from the sales, and ripping off all the profit from the retailer.

Companies that use flash sales business model

Woot.com, uBid, Groupon, Privalia, Benjamin

Fractional Ownership

How does the fractional ownership business model work?

It works by offering acquisition and administration services of the ownership of a high-value tangible asset (jet/yacht/resort apartment) shared between several parties as a way, to mitigate risk and reduce costs.

How does the fractional ownership business model make money?

With sales commissions and charging a monthly or annual management fee.

Companies that use fractional ownership business model

Sea Net, Net Jets, e25, Elite Destination, Ritz-Carlton Destination Club

Franchising

How does the franchising business model work?

It works by offering the right to use a company’s brand and operational model for a determined period. The two involved parties are the franchisee and the franchisor.

How does the franchising business model make money?

In multiple ways: an initial fee for selling the franchise rights (fret agreement), a monthly royalty for the trademark (publicity), and a percentage of the monthly sales. Some franchises may also charge a fixed fee instead of a percentage of monthly sales, some others may also see supplies.

Companies that use franchising business model

McDonald’s, Starbucks, Subway, 7-Eleven, Dunkin’s Donuts

Freemium/Free

How does the freemium business model work?

It works by offering a digital offering (software/media/game/web services) free of charge but with an optional charged version with advanced features, functionality, or virtual goods.

How does the freemium business make money?

Make sure the costs of distribution to all users (free & premium) are lower than the revenue generated from premium accounts.

Companies that use a freemium business model

Mailchimp, Dropbox, Evernote, Survey Monkey q Skype

Freeware

How does the freeware business work?

It is a proprietary software, program, or application that is available for free download, installation, use, and sharing. They are free to general end-users and might come with restrictions on some features.

How does the freeware business make money?

Some freeware run ads/promotions to generate income, and donations from happy clients, users can unlock some advanced features by payment to get a license key.

Companies that use the freeware model

Skype, Telegram, WeChat

Full Stack Model

How does the full-stack model business model work?

It is a model where a business controls the production/distribution/support of its own product, typically used in the technology world. By eliminating the need for intermediaries, a full-stack company addresses the complete value chain from end to end, controlling the entire customer experience.

How does the full-stack business make money?

By eliminating as many intermediaries as possible, the model saves time and money.

Companies that use a full-stack business model

Uber, Lyft, Urban Company

Generalized Second-Price Auction

How does the generalized second-price auction business work?

It gives the highest bidder (the winner) the chance to pay less than the original bid offer, such as the second highest bid.

How does the generalized second-price auction business make money?

The bid winner pays a commission to the auction house.

Companies that use generalized second-price auction

eBay

Gift Card

How does the gift card business work?

It is a prepaid debit card that contains a specific amount of money that can be spent on purchases or other financial transactions. The card can be open-loop which means can be used anywhere the card brand is accepted. Or close-loop which means can only be used in specific merchant stores.

How does the gift card business work?

The card issuers charge a small fee to cover the production costs and processing fees. The business earns extra marginal revenue from a gift cardholder who spends above the balance on the card.

Companies that use gift card business model

Walmart, Amazon, eBay gift card

Group Buying

How does the group buying business work?

It works by offering products/services at a massive discount (usually over 50%) with a trigger of a minimum number of buyers, also known as Collective Buying.

How does the group buying business make money?

By charging a commission (20% to 50%) of the sale.

Companies that use a group buying business model

Groupon, Living Social, Crowd Savings, Peixe Urbano, Gilt City

Hire and Leasing

How does the hire and leasing business work?

It sells continuous access to a product/service and allows customers to pay periodically for time-limited use of the product without the customer owning the product. The hiring and leasing company takes care of all costs associated with ownership of the product, such as insurance/maintenance costs.

How does the hire and leasing business make money?

The hirer or lessee makes regular payments to the owner of the asset.

Companies that use hire and leasing business model

Six Rent a Car, Triton International, United Rentals

Honor System

How does the honor system business model work?

It works by running a business based on the trust/honor/honesty of its customers.

How does the honor system business model make money?

Charging for its services or products.

Companies that use the honor system business model

Home Depot, Swanton Berry, Loomio

In-App Purchases

How does the in-app business model work?

It refers to buying/selling of goods/services within an application on a device.

How does the in-app business model make money?

Through the sales of virtual/physical products and services, it also generates revenue from advertising other products, services, and businesses.

Companies that use in-app purchases business model

Clash of Clans, Candy Crush Saga, Game of War

Intermediation

How does the intermediation business model work?

It refers to the process of connecting surplus units (lenders with funds) to deficit units (debtors in need of funds). Money is transferred from lenders to borrowers to utilize for economic purposes.

How does the intermediation business model make money?

The lender obtains a return on the funds, and the borrower receives a return for taking risks on an economic venture. The bank receives a return as well.

Companies that use an intermediation business model

Manulife Financial Corp, Multiplan, Great-West Lifeco

Japanese Auction

How does the Japanese Auction business model work?

It is an auction where the opening bid price is increased incrementally until there is only one bidder left in the arena who is then declared the winner.

How does the Japanese Auction business model make money?

Revenue is earned from sales commissions paid by buyers, auction houses charge a commission on each sale that takes place.

Companies that use Japanese Auction business model

Sotheby’s, Christie’s, Phillips

Landlord Model

How does the landlord model business model work?

It entails an entity (landlord) who sells the temporary use of assets to another entity (tenant), this is very common with physical assets like houses.

How does the landlord business model make money?

It generates revenue from the regular fee paid by the tenant.

Companies that use the Landlord Model business model

Wells Fargo, Prudential Insurance, Enterprise Rent-a-Car

Lead Generation

How does the lead generation business model work?

It works by making contacts (qualified leads) who may have an interest in the products/services of a business. It leveraged tech and the internet to attract web users by offering services, such as price comparison and reviews, and turning them into sales opportunities for other businesses.

How does the lead generation business model make money?

By charging a fixed price for each lead generated, some of them may charge a percentage of the sales.

Companies that use lead generation business model

PriceGrabber, Lending Tree, Zillow, Net Quote, Home Advisor, Price Watch, Smart Prix

Lending Club

How does the lending club business model work?

It is a peer-to-peer community that brings together creditworthy borrowers and savvy investors. Potential borrowers are screened, and the investors make the final decision on whether to lend the money or not.

How does the lending club business model make money?

They generate revenue through origination fees paid by borrowers, and service fees paid by investors.

Companies that use the lending club business model

Lending Club, Ampla, SoFi

Licensing

How does the licensing business model work?

It works by giving permission to use copyrighted materials under intellectual property laws and can have several components such as term, territory, and renewal. It is widely used in software, trademarks, brands, artworks and characters, and inventions industries.

How does the licensing business model make money?

