Business Models

A business model refers to the framework and strategy that outlines how a company creates, delivers, and captures value in the market. It encompasses various aspects, such as the target customer segment, value proposition, revenue streams, cost structure, key activities, resources, and partnerships.

The multi-brand business model refers to a strategic approach where a company operates multiple distinct brands under its umbrella

The following is an explanation of the business model known as multi-brand:

Brand Diversity: A business that uses a multi-brand model creates and manages multiple brands, each with its own distinct identity, positioning, and target market. These brands may serve a variety of customer demographics, provide a wide range of goods and services, or are active in various business sectors.

Market Segmentation: The objective of adopting a multi-brand strategy is to target a market’s various subsets through market segmentation more effectively. By developing several distinct brands, the company will be able to cater its products and services to the specific requirements, preferences, and demographics of its target audience, thereby expanding its market reach and potential.

Autonomy of the Brand: In a multi-brand model, each brand is allowed some degree of independence in its operations, allowing it to preserve its unique brand identity, brand messaging, and brand experience. Because of this, it is possible to customize and specialize the product by the target market and the brand’s positioning.

The multi-brand business model is suitable for companies that aim to target diverse customer segments, offer a range of products or services with unique brand identities, and capitalize on market opportunities in various industries or geographic regions

Synergies and Economies of Scale: Even though each brand runs its own business, the company can still reap the benefits of synergies and economies of scale because of its combined operations. It is possible to increase productivity and cost-effectiveness across all brands by leveraging shared resources. These shared resources include back-end operations, supply chains, marketing expertise, and research and development

Management of the Portfolio: The company is responsible for strategically managing its portfolio of brands, which includes monitoring their performance, the dynamics of the market, and the competitive landscape. It includes making decisions regarding the acquisition of new brands, the sale of existing brands, the extension of existing brands, or the repositioning of existing brands to maximize market opportunities and optimize the overall portfolio of brands.

The reputation of the Brand and Trust: The multi-brand business model depends on the establishment and upkeep of solid reputations for each of the individual brands to be successful. To cultivate customer loyalty and differentiate itself from other brands, each company needs to keep its promises, give its customers something of value, and earn their trust.

Market Expansion: The multi-brand model can also facilitate market expansion by allowing the company to enter new geographic locations, target new customer segments, or diversify into new product or service categories. That is all possible because the model allows multiple brands to be sold under the same umbrella. Because of this, the company can secure a more significant portion of the market and reduce the risks of being dependent on a single brand.

Examples of companies that employ the multi-brand business model include Procter & Gamble, which operates numerous brands across various consumer product categories, such as Pampers, Gillette, and Tide. Another example is Volkswagen Group, which manages a portfolio of automotive brands, including Volkswagen, Audi, Porsche, and Lamborghini.

This new and rapidly expanding business model allows users to generate high-quality content on websites for free in order to answer other users’ questions and provide reviews.

The business model for user-generated content is based on users actively creating and sharing content on a given platform. Users can contribute articles, videos, reviews, and photos, and they can interact with the content by commenting on it, liking it, and sharing it with their friends. The platform supplies the necessary infrastructure for user participation and oversees the quality control of content. The value that users extract from the platform comes from their ability to express themselves, connect with others, and access information or entertainment.

The user-generated content business model has been implemented by various platforms, such as social media platforms like Facebook, Instagram, and Twitter, content sharing platforms like YouTube and TikTok, review platforms like Yelp, and crowd-sourced knowledge platforms like Wikipedia.


The distribution channel brings in money through methods such as advertising, subscriptions, sponsored content, or the sale of merchandise. The platform’s value increases as more users sign up and contribute content to it, which helps to cultivate a sense of community and grows the number of dedicated users. Platforms for social media, content sharing, user reviews, and knowledge gleaned from the crowd are some examples of the types of platforms that use this model.

