how to create a business model for a startup

image of business model for a startup

Table of Contents

Is the Business Model just what users will pay for? That too. The business model is complex and requires numerous answers. Business models answer these questions: 

  • Your customers? And why? 
  • Your products are sold where? 
  • What’s the customer’s price? 

The business model shows how your product/services and customers relate. 

Business models are important. Some corporate giants we assume are amazing items are just clever business concepts.

Questions For Choosing Startup Business Model

As noted, a business model is not just about “how much my product/service will cost”? The right startup business model addresses why your startup exists. Ask yourself: 

  • Who is my customer? 
  • My business’s domain? 
  • What makes my company unique? 
  • What do I offer customers? 

Steps To Choose The Best Business Model For Your Startup

Product managers assist startups in finding business models. I utilize this 4-step procedure for that. 

Whose Problem Are You Solving?

First, determine your final customer: 

Entrepreneurial B2B (Business to Business). You work for the same company. Software development, web design, and outsourcing enterprises are B2B models. 

Slack, Plai, Microsoft Teams.

B2C (Business to Customer)—selling to consumers. Online businesses sell daily-use merchandise, smartphone apps, and games.  

Netflix, Hulu, Dollar Shave Club.

C2C (Customer-to-customer) platforms connect customers to sell goods and services. Peers compete for economic gain on such platforms. “Sharing economy” describes this model. Uber, eBay, Horizon. 

Competitor Analysis

Know your rivals before making a market niche declaration. Look at the niche’s top game setters: 

  • Targeting whom? 
  • How do they monetize? 
  • What’s the benefit?  

Make A Lean Canvas

Lean Canvas Business Model Canvas helps organize your business. The template has nine blocks, each for a business process direction: 

  • Problem—what’s each user segment’s issue? 
  • Who are you serving? Your biggest client? 
  • What’s your value proposition? What do you provide clients? 
  • Communication routes. Consumer communication—how? How do you convey value? 
  • Client relations. Consumer interaction: how? Personal manager or directly? Or self-service?  
  • Income sources. Customer pays what? What is your project’s monetization strategy? 
  • Key assets. How can you market your product? Communicate product value to consumers? Resources are financial, material, intellectual, etc.  
  • Key actions. What makes the business work? Production, distribution, client solution search, etc. 
  • Key partners—suppliers and integrated services—enable your business. 
  • Expenses—what your business needs. 
  • Unfair advantage—consider what you can buy that others cannot. 

Startups’ ambiguity makes Lean Canvas useful. This artifact will help you understand your business. 

image of business model

types of business models for startups

We’ve reached the algorithm’s primary point—business model selection. We explored several elements that affect this option. Your firm plan Canvas and responses to the questions above will determine the optimum monetization plan for your firm. 

Many business models exist today. The most popular ones will help startups. 

Freemium Model

Subscription-based services frequently use the Freemium concept. An app’s functionality is free, but the complete version is paid for. 

Freemium shows customers the product’s features. It also attracts the most people who pay for the premium version. 

Netflix, Spotify. 

One-Time Payment (Pay-Per-Use)

The simplest model is possible. This one requires a one-time purchase. Legal, psychiatric, and vehicle rental services fit this model because they are rarely used. 

Dutch student job site STUDENTEN. 

SaaS-Based Model

Slack, Zoho, and Microsoft Office are Saas-based businesses. Office workers may recognize this one. This arrangement allows an organization to buy long-term software from another. Technical assistance and customized services are also provided to consumers. SaaS is a B2B business model.

Subscription Model

When did you last pay Netflix? You’ll probably forget that. We ignore these monthly bank account payments. Netflix relies on subscriptions. 

Subscriptions are usually annual, half-annual, or monthly. B2C subscriptions are more common than SaaS. 


Payment-integrated products and services use the transactional model. This applies to firms that connect sellers and purchasers. They charge buyers, sellers, or both. 

Real estate, PR, event, recruiting, and financial/banking products. 


Marketplaces let sellers sell their items and give customers simple tools to communicate with them. This approach also monetizes through purchase fees and extra services. 

iHerb, Amazon, eBay. 


As the world goes digital, ad business models are becoming more unique. Use this technique to show adverts to readers and viewers by creating engaging content. 

This strategy lets you offer free content and monetize with adverts. This strategy sometimes works with crowdsourcing when users produce material.  

YouTube, NYT

Famous Apps’ Business Models

Popular apps leverage famous business models. 

Airbnb Market Model

Today Airbnb is a prominent global marketplace. Airbnb connects hosts with guests worldwide. Airbnb’s business model aims to be the largest accommodation provider without owning any properties. It connects people and earns from user fees.  

Netflix—Subscription Business Model

Netflix has 193 million subscribers from 190 countries and $20.16 billion in revenue. To create high-quality content, Netflix partners with top directors, scriptwriters, animators, and production firms. Subscribers can watch this content 24/7 without advertising. 

AWS Pay-Per-Use Business Model

Amazon Web Services (AWS) offers individuals, businesses, and governments cloud computing. AWS users can use a virtual computer cluster 24/7. 

AWS subscribers receive free credits upon signup. Thus, this resembles freemium. Users can buy more cloud space and server capacity when needed. Pay-per-use works like this.  


Startup success depends on choosing the right business model. However, choosing a company model answers certain business questions. Lean Canvas helps answer these concerns and systematize your business. 

Based on Lean Canvas and data, Uptech has extensive expertise in discovering the ideal startup business model.

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