10 business models for startups that you should know (with examples)

If you want to start a business, I am sure that your company will have one of these 10 business models. So let's dive into them.

Here users are allowed to use the basic features of a software, game or service for “free”, and then charged for “upgrades” to the basic package.

Examples: Google Drive, icloud and Slack.

Freemium Business Model
Freemium business model

Freemium is very common in web-based services (SaaS) and digital applications. In this case, the free version of the product is a growth engine, while the premium version provides long-term income.

It is based on the idea of ​​selling a product or service to receive monthly or annual subscription income.

Subscription business model

There are different types of subscription business models such as

Amazon Umbrella Subscription
Subscription pass
Subscription box
Subscription ecosystem

Subscription Business ModelSubscription Business Model

This is considered as the next step to the Freemium business model if the customer is interested in paying monthly for a premium feature of the product.

This is a pricing strategy in which users pay based on their consumption.

Pay-as-you-go Business ModelPay-as-you-go Business Model
Pay-as-you-go business model

It is used by cloud computing companies like Google Cloud, AWS, etc. In short, the more you use it, the more you pay.

A marketplace is a type of e-commerce site in which product or service information is provided by third-party sellers and the company takes a cut of the transaction (15%-25%).

Examples – Amazon, Fiverr, Urban Company

Marketplace Business ModelMarketplace Business Model
Marketplace business model

There are different types of Marketplaces such as

Light Markets – Craigslist
Managed marketplaces – Airbnb
Highly managed marketplaces – Amazon

FFS's business model is based on charging clients a fixed and variable fee for each payment made.

Fee-for-service business model Fee-for-service business model
Fee For Service Business Model

It is used by companies like Stripe and Razor pay where they deduct between 1% and 2% as collection costs on the transaction amount.

Example: Stripe charges 2.9% + 30¢ for each successful payment transaction.

Income is generated by directly selling an item or service to a customer.

Widely used by e-commerce sites or any other products purchased online. Ex. Ship, Mother Earth

Used by social media giants and search engines, who use your search data and interests to display ads.

Example: Google and Meta

Facebook Business ModelFacebook Business Model
Business model based on advertising

It keeps users out of the equation so they don't pay for the service or product offered, for example, Google users don't pay for searches.

Job portals can make money by charging an update from both the candidate and the recruiter who is on the web.

In this case, the franchisee (owner of the premises) uses the registered trademark, brand and business model of a franchisor (company).

Some examples are Dominos, KFC, etc.

Franchise business modelFranchise business model
Franchise business model

In this type of business model, an item is sold at a low price to increase sales of a complementary good, such as consumables.

Examples: Gillette razor and blades, CCD coffee machine and coffee beans and HP printer and cartridges, etc.

Razor Blade Business ModelRazor Blade Business Model
Razor Blade Business Model

Benefits of the razor approach

Recurring benefits for the brand.
Spare parts with higher margins
Good upselling and cross-selling opportunities
Stable profit model