What is the best business model?
As a coach for business models I get these questions a lot: What is your favorite business model? What business plan would you use? What is the best business model? Which business model should I use to get rich? And so on.
This article will tell you about my answer to these questions and why I admire this business model so much!
Prerequisites
But before you start, you should know (or learn) about business model patterns and the Business Model Canvas (here is a course on the latter). The Business Model Canvas is THE tool to analyze businesses and extract business model patterns from these companies! You can then apply these patterns to your own business — preferably also in the form of a Business Model Canvas.
The platform business model
Without further ado, here is the best business model if you want to make big $$$ or €€€:
It’s the platform business model:
The platform model is a business model, in which you have two or more very different customer segments, for whom you’re the broker in the middle. Think Apple, Google or eBay — they all use the platform model to bring together two sides of the market. And the ingenious part of this business model pattern is: they make money from BOTH sides!
An example: Apple Inc.
Apple for example has two large customer segments: consumers and app developers. Apple “only” provides the platform in the middle, but the majority of value is generated by millions of app developers Apple doesn’t have to pay a penny. In fact, Apple also TAKES money from these app developers! Let’s look at who pays for what:
Consumer pays:
- Hardware (iPhone, iPad, Apple Watch, Mac)
- Apps
App developer pays:
- Hardware (to test their apps they always need to buy the latest hardware!)
- Annual fee for the right to develop for the App Store
- 30% from their app sales revenue
You see, this is a pretty darn profitable business model! Apple doesn’t have to invent and develop apps — app developers do it for them…and they even PAY for it!
Closing thoughts
If your goal is to make maximum $$$, go for the platform business model. Don’t be fooled though: it is hard to establish! But once you have it going, it is a money printing machine. Just look at Amazon, Apple, Ebay, AirBnB, Uber and all the heavy-weight champions of the tech industry!
I found the best way to find and understand business model patterns like this one in general is to analyze and visualize them. The Business Model Canvas is an awesome tool for that! It’s quick, visual and eye-opening. If you want to brush up on this wonderful tool, feel free to check out this Udemy course on the Business Model Canvas (Basics). I use the Canvas with most of our clients to help them see patterns and come up with successful business models! Then use this method to analyze companies from your industry and (important!) from completely unrelated industries. Some people became very rich with their businesses by simply copying a business model from an unrelated industry, that simply wasn’t common in their industry.
And now I wish you all the luck in the world with whatever business you’re about to start or improve! Always feel free to contact me, if you want assistance or need help. Cheers!
