Business Model

A business modal can be defined as the strategy of a business through which it wants to earn revenue from the products and services offered by the business. There are different business modals followed by the companies depending upon the type of products and services offered by the company or the business entity. Most of the companies choose the existing business modal or they invent a new business modal that is customized according to their own needs. The selection of the business model is based on the fact that which modal earns more profit for the company. A number of other things that a business model also defines are the marketing strategy of the company, branding for the product and the services of the company, pricing strategies, selection of the sales channel and professional partners from the business model.

Example of a Business Model

The examples of the business model can be a mobile phone company that has a strategy of selling mobile phone at a lower price as compared to the price in the market but they follow a model that tends to generate revenue by selling bulk call packages and the minutes consumed on the call and the number of SMS sent from the user account.

This kind of the business model is attractive for the investors as they are attracted towards the potential of getting revenue by the amount of services consumed by the users or the callers. This kind of business model has chance of growth as the company can offer a number of new products and services in the future.

Why Business Model is Important for the Companies

A business model is very important for the company to generate revenues. An effective business model helps a company to increase its sales of its products and services.


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