It works by charging a fixed fee based on the number of users/royalty (percentage) based on the use of the copyrighted material.

Companies that use a licensing business model

Microsoft, Disney, Calvin Klein

Litigation Crowdfunding

How does the litigation crowdfunding business model work?

It refers to the process of a claimant raising funds from a 3rd party (the crowd) to finance relatively high-value lawsuits in exchange for payouts upon success or settlement of the case.

How does the litigation crowdfunding business model make money?

The plaintiff gets awarded a claim by the law court if they win, or if there is a settlement. The investors get returns on their invested funds.

Companies that use litigation crowdfunding business model

AxiaFunder, CrowdJustice, LexShares

Loan Sharking

How does the loan sharking business model work?

A loan shark is an individual/company that lends money at an interest rate that exceeds the allowed legal limit, which operates outside the law.

How does the loan sharking business model work?

From high interest rates on the loans, they give their customers.

Companies that use loan sharking business model

CreditHall, LionCash, iCredit

Long Tail

How does the long-tail business model work?

It works by selling many unique products in small quantities with eventual sales of a few popular products in large quantities.

How does the long-tail business model make money?

By selling low quantities of many different products, those products are usually very specific and unique, and they have higher margins.

Companies that use a long-tail business model

Lulu.com, Myspace, iTunes

Low-Cost

How does the low-cost business model work?

It is a business practice where businesses offer their products/services at lower costs in order to attract high demand and increase their market share.

How does the low-cost business model make money?

The lean cost structure helps them to realize higher margins on their products/services than other companies. The sales of their goods/services are their major source of revenue.

Companies that use a low-cost business model

Ikea, McDonald’s, Primark

Low-Cost Carrier

How does the low-cost carrier business model work?

It is an airline that operates without offering traditional services that are usually offered as part of the fare, thereby offering lower fares.

How does the low-cost carrier business model work?

The carriers generate revenue from the sale of ancillary services, luggage/food, or insurance. They also make money from the sale of their low-cost tickets.

Companies that use low-cost carrier business model

Southwest Airlines, Ryanair, EasyJet

Loyalty

How does the loyalty business model work?

It is also known as the ‘earn and burn model’, by encouraging customer expenditure at certain businesses in exchange for rewards. The amount spent by customers is exchanged for reward points (a virtual currency) which after accumulating to a certain amount can be exchanged for goods/services.

How does the loyalty business model make money?

By selling their points to other institutions, usually affiliated credit card issuers.

Companies that use a loyalty business model

CadStar, Points, Aimia, Nectar, See You, China Reward, Lyoness

Made to Order

How does the made-to-order business model work?

It works by selling products that are manufactured only after an order is processed. Once the payment is confirmed, the vendor starts to fulfill it, it is also called Built to Order.

How does the made-to-order business model make money?

It makes money by charging for products that are produced only after payment confirmation. The process avoids unsold inventory and large working capital.

Companies that use made-to-order business model

Apple, Dell

Mafia

How does the Mafia business model work?

It refers to organized crime groups, sometimes it is used to refer to groups without any connection to crime. Maifa groups usually have a hierarchy, where higher-ranking members make decisions that trickle down to other members. The head of the mafia group is known as the boos/don. Most of the money flows to the don and his subordinate under-boss.

How does the Mafia business model make money?

Undertake ventures, and engage in other legitimate businesses that are used as a font to perpetrate money laundering, also illegal activities like prostitution, gambling, drugs, etc.

Companies that use the Mafia business model

Gambling, Pornography

Marketplace

How does the marketplace business model work?

It is a platform that facilitates trade between buyers and sellers. Typically, it connects buyers and sellers on a proprietary and centralized platform. The marketplace does not own any inventory.

How does the marketplace business model make money?

It generates revenue by charging commissions from the sellers who list their products on the marketplace platform. Sellers need to pay a fee to access premium services on the platform, and sellers may be required to pay a listing fee on some platforms.

Companies that use the marketplace business model

Amazon, eBay, Craigslist

Mass-Customization

How does the mass-customization business model work?

It works by allowing customers to customize and buy products based on their tastes or preferences at a reasonable price and speed. The model combines the low unit costs and speed of mass production processes with the flexibility of individual customization.

How does the mass-customization business model make money?

It makes money by charging similar prices to mass production companies but with the differentiation of products that meet individual customers’ needs. It avoids unsold inventory which results in greater overall profitability.

Companies that use mass-customization model: My Customizer

Merchant Model

How does the merchant model business model work?

It refers to the selling of goods/services to customers via a virtual platform. The merchant acts as a middleman, connecting manufacturers to buyers through their online platform.

How does the merchant business model make money?

From the margin placed on goods sold to customers.

Companies that use the Merchant model: Apple iTunes, Amazon, Alibaba

Metering

How does the metering business model work?

It works by charging customers for the amount of service used. It is a very common model between public utilities, taxi cabs, consulting services, etc.

How does the metering business model make money?

By charging more than the cost to deliver the service units.

Companies that use the metering business model: Uber, Car2Go, TXU

Mirco Credit

How does the micro-credit business model work?

It is a small loan given to poor borrowers who typically do not have a steady source of income, collateral, or credit history.

How does the micro-credit business model make money?

From interest/service fees accruing to loans, they give to customers.

Companies that use micro-credit business model

Grameen Bank, Kiva, CDC Small Business Finance Corp.

Micro Loan

How does the microloan business model work?

Microloans are small loan amounts of money typically used to help small businesses grow and are offered at low interest. They are one of the components of micro-financing.

How does the microloan business model make money?

The interest paid on loans by borrowers, and they get funded through donors and government support.

Companies that use Micro Loan business model

Grameen Bank, Accion Opportunity Fund, USDA FSA Microloans

Microfinance

How does the microfinance business model work?

It works by providing an alternative source of financial services, such as loans and savings, for low-income individuals and those who do not have access to traditional banking services.

How does the microfinance business model make money?

By charging the lenders interest on loans, normally the interest rates are lower than those offered by normal banks.

Companies that use the microfinance model: Grameen Bank, Kiva, BanKO

Microfranchising

How does the microfranchising business model work?

It works by applying the fundamentals of traditional franchising to home-based businesses. It has low startup costs and can be afforded and run by individuals with low income or savings. It’s a very common type of franchising in the developing world but also among staying-at-home moms.

How does the microfranchising business model make money?

Low initial fee for the franchise rights (and training) and a low fixed monthly fee.

Companies that use microfranchising business model

CFW Clinics, Nauru Energy, Grameen Phone, Living Goods

Monopolistic

How does the monopolistic business model work?

A company exists in a market with little or no competition and thus can control prices and output.

How does the monopolistic business model make money?

It maximizes its profits by producing goods to the point where its marginal revenues equal its margin costs.