YouTube is a prime example of a company that successfully utilizes the user-generated content business model. Users create and upload videos on the platform, and other users engage with the content through views, likes, comments, and shares. YouTube provides the infrastructure for content creation, hosting, and discovery while generating revenue through advertising and premium subscriptions. The platform’s success is built upon the vast library of user-generated content and the vibrant community of content creators and viewers

The agency-based business model refers to a business structure where a company acts as an intermediary or representative between clients and various service providers

The term “agency-based business model” refers to a business structure in which a company acts as an intermediary or representative for several different service providers on behalf of its clients. The agency acts as a go-between for its clients, easing the process of transactions and providing them with specialized services tailored to their requirements. The following is a list of essential components that make up the agency-based business model:

Representation of the Client: Agencies are responsible for representing their clients and working on their behalf to locate and acquire services from third-party providers. They ensure that clients and service providers can effectively communicate with one another and work together by acting as a bridge between the two parties.

Network of Service Providers: In most cases, advertising agencies will keep in place a network of service providers or freelancers who specialize in various fields. They take advantage of this network to provide their customers with a comprehensive selection of services, catering to a wide variety of requirements such as marketing, design, development, consulting, and many more.

The agency-based business model is ideal for small and medium-sized businesses, startups,
professionals, companies expanding into new markets, and enterprises with complex needs.

Project Management: Agencies typically take charge of the project management aspect, coordinating between clients and service providers the various tasks, timelines, and deliverables. They make sure that projects are carried out in a streamlined and effective manner, following the prerequisites and requirements of the clients.

Expertise Specializing in a Particular Field Agencies brings to the table a wealth of knowledge and experience specializing in a particular field. They are knowledgeable of the competitive landscape, current on industry developments, and able to offer clients insights and recommendations. Clients are better able to achieve their objectives and make decisions based on accurate information as a result of this expertise.

Management of Client Relationships: The primary focus of agencies is establishing and maintaining healthy client relationships. To cultivate lasting business relationships, they place a premium on ensuring the happiness of their customers, demonstrating an awareness of their requirements, and providing services of the highest possible standard.

Fee-based Revenue Model: Agencies generate revenue by charging fees or commissions based on the services provided. These fees may be structured as a percentage of the project cost, a flat fee, or a retainer-based arrangement, depending on the nature of the services and the agreement with the client.

The consulting business model offers clients expert advice, guidance, and specialized services to solve problems, improve performance, or achieve goals.

To put it simply, the consulting business model entails providing clients with expert advice, direction, and specialized services in order to assist those clients in solving specific problems, improving their performance, or achieving particular objectives. Consultants make use of their knowledge, expertise, and experience in order to provide clients with useful insights and recommendations regarding strategic moves. The term “consulting” can refer to a wide variety of different specializations, including “management consulting,” “financial consulting,” “IT consulting,” “marketing consulting,” and many others. The consulting process involves close collaboration between the consultant and the client to gain an understanding of the client’s particular requirements and difficulties, the conduct of research and analysis, the development of individualized solutions, and the provision of ongoing support and guidance all the way through the implementation phase.

The consulting business model is an excellent way to charge your clients if you are a subject matter expert (SME)
in a field and the duration of the project is uncertain (due to changes in client requirements).

Working on a project basis

Consultants typically work on a project basis, where they are hired for a specific duration or scope of work. They may collaborate with clients in various ways, including conducting assessments, developing strategies, implementing changes, providing training, or offering ongoing advisory services.The consulting business model offers several benefits to both consultants and clients. For clients, it provides access to specialized expertise and external perspectives, enabling them to overcome challenges, make informed decisions, and achieve their objectives. Consultants, on the other hand, have the opportunity to apply their knowledge and skills in diverse industries and work with a variety of clients, which can lead to professional growth and new opportunities.


