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Step 15 Design a business model (General Business Models (One time…
Step 15
Design a business model
Spend some time thinking abt the business model, it's what made juggernauts like google (PPC) - don't just use market default
Difficult changing once have an established customer base, thus consider testing before finalize on a specific one (look from customer's perspective)
Is a framework to extract value from customers
Key factors when considering a business model
Understand what customer willing to do. DMU and acquiring paying customer useful here
Assess how much value you provide and when. QVP useful here
Identify what competition doing
Make sure distribution channel incentived enough
Free not a business model - can use temporarily but can't survive without paying customer
General Business Models
One time upfront + maintenance - good to compensate for capital expenditure - but loose out recurring rev
Cost plus - used to share risk
Hourly rates - useful when structure less and dynamic proj
Subscription or leasing - gr8 for recurring rev - prepay super awesome
Licensing - But IP should be strong, reduced TAM (max 5% royalties common), Eventually, produced will try to improve gross margins
Consumables - pay per use - good for catching customers and in long run
Upsell with high margin products (like Razor and razor blade) - makes easier to acquire customers
Advertising (ability to attract and retain a demographic needed)
Selling data (or temporary access) - Usually have to attract customers via free or subsidized services
Transaction fee
Usage based
"Cell phone" plan
Parking meter or penalty charges - but may alienate loyal customers
Microtransactions
Shared savings - though diff to implement
Franchise - when no will to roll out
Operating and maintenance.
Consider
Is it coming from capital costs
or operating costs (easier to get)