Companies that use a monopolistic business model

Standard Oil, De Beers Group, Luxottica

Multi Business Model

How does the multi-business model work?

It combines and integrates various business models and adapts them to their business to deliver better value and experience to their customers.

How does the multi-business model make money?

Through competitive pricing and cost reduction on their goods and services.

Companies that use a multi-business model

Amazon: eCommerce/marketplace, Microsoft: devices, software, etc.

Multi-Level Marketing

How does the multi-level business model work?

It works by selling through a sales system in which sellers are compensated by the sales they generate and by the sales of other sellers that they recruit.

How does the multi-level business model make money?

By selling high-margin products through a salesforce, but only paying commission, without salaries, etc.

Companies that use multi-level business model

Amway, Mary Kay, Avon, Herbalife, Forever Living Products

Multi-Sided or Two-Sided

How does the multi-sided business model work?

It works by offering value to two distinct customer groups that provide mutual benefits. Businesses use this model such as Credit Card Holders and Merchants, etc.

How does the multi-sided business model make money?

By charging a fixed or variable fee from one of the groups or from both groups.

Companies that use multi-sided business models: Google, Airbnb, Craigslist, Sony PS3

Multiunit Auction

How does the multiunit auction business model work?

It is an auction where multiple units of homogeneous goods are available for sale. Bidders can place bids for one item or multiple items.

How does the multiunit business model make money?

Sales commission paid by buyers, auction houses charge a commission on each sale that takes place.

Companies that use multiunit auction model: Christie’s, Sotheby’s, Phillips

Music Streaming

How does the music streaming business model work?

It is a method of delivering audio content to a device directly without the need to download the files from the internet to your device.

How does the music streaming business model make money?

Through subscriptions for premium services, and ads on the platform.

Companies that use music streaming business model: Spotify, Pandora, Apple Music

Name Your Own Price (NYOP)

How does the ‘name your own price’ business model work?

NYOP is a business model where buyers suggest a price for a product or service, and the transaction takes place if the seller accepts the buyer’s price.

How does the NYOP business model make money?

The sales of goods and services.

Companies that use the NYOP model: Garmentory, Priceline, Bonvoy Adventure Travel

Network Effect

How does the network effect business model work?

It works by offering products/services in which the value to its customers is directly dependent on the number of other customers already using it. The value of the business increases exponentially as more users adopt it.

How does the network effect business model to make money?

Subscriptions and intermediation fees.

Companies that use network effect business model: Facebook, WhatsApp, Microsoft Windows

No Frills Model (Discount/Budget Model)

How does the no-frills business model work?

It works by offering low-cost products or services without non-essential features. Any item or feature that is an addition to the core business is removed in order to lower the price to its minimum. It is also called the Low-Cost model, Discount model, and Budget model.

How does the no-frills business model make money?

By charging additional fees to non-essential services/products and creating additional sources of revenue such as advertising space, duty-free shopping, travel insurance, train tickets, etc.

Companies that use no-frills model: Pure Talk, Ryanair, Food Basic, Tata Motors

Omni Channel

How does the omni-channel business model work?

It is an approach in which a company provides their customers access to their goods/services and support on all channels like mobile/desktop, via phone, or in a brick-and-mortar store.

How does the omnichannel business model make money?

It ensures that businesses meet customer demands and expectations, and customers find it easier to make a purchase if they can seamlessly access a company’s goods/services via all channels. This increases sales and revenue for the business.

Companies that use omnichannel business model: Disney, Virgin Atlantic, Bank of America

On-Demand Workforce

How does the on-demand workforce effect business model work?

It is a model wherein workers are hired on demand when needed, such workers could be freelancers, contractors, etc.

How does the on-demand workforce business model make money?

The workers get paid for the work they do, while the business saves costs on staffing as they only per tasks.

Companies that use on-demand workforce: Upshift, 99designes, Amazon Mechanical Turk

One Deal A Day

How does the one-deal-a-day business model work?

It is a model in which a product is offered for sale at a discount for a period of 24 hours.

How does the one-day-a-deal business model make money?

Mainly from product and service sales, also ads fees on the platform.

Companies that use the one-day-a-deal model: Woot, Whiskey Militia, 1 Sale A Day

Online Business Model

How does the online business model work?

It refers to the businesses conducted via the Internet to become profitable.

How does the online business model make money?

Mainly through sales of products/services, as well as commissions and subscriptions.

Companies that use online business models: Amazon, Alibaba, eBay

Online Marketplace

How does the online marketplace business model work?

It is an internet-based market platform that connects buyers and sellers.

How does the online marketplace effect business models to make money?

The platform charges sellers commissions on products sold on the platform, they also generate revenues for adverts placed on the marketplace, product listing fees, sign-up fees, and subscriptions.

Companies that use online marketplace business models: Amazon, Alibaba, eBay

Online2Offline Commerce

How does the Online2Offline business model work?

O2O companies use the online world to find and bring customers to offline (real-world) companies. It works by attracting online users by offering values such as deals, reservations, recommendations, etc., and turning those online users into real-world sales leads (foot traffic) or customers to merchants.

How does the Online2Offline business model make money?

By charging a commission fee which can be a fixed price or a variable one based on the sale.

Companies that use the Online2Offline Business Model

Groupon, Opent Table, Spa Finder, Booking.

OPEN

How does the open business model work?

It works by generating its value offer entirely from external contributors such as partners and customers sharing risks and rewards.

How does the open business model make money?

It makes money by charging a monthly fee and/or a percentage of the royalties from the sales of the innovative products or services created.

Companies that use an OPEN business model

Qualcomm, Genzyme, Patients Like Me, P&G

Open Innovation

How does the open innovation business model work?

It is the method of promoting collaboration with talents and organizations outside a company.

How does the open innovation business model make money?

It helps companies to create new revenue streams without compromising their core business. Businesses also profit from the wealth of ideas borne out of open innovation, which could result in higher production efficiencies.

Companies that use an open innovation business model

Ford, 3M, GE, Samsung Accelerator Program, Delphi & Mobileye working on autonomous driving

Open-Source

How does the open-source business model work?

It works by offering a product license for free with optional paid professional services, maintenance, and support for the same free open-source products.

How does the open-source business model make money?

By offering paid professional services, maintenance, and support to open-source products.

Companies that use open-source business models: WordPress, Mozilla, Open Stack

OTT (Over The Top)

How does the OTT business model work?

It refers to the delivery of TV/Film/Other media content through the Internet rather than through a traditional cable/broadcast provider.

How does the OTT business model make money?

Subscription fees and advertisements on their platform.

Companies that use the OTT business model: Netflix, Hulu, Amazon Prime Video

Outsource

How does the outsource business model work?

It works by offering outsourced services to other businesses, the services are usually business processes that are not part of the core business of their customers.