The consulting business model involves providing specialized services and expert advice to clients, helping them solve problems and achieve their goals. Consultants leverage their expertise to offer valuable insights, customized solutions, and ongoing support. This model benefits both consultants and clients, with consultants gaining professional growth and clients accessing specialized knowledge. Popular consulting firms include McKinsey & Company and Deloitte Consulting

Some examples of well-known consulting firms include:

  • McKinsey & Company: A global management consulting firm known for providing strategic and operational advice to businesses across various industries.These consulting firms have established reputations and work with clients worldwide, providing valuable insights and solutions to help businesses navigate challenges and drive growth.
  • Boston Consulting Group (BCG): A leading management consulting firm that offers expertise in areas such as strategy, operations, technology, and corporate development.
  • Deloitte Consulting: A multinational professional services firm that provides a wide range of consulting services, including strategy, technology, human capital, and financial advisory.
  • Bain & Company: A management consulting firm that specializes in helping companies with strategy, mergers and acquisitions, organizational design, and performance improvement.
  • Accenture: A global consulting and professional services company that offers services in areas such as digital transformation, technology consulting, and operations.
  • PricewaterhouseCoopers (PwC): A professional services network that provides consulting services in areas such as management consulting, technology consulting, and risk management.

These consulting firms have established reputations and work with clients worldwide, providing valuable insights and solutions to help businesses navigate challenges and drive growth.

Affiliate marketers promote and sell items and services for merchants to earn commissions.

The affiliate marketing business model is a strategy in which individuals or companies (affiliates) earn commissions by promoting and selling products or services on behalf of another company (merchant). It operates on the basis of a mutually beneficial partnership, where the affiliate drives traffic and leads to the merchant’s website, and in return, receives a commission for each successful referral or sale.In affiliate marketing, affiliates typically join affiliate programs offered by merchants or affiliate networks. They receive unique tracking links or codes that they use to promote the merchant’s products or services through various channels such as websites, blogs, social media, email marketing, or online advertising. When a user clicks on the affiliate’s link and makes a purchase or completes a desired action (such as filling out a form or signing up for a service), the affiliate earns a commission based on a predetermined percentage or a fixed amount.

The affiliate marketing business model can be beneficial for various parties involved in the online marketplace:

Merchants: Companies or individuals who have products or services to sell
Affiliates: Individuals, bloggers, content creators, influencers, and website owners
Consumers: Affiliate marketing can benefit consumers by providing them with reviews, and access to products or services
Affiliate Networks: These platforms act as intermediaries, connecting merchants with affiliates providing tracking, and payment systems

The affiliate marketing model benefits both affiliates and merchants.

One of the key advantages of the affiliate marketing model is that it allows individuals or businesses to monetize their online presence and audience without the need to create their own products or services. Affiliates can choose from a wide range of products or services in various niches, selecting those that align with their target audience and interests.The affiliate marketing model benefits both affiliates and merchants. Affiliates have the opportunity to generate income based on their marketing efforts, without the need for inventory, customer service, or product fulfillment. Merchants, on the other hand, benefit from increased exposure, expanded reach, and potential sales or leads generated by the affiliates’ promotional efforts.


Overall, the affiliate marketing business model provides a win-win situation for affiliates and merchants, allowing individuals or businesses to earn passive income by promoting products or services they believe in, while merchants can leverage the marketing efforts of affiliates to drive sales and expand their customer base.

The Amazon Affiliate Program (also known as Amazon Associates), Commission Junction, ShareASale, and ClickBank are just a few examples of businesses that make use of the affiliate marketing business model. These platforms connect affiliates with a wide variety of merchants and provide the tools and resources required to track referrals, manage commissions, and maximize performance. Affiliates can use these platforms to connect with merchants.

