Commerce Glossary

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What is a Business Model?

busi - ness mod - el
noun
Is a company’s high-level plan for generating revenue by identifying its target market, the base services or products the business will provide, and financing details. For new businesses, having a business model is the key to ensure direction and development, and helps a business to anticipate market moves and stay up-to-date with opportunities and challenges.

For startup companies, a business model should include a strategy of what their services or products are offering to the target customer and what differentiates their business from competitors. In addition, a business model should also include a marketing strategy, financing resources, and a revenue forecast. Defining and discovering new opportunities, such as creating partnerships, is another aspect of a business model that can help your company grow and expand in the future.

A subscription business model charges customers a recurring price at regular intervals of time (often monthly or annually) to access a product or a service. This takes place through subscriptions that allow access to the service or product. Pricing for this model can take various forms, from simple or flat-rate subscriptions, to tiered pricing, per-user (or per-seat) pricing, per feature, or usage-based, or a combination of these. Freemium, premium, and free trials are also options in the mix.

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