How does the outsource business model make money?

By charging monthly/hourly fees, some also charge performance-based rewards.

Companies that use the outsource model: Capgemini q ISS, Sodexo, IBM, Accenture

P2P

How does the P2P business model work?

It works by allowing individuals to connect directly to one another and exchange goods/services.

How does the P2P business model make money?

Charging a commission fee based on sales amount, some also charge for a listing fee or ads display.

Companies that use the P2P business model: Drivy, Lyft, Zopa, Match

Pawn Shop

How does the pawn shop business model work?

It works by offering loans to people, secured with items of personal property (jewelry, electronics, collectibles, etc.) used as collateral, which then becomes a secured debt owed to the pawnshop

How does the pawn shop business model make money?

Interest rates or reselling items for a higher price.

Companies that use pawn shop business model

Borro, Gold & Silver Pawn Shop, Family Pawn, Benny’s Pawn, Welsh Pawn, A-Ok Center

Pay Per Click

How does the pay-per-click business model work?

It works by offering direct traffic to websites in exchange for a predefined amount/bid for each ad clicked.

How does the pay-per-click business model make money?

Flat-rate PPC ‘where advertisers & publishers agree upon a fixed price for each click’. Bid-based PPC ‘where advertisers compete for clicks determining the maximum amount paid for an ad spot’ and the max expenditure for the same of clicks in a day or month.

Companies that use the pay-per-click business model

Google Adwords, Microsoft Bing, Rakuten, ClickBank, Share a Sale

Pay per Performance (Pay per Result)

How does the pay-for-performance business model work?

It charges its customers based on performance delivered that can be objectively measured. There are many other forms: pay-per-lead, pay-per-call, pay-per-install, pay-per-impression, pay-per-conversion, pay-per-sale, pay-per-acquisition.

How does the pay-per-performance business model make money?

Mostly based on percentage of commission, flat rate, or bid-based.

Companies that use pay-per-performance business model

Google Adwords, Fahrenheit 212, Priorite Comunicacao, PBSRG

Pay-What-You-Want (PWYW)

How does the PWYW business model work?

It works by allowing customers to pay what they want for the goods/services provided. The model does not depend on deciding the price and gives full freedom to customers to pay what they feel the product or service is worth to them. Also known as Pay What You Can PWYC.

How does the PWYW business model make money?

You need to set up a minimum price accepted.

Companies that use the PWYW business model

Radiohead, IndieVox, Open Books, Panera Bread, Zest Business Consulting

Pay-As-You-Go (PAYG)

How does the PAYG business model work?

It works by offering services that are charged on its metered usage. Customers pay a predefined price based on what they consume. It is from taxi cabs to website hosting services.

How does the PAYG business model make money?

By charging more than the cost to deliver the service units.

Companies that use the PAYG model

Psonar, Amazon Aws, ZiferBlat, Car2Go

Pay-Per-Use (PPU)

How does the PPU business model work?

It is the same pay-as-you-go (or metered business model). It works by charging the customer based on the service usage, it is the model used by municipal water service.

How does the PPU business model make money?

The customer pays a fee for usage on demand

Companies that use the PPU business model

Amazon Web Service, Qure.ai, Sigtuple, Electric Utilities like Con Edison, Stasis Monitors, Azure

Payment Gateway (Payment Intermediaries)

How does the Payment Gateway business model work?

It works as an intermediary between online merchants and banks to process customers’ payments.

How does the Payment Gateway business model make money?

By charging a fixed fee/variable fee for each transaction.

Companies that use the Payment Gateway business model

PayPal, Stripe, Authorize.net, PayU, Zaakpay, Gumroad

Paywall

How does the Paywall business model work?

It is usually adopted by big news websites and works by blocking unlimited access to its web page (news and articles) without a paid subscription.

How does the Paywall business model make money?

By charging a subscription fee.

Companies that use the Paywall business model

Time, Financial Times, Wall Street Journal, New York Times

Peace of Mind

How does the peace of mind business model work?

By offering products/services that help improve the level of safety of its customers.

How does the peace of mind business model make money?

By charging premium prices for products and services.

Companies that use peace of mind business model

Lojack, Honest, Geico

Peer to Peer Lending

How does the peer-to-peer lending business model work?

It is the model wherein individuals obtain loans directly from individuals through a platform that matches lenders without borrowers.

How does the peer-to-peer lending business model make money?

Borrowers are able to obtain loans from alternative platforms to traditional lenders. Investors on the peer-to-peer platforms earn between 2%-6% interest on their money. P2P platforms charge upfront fees for loan processing from borrowers, it also generates revenue by adding a small margin into the loan plus interest repayments from the borrowers. Sometimes also charge a percentage fee on the interest.

Companies that use the P2P model

Prosper Personal Loans, Funding Circle, LendingClub

Penetration Pricing

How does the penetration pricing business model work?

It is used to quickly attract customers to a new product or service by offering lower prices, and below-average prices during their initial offer. After this, prices rise back to the normal rate.

How does the penetration pricing business model make money?

This model drives up sales volume, thereby increasing revenue. Suppliers may offer bulk discounts if the volume is high enough, thereby cutting costs for the business.

Companies that use the penetration pricing model

Costco ‘organic foods’; Fastlane Communications ‘high-speed internet service’ into cable television, Starbucks ‘new and seasonal coffee’

Penny Auction (Bidding Fee Auction or All-Pay Auction)

How does the penny auction business model work?

By offering auctions in which all participants must pay a non-refundable fee to place each small incremental bid. The auction typically ends 10-20 seconds without new bids, the last participant to have placed a bid wins the item and pays the final bid price, which may be lower than the retail price. It is also known as Bidding Fee Auction or All-Pay Auction.

How does the penny auction business model make money?

Fees for each bid, payment for the winning bid.

Companies that use the penny auction business model

Orange Bidz, Mad Bid, Happy Bid Day, Quibids

Performance-Based Advertising

How does the performance-based ad business model work?

The businesses pay based on the results of their ad campaigns instead of a fixed price. The results of their ad campaigns include ad views, sales, demo downloads, app installation, etc. It evolves in other different ways: CPM ‘Cost per Mile’, CPC ‘Cost per Click’, CPS ‘Cost per Sale’, CPL ‘Cost per Lead, and CPA ‘Cost per acquisition’.

How does the performance-based ad business model make money?

It increases sales by informing potential buyers about your goods/services. It helps businesses to create a public image or distinctive brand that they desire, which appeals to target customers and increases sales. It promotes specific actions in customers, such as visiting a site/platform to make a purchase.

Companies that use performance-based advertising model

AdQuantum, JumpFly, Ignite Visibility

PIPE

How does the PIPE business model work?

It works by creating/selling and delivering products/services to customers. Value is produced upstream and consumed downstream. There is a linear flow, like water flowing through a pipe.