The direct sales business model refers to a strategy in which a company sells its products or services directly to consumers without relying on traditional retail channels

The term “direct sales business model” refers to a strategy wherein a company sells its products or services directly to consumers without relying on traditional retail channels as part of its distribution network. This model is used in the context of selling a company’s products or services. The company establishes a direct relationship with its customers and conducts sales through a variety of methods including in-person presentations, home parties, online platforms, and social selling rather than distributing its products through intermediaries such as wholesalers or retailers. This allows the company to save money on distribution costs. Independent sales representatives, who are also sometimes referred to as distributors or consultants, are an important cog in the direct sales model’s wheel. These representatives are typically people who join the company as independent contractors and earn commissions or bonuses based on their sales performance. They are given the opportunity to do so when they sign on with the company. They are the public face of the company and are responsible for promoting and selling the company’s goods or services to individual customers.

Personalized customer interactions

This approach to running a business provides a number of benefits. To begin, it makes it possible to have personalized interactions and demonstrations with customers. This enables customer service representatives to provide in-depth product knowledge, respond to questions, and offer a customized experience. Second, direct sales companies frequently offer their representatives comprehensive training, support, and marketing materials. This gives their representatives the ability to create their own businesses and earn money based on the success of those businesses. The direct sales model is widely used in a variety of industries, including the cosmetics industry, the wellness industry, the household goods industry, and the home decor industry, amongst others. Companies such as Avon, Tupperware, Amway, and Mary Kay are all examples of businesses that utilize the direct sales business model. These businesses are dependent on a network of independent sales representatives who cultivate relationships with clients, give product demonstrations, and earn commissions on the sales they make.


Overall, the direct sales business model allows companies to bypass traditional retail channels and establish a direct connection with customers through independent sales representatives. It provides individuals with an opportunity to start their own business, earn income based on their sales performance, and offers consumers a personalized buying experience.

Herbalife is a good illustration of a business that operates on the basis of the direct sales business model. Herbalife is a multinational company that specializes in nutrition counseling and weight management. The company’s products are distributed directly to end users by a network of independent distributors.

Another example is Pampered Chef is a company that sells kitchen tools, cookware, and food products of a very high quality. They rely on a network of independent consultants who bring cooking shows and demonstrations directly to the homes of potential customers. During these events, the consultants showcase the company’s products and offer customers advice on how to prepare them.

The reverse razor and blade business model is a strategy where a company initially sells a high-margin product, often referred to as the “blade,” and offers complementary or compatible products, known as the “razors,” at a lower or even subsidized price

This business model is an inversion of the conventional razor and blade method, in which the primary product is offered at a reduced price in order to generate recurring revenue through the sale of consumable or complementary items. In the razor and blade business model with its reversed focus, the primary objective of the company is to maximize profits from the sale of an initial product with a high margin of profit. This primary product acts as a platform or entry point for customers, and the company’s goal is to establish a loyal customer base through the utilization of its distinctive value proposition or superior features.

Encourage repeat business from existing customers and boost consumption of the core offering

Once customers have purchased the high-margin product, the company then offers compatible or complementary items at a lower price. These razors are designed to work seamlessly with the primary product, enhancing its functionality or providing additional features. By offering the razors at a lower cost, the company aims to drive customer loyalty, increase usage of the primary product, and potentially generate revenue through the sale of related accessories or services.

The reverse razor and blade business model operates on the concept that customers are more willing to invest in additional products or services once they have made a significant initial purchase. By providing the primary high-margin product first and following up with discounted or lower-cost complementary items, the company aims to maximize the overall customer value and create a sustainable revenue stream. An example of the reverse razor and blade model is the gaming industry, where companies sell gaming consoles, the high-margin product, at a premium price. These consoles serve as the platform for gaming experiences. The company then offers games, accessories, and online services at lower prices to entice customers to engage with their console and generate additional revenue streams.


In a nutshell, the reverse razor and blade business model entails selling a primary product with a high profit margin and offering items that are complementary or compatible with the primary product at a lower price in order to strengthen customer loyalty and generate additional revenue. Its primary goals are to maximize profits from the initial sale and to leverage customer engagement in order to increase ongoing sales of related products or services.

