A business model is at the heart of any business venture. No matter how attractive an investment opportunity appears, it must have a solid way of making money to be worthy of investment – a clear and easy to follow A to Z. There are many different types of business models out there, but here are four which can offer high yield returns for venture investors.
1. Demand Orchestration
Demand orchestration will have a business acting as a third party. This business model creates a location for buyers and sellers to make transactions with each other directly — the business earns a percentage of the monetary exchanges. The most influential example of demand orchestration is eBay. eBay was able to create a platform which provides a vast number of options for buyers and sellers, and by doing this, they were able to attract a huge user-base. This user-base eventually became very attractive to first party services and products.
2. Low Prices
Offering low prices allows a business the opportunity to attract a large share of the marketplace simply because its products are a little easier on the wallet than their competitors. As the business grows, it can develop product upgrades, new ideas and even better service. The idea here is to grab substantial attention from a noisy marketplace. Once that’s been done, and the trust of the market is earned, the business might then increase its prices without losing too much from its share.
3. Reverse Auction
This business model involves buyers offering a price for a service or product. If the seller accepts then the buyer must comply to the seller’s terms and conditions. This model gives buyers a feeling like they are getting a real bargain. The sellers meanwhile can have access to a marketplace which is similar to those offered by demand orchestration, minus prices being set by producers.
A unique specialty product or service results in a limited production to high profit yield. In this model, the marketplace is dictated solely by the producer as their product or service is completely unique and in demand by (usually) a small demographic. If a larger number of people desire the same product or service, it’s likely that other companies will enter the market to compete. This business model does not necessarily need a large customer-base to turn a profit, a small number willing to pay higher prices can be extremely lucrative.