How does the PIPE business model make money?

Charging for its sales.

Companies that use the PIPE business model: Nestle, Coca-Cola

Platform (Intermediation/Marketplaces)

How does the platform business model work?

Connecting buyers/sellers and enabling them to transact with each other. By allowing users to create and consume value the model becomes extremely scalable and able to benefit from network effects.

How does the platform business model make money?

By charging a commission/percentage when producers/consumers transact. One or both sides may pay for the platform.

Companies that use the Platform Business model: eBay, Airbnb, YouTube

Pop Up Stores

How does the pop-up store business model work?

By opening a temporary/short-term store instead of a permanent store, it may owe space with a permanent location.

How does the pop-up store business model make money?

By selling goods, but without high upfront investment and fixed cost.

Companies that use the pop-up store model: eBay, Reis, Baracuta, King & Mcgaw

Post Paid Model

How does the post paid model work?

A payment term that customers pay for the goods/services only after they have been rendered, and they are charged based on their actual usage.

How does the post paid business model make money?

It offers more convenience, which attracts more customers and then increases sales for the business.

Companies that use the post paid model

AT&T postpaid plans; Uber accepts payment after the passenger has been delivered to the destination

PPP (Public-Private Partnership)

How does the PPP business model work?

It is a collaboration between the government and a private sector organization to fund, build, and operate public infrastructures.

How does the PPP business model make money?

It helps the government to raise sufficient finance to meet public infrastructure needs.

Companies that use the PPP model

Delhi Metro & Reliance Energy built the Mumbai Metro, Seattle & Gigabit Squared built high-speed fiber cable connections for all residents

Premium

How does the premium business model work?

It offers high-end products/services to brand image and quality-sensitive consumers. By using premium pricing in order to encourage favorable perception and higher profit in a lower sales volume.

How does the premium business model make money?

By charging high prices in order to have higher profit margins in a low sales volume.

Companies that use the premium business model

Apple, Beats, Burberry, Mercedez Benz

Prepaid Model

How does the prepaid business model work?

By selling credit in advance of customers’ expenditure, the customer can use services or by-products up to the amount purchased in advance. Once the credit is over, a new amount of credit can be purchased. It is widely used by phone carriers.

How does the prepaid business model make money?

Prepaid credit usually means less spending or reduced opportunity to profit from interest rates, in the prepaid business model companies charge a deposit fee or a higher cost per use.

Companies that use the prepaid business model

MasterCard, Gift Cards, AT&T

Price Discrimination

How does the price discrimination business model work?

It refers to the practice of offering different customers/prices for the same product/service. It is based on a business belief that certain categories of customers can be asked to pay more or less depending on demographics, economic status, usage, etc.

How does the price discrimination business model make money?

This model helps business to capture maximum value (revenue) from the different consumer markets. It aims to charge consumers the maximum price they are willing to pay for a good or service.

Companies that use the price discrimination model

Microsoft offers the MS Office school edition at lower prices than other editions, and Amazon Prime offers a discounted membership to low-income seniors

Price Skimming

How does the price-skimming business model work?

It refers to a business charging the highest initial price that the market accepts, and then gradually lowering the price over time to attract more price-sensitive customers.

How does the price-skimming business model make money?

Companies using this model will potentially see higher returns on their products/services due to the initial high price.

Companies that use the price-skimming model: Apple, Sony, Salesforce

Private Club Model

How does the private club business model work?

By offering access to a set of products/services/infrastructure exclusive to approved members who pay a monthly fee.

How does the private club business model make money?

By charging a monthly fee, and selling products/services to its members, some clubs may also charge for daily or seasonal passes if they are semi-private or public clubs.

Companies that use a private club business model

Yellowstone Club, Palm Beach Bath & Tennis Club, Algonquin Golf Club, The Jonathan Club, The Bohemian Club, The Knickerbocker Club, The China Entrepreneur Club

Private Label

How does the private label business model work?

By offering products to be branded by a particular reseller, usually a big chain of retail stores that uses their own brand to sell products with higher margins.

How does the private label business model make money?

Selling a high volume of products at wholesale price to retail stores big enough to enjoy its own brand power. Private label companies don’t need to invest in branding or publicity as they just print the reseller’s desired brand in their products.

Companies that use private label business model

Hormel Foods, Cott Corporation, Richelieu Foods, McBride

Private Shopping Club

How does the private shopping club business model work?

By creating a member-only club where its members can buy products at high discounts.

How does the private shopping club business model make money?

By offering unsold inventory from brands at a huge discount. It runs on the sale and collects cash immediately on purchase. They purchase only what was sold, nearly eliminating inventory risk.

Companies that use private shopping club business model

Gilt Groupe, Jet Setter, Amazon Buy VIP, Kings Lane, Best Secret

Product Bundling

How does the product bundling business model work?

By offering grouped products/services together in order to create a new price point.

How does the product bundling business model make money?

It makes money by combining products/services of low margin with high margin ones.

Companies that use product bundling business model

Microsoft, McDonald’s, BestBuy

Product Service System (PSS)

How does the product service system business model work?

Offering a mix of both products/services capable of jointly fulfilling a user’s needs. In a more extreme format, businesses sell the function of the product instead of the product itself.

How does the product service business model make money?

By charging for service units instead of product units.

Companies that use the PSS model

IBM, Xerox, Philips, Michelin, Rolls-Royce

Product Subscription

How does the product subscription business model work?

By delivering products with pre-defined quantity and regularity in exchange for a monthly or annual fee.

How does the product subscription business model make money?

By charging a monthly fee to its customers based on the quantity & periodicity of the desired product.

Companies that use a production subscription business model

Black Socks, Shoedazzle, Subscription, Dollar Shave Club

Productized Service

How does the productized service business model work?

By offering a pre-determined package of services with a fixed price, scope, and deadline instead of an Ad Hoc service charged by the hour.

How does the productized service business model make money?

It generates revenue by selling services just like a product. The service has a fixed price, well-defined scope, and a buy button to purchase without getting in touch with a sales rep (Website design for $1300, 1000-word articles for $50, Ads audit account for $199, etc.).

Companies that use a productized service business model

Legalzoom, WP Curve, Fiverr, Place It, Brand Bucket, Rocking Book Covers

Proof of Payment

How does the proof of payment business model work?

It is a payment tool used as proof of the occurrence of a transaction between two parties. A receipt is commonly used as proof of payment.

How does the proof of payment business model make money?

A transaction may be deemed invalid if there is no proof of payment, so It helps companies to save unnecessary costs on their transaction.

Companies that use proof of payment model

All businesses are expected to issue proof of payment at the end of a transaction, the proof of payment can be receipts or cash notes.

Pyramid Scheme

How does the pyramid scheme business model work?

