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20 Examples of Business Models
Affinity Club
e.g. MBNA
Partner with membership associations and other affinity groups to offer a product exclusively to its members, exchanging royalties for access to a larger customer base.
Automation-enabled services
e.g. Betterment, IBM Watson
Harness software that automates processes previously requiring human labor and cognition to reduce operating costs.
Brokerage
e.g. Century 21, Orbitz
Bring together and facilitate transactions between buyers and sellers, charging a fee for each successful transaction.
Bundling
e.g. Fast-food value meals, iPod/iTunes
Make purchasing simple and more complete by packaging related products together.
Crowdsourcing
e.g. Wikipedia, YouTube Outsource tasks to a broad group that contributes content for free in exchange for access to other users’ content.
Data-Into-Assets
e.g. Waze, Facebook
Use data management and analysis processes to capture value from having access to or ownership of data.
Digital Platforms
e.g. OpenTable, Airbnb, Uber>
Enable value-creating interactions between external producers and consumers through open, participative infrastructure with set governance conditions.
Disintermediation
e.g. Dell, WebMD
Deliver directly to the customer a product or service that has traditionally gone through an intermediary.
Fractionalization
e.g. Time-sharing condos, NetJets
Allow users to own part of a product or service but enjoy many of the benefits of full ownership at a fraction of the price.
Freemium
e.g. Spotify, LinkedIn, Dropbox
Offer basic services for free but charge for upgraded or premium services.
Leasing
e.g. Luxury cars, Xerox, MachneryLink
Make high-margin, high-cost products affordable by having the customer rent rather than buy them.
Low-Touch
e.g. Southwest, Walmart, Xiameter
Offer low-price, low-service version of a traditionally high-end offering.
Negative Operating Cycle
e.g. Amazon
Generate high profits by maintaining low inventory and having the customer pay up front for a product or service to be delivered in the future.
Pay-As-You-Go
e.g. Amazon Web Services, car2go
Charge the customer for metered services based on actual usage rates.
Razors/Blades
e.g. Gillette, personal printers
Offer the higher-margin “razors” for low or no cost to make profits by selling high-volume, low-margin “blades.”
Reverse RAZORS/BLADES
e.g. iPod/iTunes, Amazon Kindle
Offer the low-margin “blades” at no or low cost to encourage sales of the higher-margin “razors.”
Product-to-Service
e.g. IBM, Hilti, Zipcar
Rather than sell the products outright, sell the service the product performs.
Standardization
e.g. Minute Clinic
Provide lower-cost standardized solution to problems that once could be addressed through high-cost customized products or services.
Subscription Club
e.g. Netflix, Five Four Club, Dollar Shave Club
Charge the customer a subscription fee to gain access to a product or service.
User Communities
e.g. Angie’s List
Grant members access to a network, generating revenue through membership fees and advertisements.
Mark W. Johnson
Co-founder, Innosight, Chief Strategy Officer, Huron
Mark Johnson co-founded Innosight with Clay Christensen. He is currently the Chief Strategy Officer for Huron, Innosight’s parent company.He has been a strategic advisor to both Global 1000 and start-up companies in a wide range of industries—including automotive, health care, aerospace/defense, enterprise IT, energy, and consumer packaged goods. He has advised Singapore’s government on innovation and entrepreneurship.
The Business Model Challenge | Mark W. Johnson video player ready
The Business Model Challenge | Mark W. Johnson
Reinvent Your Business Model | Mark W. Johnson video player ready
Reinvent Your Business Model | Mark W. Johnson
In the News
HBR Live in London: Reinvent Your Business Model
April 23, 2019
Join Mark Johnson and Harvard Business Review in London, April 23.
Axiom Business Book Awards
DECEMBER 14, 2018
Bronze Medalist in Business Theory
Innovation Leader: Pointers 2018
JUNE 25, 2018
Learn more about “Three Principles for Engaging Employees in Business Model Innovation” by Mark W. Johnson, Innosight co-founder and author of new book, Reinvent Your Business Model: How to Seize the White Space for Transformative Growth.
