Choosing a Business Model

6 important questions on Choosing a Business Model

What are the Scalability, Profitability, Risks, Costs and Funding, and Reward of the Product Business Model?

Scalability:  Medium                                           
Profitability:Declines over time 
Risks:Inventory & price competition
Costs and Funding:Need money to develop & test product
Reward: Can be huge company

What are the Scalability, Profitability, Risks, Costs and Funding, and Reward of the Service Business Model?

Scalability: Low
Profitability: Medium
Risks: Customer develops inhouse
Costs and Funding: Generate revenues sooner
Reward: Very profitable company

What are the Scalability, Profitability, Risks, Costs and Funding, and Reward of the Subscription Business Model?

Scalability:  High 
Profitability: High
Risks: High fixed cost
Costs and Funding: Expensive to build volume to cover costs
Reward: Similar payoff to products 
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What are the Scalability, Profitability, Risks, Costs and Funding, and Reward of the License Business Model?

Scalability: High 
Profitability: High
Risks: Licensee does not pursue
Costs and Funding: Often lowest cost 
Reward: May be small 

What are the Scalability, Profitability, Risks, Costs and Funding, and Reward of the Advertising Business Model?

Scalability: High   
Profitability: High (if the audience is large) 
Risks: Often low
Costs and Funding: Cheap to start, Expensive to market in volume 
Reward:  Depends on marketing success 

What are the Scalability, Profitability, Risks, Costs and Funding, and Reward of the Hybrid Business Model?

Scalability: Depends
Profitability: Superior to product
Risks: Hedged
Costs and Funding: Same as product and service 
Reward: Best of both worlds

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