By exchanging money primarily for enrolling other people in the scheme rather than supplying any real product or service. It is an unsustainable variation of the multi-level illegal marketing business model.

How does the pyramid scheme business model make money?

By taking a percentage from each new joining fee sold by its members.

Companies that use pyramid scheme business model

Solavei, Usana, Nuskin, Many Investment Clubs

Razor and Blades Business Model

How does the razor and blade business model work?

Also known as Bait and Hook, it works by selling a product at a loss or very low margin to enable selling volumes of another related higher-margin product or service.

How does the razor and blade business model make money?

It makes money from the sale of related products/services with higher margin profits.

Companies that use razor and blade business model

Nespresso, Gillette, HP Printers, AT&T Cellphones, Sony PlayStation 3

Rent Subscription

How does the rent subscription business model work?

By allowing you to rent a limited number of products for a monthly fee, it’s a flexible ownership model where you can subscribe and keep products for as long as you want.

How does the rent subscription business model make money?

By selling subscriptions that in the long run are more profitable than the cost of product acquisition, repair, and replacement summed. And by selling the product itself.

Companies that use a rent subscription business model

Rent the Runway, The Ms. Collection, Pley, RocksBox, Spark Box Toys, Gwynnie Bee, Le Tote

Rent-To-Own

How does the rent-to-own business model work?

It is an agreement that allows a tenant to rent a property (a home) and also gives them the option to buy it before the lease expires. It typically consists of a standard lease agreement and a purchase option.

How does the rent-to-own business model make money?

The seller collects a monthly rent on the property and in some cases may collect above-market rent monthly, which increases the seller’s income.

Companies that use the rent-to-own business model

Divvy Homes, Empire East, iRentToOwn.com

Rental Business Model (Renting)

How does the rental business model work?

By offering temporary use of something owned by someone else. There are two situations in which the rental businesses make sense: you need to use something in a short period, something is too expensive to buy and you rent for longer periods.

How does the rental business model make money?

By charging an hourly, daily, or monthly fee that represents a percentage of the total cost of ownership.

Companies that use the rental business model: Hertz

Retailer Cooperative

How does the retailer cooperative business model work?

It is a model in which small independent retailers/businesses pool their resources to purchase in bulk from manufacturers and share marketing costs so as to maximize profits.

How does the retailer cooperative business model make money?

It improves buying conditions for its members, thereby increasing sales profits. Their joint marketing and promotion drive down individual costs and may attract new customers, resulting in increased sales.

Companies that use the retailer cooperative business model

Ace Hardware, Mitre 10, Federated Co-operatives

Revenue Share

How does the revenue share business model work?

It is a model wherein companies distribute the total amount of revenue generated from their business between partners/stakeholders in accordance with a legal agreement.

How does the revenue share business model make money?

All the stakeholders get a share of the revenue generated by the business alliance based on a legal agreement.

Companies that use the revenue share model

NFL (National Football League), United States Government

Revenue-based Financing

How does the revenue-based business model work?

It is also called royalty-based financing, is a method companies use to raise capital from an investor, and the investor receives a percentage of the ongoing revenue in exchange for the invested money.

How does the revenue-based business model make money?

It generates high returns for the lenders, especially when the loan is structured in the right way for the right companies. This model helps the business to grow more sustainably, which is healthy for consistent revenue generation.

Companies that use the revenue-based financing model: Pipe, Capchase, Clearco

Reverse Auction

How does the reverse auction business model work?

The model consists of multiple sellers and one buyer, in which the sellers bid for the price at which they are willing to sell their goods/services to the buyer.

How does the reverse auction business model make money?

The lower purchase cost helps the buyer to save money, the seller makes money from the sale of the goods, and the auctioneers receive a commission for services rendered.

Companies that use the reverse auction model: Government Contracts, ProcurePot

Reverse Factoring

How does the reverse factoring business model work?

It is a three-way financing solution involving a buyer/seller/financial institution whereby the supplier’s invoice is financed by the financial institution (bank) on behalf of the buyer, while the buyer gets more time to pay the invoice.

How does the reverse factoring business model make money?

The supplier receives early payment for their supplies, which is good for their growth. The buyer benefits from longer payment terms, which improve their liquidity and cash flow. The banks get paid by the buyer, with interest on the money paid to the supplier on behalf of the buyer.

Companies that use the reverse factoring business model

Mitsubishi HC Capital, PrimeRevenue, Trade Finance Global

Reverse Logistics

How does the reverse logistics business model work?

It is a model that moves goods from consumers back to the sellers or manufacturers through the supply chain. It often involves the return of defective products, trade-in of old products for new ones, etc.

How does the reverse logistics business model make money?

Businesses could resell, reuse, or recycle returned products, which helps them to increase revenue. The model leads to greater customer satisfaction, the customers are likely to remain with the brand for a longer time and keep making purchases from the company.

Companies that use the reverse logistics model: H&M, APPLE, UPS

Ride Matching

How does the ride-matching business model work?

It is the pairing of one or more riders to get to their destination by sharing a single vehicle.

How does the ride-matching business model make money?

The driver gets paid for the service, the customers enjoy transportation convenience and save costs, and the ride-matching platform earns a commission from each ride.

Companies that use the ride-matching model: Via

S2P (Source-To-Pay)

How does the S2P business model work?

It is an end-to-end process of procurement that spans sourcing for suppliers, negotiating with them, and hiring them for their products and services. It includes vendor management, performance management, and purchasing.

How does the S2P business model make money?

The platform charges a subscription fee from suppliers and generates revenue through paid ads.

Companies that use the S2P model: SAP Ariba, Coupa BSM Platform, Ivalua Strategic Sourcing

SAAS (Software As A Service)

How does the SAAS business model work?

It is a method that allows users to access cloud-based applications over the Internet instead of installing and maintaining them.

How does the SaaS business model make money?

By charging subscription fees.

Companies that use the SaaS model: Microsoft, Shopify, Slack

Sampling Subscriptions

How does the sampling subscriptions business model work?

It involves consumers trying out free samples of products from various brands without the obligation of paying for them.

How does the sampling subscriptions business model make money?

It gives consumers the opportunity to try a product for a limited time, and the option to purchase what they like for a reasonable price. Thus increase the revenue for the business.

Companies that use the sampling subscription model: Rocksbox, Birchbox, Bergamot

Scan-Based Trading

How does the scan-based trading business model work?

It is a process whereby suppliers retain ownership of the inventory inside the retailer’s stores until the items are scanned at the register and sold.

How does the scan-based business model make money?

The Sale of the products is the major source.

Companies that use the scan-based trading model: Ira Green, Source Interlink, Eurpac

Search Agent Model

How does the search agent business model work?

It is one who represents the interest of the buyer during the process of purchase or lease of a property, usually a house or apartment.