Hewlett-Packard HP, a printer manufacturer, reverses the razor and blade model. HP sells mostly high-margin printers. Printer hardware is often discounted to attract buyers. HP can sell cheaper ink cartridges to customers who have already bought printers. Customers must replace their printer’s ink cartridges to keep it working. HP sells standard, high-capacity, and specialty ink cartridges at various prices. HP uses the “reverse razor and blade” business strategy by selling printers at competitive costs and ink cartridges. The main product, the printer, has a high margin, while the ink cartridges, which are regularly purchased, are cheaper.

The give them fries they come for the burger business model is a strategy where a company offers a low-margin or even loss-leading product as a means to attract customers.

The primary product, often sold at a discounted or inexpensive price, acts as a “hook” to draw customers in. Once customers are engaged and interested, the company generates profits by upselling or cross-selling complementary or higher-margin products.The concept behind this business model is that by offering an appealing or enticing product at an attractive price point, customers are more likely to make a purchase and establish a connection with the brand. Once they are invested or loyal, the company can leverage that relationship to sell additional products or services at higher profit margins.

A initial low-margin product (fries) serves as a way to attract customers

The analogy of “give them fries they come for the burger” refers to the idea that the initial low-margin product (fries) serves as a way to attract customers, and once they are in, they are more likely to purchase the main, higher-margin product (burger) and potentially other items.This model relies on the understanding that customers tend to be more willing to spend additional money after they have already made a purchase or are engaged with a brand. It capitalizes on the concept of customer lifetime value, aiming to maximize the long-term profitability of each customer relationship.

Companies implementing this strategy carefully analyze their product offerings to identify the optimal combination of low-margin and high-margin products that will drive customer acquisition, retention, and profitability. By effectively executing this business model, companies can generate increased sales, customer loyalty, and ultimately, improved profitability.

Fast food chains like McDonald’s are a good example of companies that use the business model “give them fries; they come for the burger.” In this model, customers are enticed to the establishment by the promise of additional side items. McDonald’s provides customers with the opportunity to purchase value meals, which include a burger, fries, and a drink, all for a bundled price that is frequently set at an attractive price point. The burger is the primary offering, while the fries are more of an accessory item to go along with the meal. McDonald’s encourages customers to make a purchase and develop a relationship with their brand by including an incentive in the form of a discounted or low-margin bundle of goods.

The razor and blade business model is a strategy where a company sells a primary product,
known as the “razor,” at a low or even subsidized price.

King C. Gillette, founder of Gillette, popularized the razor and blade business model
by selling a durable razor at cost and premium disposable blades.

The razor and blade business model is a strategy where a company sells a primary product, also known as the “razor,” at a low or even subsidized price in order to drive sales of additional products, which are known as “blades.” This first product acts as a platform for customers to use or a point of entry for them. After the consumer has purchased the razor, they will need to buy additional products, which are referred to as the “blades,” in order to use it properly. Consumable goods like these blades help the company maintain a steady stream of income because customers continue to buy them.

Creating a long-term relationship with customers

The model operates on the principle of creating a long-term relationship with customers by selling the initial product at a lower cost, sometimes even at a loss, to establish a customer base. Once customers are locked into the platform, they become dependent on purchasing the compatible blades or accessories, which are priced at a higher margin to ensure profitability.This model leverages the concept of “lock-in” or customer loyalty, as customers are unlikely to switch to another brand due to the compatibility requirement.

Drive demand by ongoing innovation

In addition, the business model for razors and blades frequently includes continuous research and development, as well as enhancements to existing products, in order to boost demand for the primary product and guarantee continued sales of the blades. The goal of businesses that use this business model is to generate consistent revenue and recoup their initial investment through the sale of blades or other products that complement their core offering. In addition, the razor and blade business model offers scalability because the company can grow its customer base and increase revenue by selling more blades over time. Scalability can be achieved in this way because the razor and blade business model is comprised of two components. Additionally, because customers depend on the products offered by the company to fulfill an ongoing requirement, this business model encourages customer engagement and retention.