How does the search agent business model make money?

It charges a retaining fee when starts, and a success fee when the property is sold.

Companies that use the search agent model: Garrington, Prime Portfolio, Haringtons UK

Second Hand

How does the second hand business model work?

The products that have been previously used by another buyer, second-hand goods are often purchased for a fraction of the retail price.

How does the second hand business model make money?

Income from advertisements on their platforms, sales of goods, fees for listing, etc.

Companies that use the second hand business model

Letgo, Modacruz, Vestiaire Collective, Greendust

Self-Service

How does the self-service business model work?

It refers to the practice where customers are able to access resources themselves in order to find solutions on their own without the assistance of a company’s employee.

How does the self-service business model make money?

Self-service lowers costs by helping businesses service a large number of customers with small teams.

Companies that use the self-service model: Apple, Amazon, Spotify

Service Subscription

How does the service subscription business model work?

It offers to sell goods/services to customers, and the customers pay a recurring fee on a set timeline, such as monthly or weekly.

How does the service subscription business model make money?

Charging customers a recurring fee for continued access to their goods and services.

Companies that use the service subscription model: Hulu, HelloFresh, Butcher Box

Servicizing

How does the servicizing business model work?

It refers to a model where businesses shift their focus from selling products to selling the functions of the product or selling the service component of the product.

How does the servicizing business model make money?

It generates revenue when customers make payments to them based on the package sold to them.

Companies that use the servicizing business model

Xerox’s pay-per-copy model, RR power-by-the-hour service package, Atlas Contract Air service

Set It and Forget It

How does the set-it-and-forget-it business model work?

The model is that customers have so much trust in a company that they just forget it.

How does the set-it-and-forget-it business model make money?

It helps businesses to automate revenue generation from customers, the model means more sales from customers with minimal employee engagement, which saves costs for the business.

Companies that use the set-it-and-forget-it model

Amazon Dash Button, Fixed Deposit, Health Insurance

Shared Business Model

How does the shared business model work?

It is a model that involves consumers in the creation, use, and distribution of goods and services via digital platforms, online communities, or apps.

How does the shared business model make money?

The prices of goods/services in a shared business model are usually more affordable, hence, it saves costs for consumers. It generates extra income for sellers. The platform typically charges a commission on transactions.

Companies that use the shared business model

WeWork: Co-Working Spaces, Uber: Ride-Sharing and Car-Sharing, Airbnb: house renting/Couchsurfing

Shared Ownership

How does the shared ownership business model work?

It is one in which a business distributes shares to its stakeholders, especially employees.

How does the shared ownership business model make money?

The stakeholders get paid dividends on their percentage ownership of the business. Capital appreciation is another means by which owners of shared businesses make money.

Companies that use the shared ownership model

John Lewis, Publix Super Markets, Brookshire Brothers

Shareware

How does the shareware business model work?

It is the provision of commercial software for free during a certain time period, after which the user is expected to pay for continued access to the full-featured version.

How does the shareware business model make money?

Much shareware generates revenue through advertisements, also a license fee after the trial period.

Companies that use the shareware model

WinZip, Adobe Photoshop, Getright

Showrooming

How does the showrooming business model work?

It refers to the practice of consumers visiting a brick-and-mortar store to view and check a product, before purchasing it online for a lower price.

How does the showrooming business model make money?

It helps consumers save costs by buying the lowest-priced offering on the spot.

Companies that use the showrooming model: Allbirds, Bonobos, Glossier

Simplified

How does the simplified business model work?

It involves the removal of complex/unnecessary steps and tasks to improve the efficiency of production processes in businesses.

How does the simplified business model make money?

It leads to increased efficiency, which saves the business cost on staffing needs. Increased productivity which means better products and increased profits. Simplified processes allow the business to increase production speed, thus, producing and making delivery on time to customers which often results in customer satisfaction and retention of more sales.

Companies that use the simplified model: TSG, Cflow, MicroD

Sliding Scale Fees

How does the sliding scale fees business model work?

Sliding scale fees are fees paid for goods/services based on a customer’s income and capacity to pay.

How does the sliding scale fees business model make money?

The model may endear customers to a company, which means customer retention and increased sales from new ones.

Companies that use the sliding scale fee model

Canadian Unitarian Council, Fidelity International, People Incorporated Mental Health Services

Social Commerce

How does the social commerce business model work?

It entails the buying and selling of goods/services directly through the SNS platform.

How does the social commerce business model make money?

It provides a convenient and frictionless buying experience, which could lead to increased sales for the business. It generates social proof for businesses, which attracts even more customers and more sales. The SNS platform generates revenue through adverts.

Companies that use the social commerce model

Old Navy’s INS shop, Storrow Jewelry’s, Skullcandy, Burrow

Social Cooperative

How does the social cooperative business model work?

It is a model wherein the public interest is the main purpose.

How does the social cooperative business model make money?

The social cooperative produces goods that they sell to generate revenue for the continued sustenance of the cooperative.

Companies that use the social cooperative model

Un Fiore per la vita, Il Germoglio Cooperative, Al di La dei sogni Cooperative

Sponsorship

How does the sponsorship business model work?

It is the practice where a company monetizes its products/services through sponsors instead of setting prices for its customers.

How does the sponsorship business model make money?

Businesses using the sponsorship model generate revenue through funding received from sponsors, and in-kind sponsorships. The sponsors enjoy increased brand awareness and visibility, a form of advertisement that leads to increased sales.

Companies that use the sponsorship model

The International Olympic Committee, FIFA, NBA

Store-In-Store

How does the store-in-store business model work?

It refers to the practice where a retailer rents out part of its space allowing other brands to operate independently and exercise autonomy over retail decisions, such as pricing, and in-store service, and develop their own marketing campaigns.

How does the store-in-store business model make money?

The traffic generated by the host retailer could lead to increased sales for the vendor stores. The model helps brands save money by cutting overhead costs to run an independent store on their own. The host retailer generates revenue through rent or percentage profit paid by vendor stores.

Companies that use the store-in-store model

JCPenny for Sephora, BestBuy for Samsung, Macy for Starbucks

Subscription

How does the subscription business model work?

It involves customers paying a recurring fee for continuous access to a product or service.

How does the subscription business model make money?

A recurring monthly or annual fee for continuous access to the products/services.

Companies that use the subscription model: Netflix, Microsoft, Spotify

Supply Chain

How does the supply chain model work?

It is a network between an organization and its suppliers following a sequence of activities through which a commodity moves from the source to the market.

How does the supply chain model make money?

It leads to increased sales and profitability for the company, and all the involved parties get paid.

Companies that use the supply chain

CH Robinson Worldwide, UPS Supply Chain Solutions, Kuehne + Nagel Americas

Surprise Box

How does the surprise box model work?

It involves curating a package of goods for a particular niche or variety of niches for subscribers on a regular basis.

How does the surprise box model make money?

By charging a recurring fee that is paid regularly, usually monthly.

Companies that use the surprise box model

Stitch Fix, Wonderful Objects, 420 Goody Box

Swapping

How does the swapping model work?

It is the exchange of goods/services with other goods/services of comparable value.

How does the swapping model make money?

The platform charges a commission on the value of the transaction, and the two involved parties save costs by exchanging what they have for what they need.

Companies that use the swapping model

Swapz, Swapitshop, Swapcycle, Gumtree Swap Shop, Craigslist, U-exchange, Trademade

Syndication

How does the syndication model work?

It refers to an alliance of independent businesses working together to achieve a common objective.

How does the syndication model make money?

Up-front licensing fees, advertising revenue, percentage share of transaction revenues.

Companies that use the syndication model

FedEx, Motley Fool, Amazon

The Ad Unit Model

How does the Ad Unit model work?

It refers to a placeholder for an ad that is integrated into other apps and is displayed to users in order to monetize their traffic.

How does the Ad Unit model make money?

The ad unit gets paid per click, and advertisers pay the ad network for the services.

Companies that use the Ad Unit model

Google AdSense, Amazon Affiliates, Bing for Partners

Three-Tiered

How does the three-tiered model work?

It entails a business offering their customers three different pricing choices for the same product/service, which has different individual options.

How does the three-tiered model make money?

It helps businesses to attract more customers with multiple offerings, thus capturing more sales. It affords businesses choice and flexibility and increases sales opportunities.

Companies that use the three-tiered model

HubSpot, Microsoft 365, Xbox Game Pass

Time-Based Pricing

How does the time-based pricing model work?

It is a method of pricing goods/services based on the time the customers make the purchase.

How does the timed-based pricing model make money?

By helping businesses to take advantage of high customer turnover during peak periods, thereby increasing sales and profits.

Companies that use the time-based pricing model

British Airways, Uber, Airbnb

Timeshare

How does the timeshare model work?

It enables multiple owners to own and use a property at different times of the year, typically for a 1-week interval each year.

How does the timeshare model make money?

Timeshare owners can rent their allotted time and make money. Timeshare companies make money through the purchases made by timeshare owners and charge maintenance fees for the property.

Companies that use the timeshare model

Wyndham Destinations, Marriott Vacation Club, Disney Vacation Club

Tip Jar/Donation

How does the tip jar/donation model work?

It is a discretionary payment determined and paid by customers to employees of an organization for good service.

How does the tip jar/donation model make money?

It makes money from the voluntary payments made by customers.

Companies that use the tip jar/donation model

Spotify, Twitter, Patreon

Tripwire

How does the tripwire model work?

It is a low-cost introductory offer designed to turn a prospect or cold traffic into paying customers.

How does the tripwire model make money?

It builds up the customer base of a company, which often translates to more sales.

Companies that use the tripwire model

Name.com, Ryan Levesque, DotcomSecrets

Usage Fee (Metered Service)

How does the Usage Fee model work?

It is a model in which consumers only pay for the number of goods or services they use.

How does the Usage Fee model make money?

It empowers customers to only use what they can afford, which is often an attraction for more customers, resulting in more sales. It provides insights into customer usage, which can be used by businesses to implement targeted marketing to increase revenue.

Companies that use the Usage Fee model

Amazon Web Services, Digital Ocean, WordStream

Value-Added Reseller (VAR)

How does the value-added reseller model work?

It refers to the practice of a company/individual who purchases a product from a company and then resells it after adding value to the product.

How does the value-added reseller model make money?

The supplier gets paid for their products. The value-added reseller resells the value-added product at a higher price to make a profit. Many resellers offer after-sales services like repair & maintenance.

Companies that use the value-added reseller model

Ingram Micro, Elite Group, Router-Switch.com

Vickrey Auction

How does the Vickrey auction model work?

It is a type of sealed-bid auction where participants submit their bids but do not know the bids of others, with the second-highest bid winning the auction.

How does the Vickrey auction model make money?

The winner saves some money since they don’t need to pay the maximum price but the second higher price. The seller gets paid the maximum value for the product. The auctioneer takes a percentage commission from the transaction costs.

Companies that use the Vickrey auction model: eBay, Google Ads

Virtual Business

How does the virtual business model work?

It works by conducting all or most of its business activities via the Internet.

How does the virtual business model make money?

Through the sales of products/services, charging a commission on the sale of products, through ads.

Companies that use the virtual business model: Amazon, Zappos, Netflix

Walrasian Auction

How does the Walrasian Auction model work?

It is a concurrent auction where demand for the good at every possible price is calculated and submitted to the auctioneer, who then sets the price such that the total demand across all submitted demands equals the total amount of the goods.

How does the Walrasian Auction model make money?

Seller: by sales of the goods. Buyer: from the pricing at the auction. Auctioneers: receive a commission for their services.

Companies that use the Walrsian Auction model: NYSE (New York Stock Exchange)

Warehouse Club

How does the warehouse club model work?

It offers low-priced goods/services to members who pay an annual membership fee.

How does the warehouse club model make money?

Annual dues, small markup on the prices, bulk goods at discounted prices to save costs.

Companies that use the warehouse club model

Costco’s Membership, Sam’s Club, BJ’s

White Label

How does the white-label model work?

When a manufacturer of a product uses the logo and brands of the buyer instead of its own.

How does the white-label model make money?

It helps the manufacturer to generate more sales and saves costs by not having to market itself. The model affords the reseller low start-up costs.

Companies that use the white-label model

Great Value Brand, Whole Foods Market’s, 365 Everyday Value

Wholesale

How does the wholesale model work?

It is an intermediary that buys in bulk from the manufacturer at discounted prices and then sells at higher prices to retailers.

How does the wholesale model make money?

Wholesalers buy at discounted rates from manufacturers saving them costs, also it generates revenue by selling at higher prices to retailers.

Companies that use the wholesale model

Costco Wholesale Corp, Sam’s Club, BJ’s

Work Cloud

How does the work cloud model work?

It is the delivery of different computing services through the internet to our devices.

How does the work cloud model make money?

Offering customer data spaces where they can store their data for a recurring fee. Work cloud businesses might charge a fee for customers to access some software services.

Companies that use the Work Cloud model

Google Cloud, Amazon Web Services, Microsoft Azure

Worker Cooperative

How does the worker-cooperative model work?

It is a model that businesses owned/democratically controlled by their employees.

How does the worker-cooperative model make money?

Membership dues, sales of goods/services, through revolving capital, etc.

Companies that use the worker-cooperative model

Union Cab of Madison Cooperative, Cooperative Home Care Associates, Isthmus Engineering