The razor and blade business model involves selling a primary product at a low cost, creating customer loyalty, and generating recurring revenue through the sale of complementary consumable products. It offers scalability, fosters customer engagement, and ensures long-term profitability.

Here are a few examples of companies that employ the peer-to-peer business model (beside the obvious Gillet Shaving Products):

  • Keurig:
    Keurig offers single-serve coffee machines, the primary product, at affordable prices. The company generates ongoing revenue by selling coffee pods, the blades in this context, which are necessary to brew coffee using the machines.
  • Nintendo:
    Nintendo uses the razor and blade model in the gaming industry. The company sells gaming consoles, the razors, at competitive prices, but generates significant revenue through the sale of game cartridges or digital game downloads, the blades, which are necessary to play games on their consoles.
  • HP (Hewlett-Packard):
    HP employs the razor and blade model with their printers. They offer printers at affordable prices or even as loss leaders, but make profits by selling ink cartridges, the blades, which need to be replaced regularly for continued printing functionality.
  • Fitbit:
    Fitbit sells fitness trackers, the primary product, at various price points. The company relies on the sale of interchangeable bands, charging cables, and other accessories, the blades, to generate ongoing revenue and maintain customer engagement.

.These examples illustrate how different industries leverage the razor and blade business model to establish customer loyalty and generate recurring revenue through the sale of complementary consumable products.

The hidden revenue business model refers to a strategy where a company generates income from sources that are not immediately apparent or visible to the customer

The hidden revenue business model is a strategy where a company generates income from sources that are not immediately apparent or visible to the customer. It involves identifying and leveraging additional revenue streams beyond the primary source of revenue.

Google, Facebook, Instagram, and Twitter are several examples.

Monetize business beyond the sale of products

In this model, companies explore alternative ways to monetize their business beyond the sale of products or services. They often tap into existing customer relationships, data, or assets to unlock hidden opportunities for generating profit.One common example of hidden revenue is through advertising. Companies may partner with advertisers to display ads on their platforms or websites, generating revenue based on the number of impressions or clicks.

Data sold anonymized to third parties

Another source of hidden revenue is data monetization. Companies collect and analyze customer data to gain insights or sell anonymized data to third parties for market research or targeted advertising purposes.Additionally, companies may engage in affiliate partnerships where they earn commissions for referring customers to other businesses or products.

Licensing fees are another form of hidden revenue, where companies license their intellectual property or technology to other companies in exchange for royalties or fees.Upselling is also a strategy employed in the hidden revenue model, where companies offer additional products or services to existing customers, increasing the average transaction value and revenue per customer.

The hidden revenue business model allows companies to diversify their income streams, reduce reliance on a single source of revenue, and maximize the value derived from existing resources and customer relationships.It is important for companies to carefully balance their hidden revenue initiatives with maintaining a positive customer experience and ensuring transparency to build trust with their customer base.By adopting the hidden revenue business model, companies can unlock untapped potential for revenue generation and increase their overall financial stability and success.

Google is a good example of a company that uses the business model of having hidden revenue streams. Although Google’s advertising platform is its primary source of revenue, the company also generates other, less obvious sources of revenue through a variety of different channels. For instance, Google collects user data from its search engine, email service, and other products in order to provide personalized advertisements and insights to advertisers. This practice is known as data monetization. In addition, Google provides cloud computing services, known as Google Cloud, for which the company charges fees for storage, processing, and other services. This generates an additional revenue stream for Google. Google also generates revenue by licensing its Android operating system to companies that make smartphones. This revenue comes from licensing fees and apps that come pre-installed on the devices. Google is able to maintain a strong financial position and diversify its income streams thanks to these unpublicized sources of revenue.

Scroll to Top