Neal Cabage is a digital product architect and author of The Smarter Startup. In order to help budding entrepreneurs apply the appropriate model to their business, he created what he calls the “Business Model Archetypes.”
“This is a much more simplified, cohesive model that should be a lot more valuable,” Cabage says.
THE SEVEN BUSINESS MODEL ARCHETYPES
- The Trade Archetype: focuses on sourcing products that can be sold at a higher price. The difference between what that product can be bought and sold for is the Arbitrage (the spread). An example of this would be eCommerce or Lead Generation.
- The Service Archetype: primarily focuses on problem solving for the customers and money is generated by selling hours. An example of this would be a Digital Services Agency.
- The Product Archetype: is all about developing a great product and selling it. For example, creating cutting-edge software or content that consumers need.
- The Brokerage Archetype: is a combination of Trade and Service. In this case, products are still being sourced but they’re done on behalf of the client. Money is made by being retained, for the hours spent rather than the arbitrage. A good example here is an Ad Network that sources traffic on behalf of advertisers.
- The Marketplace Archetype: combines Trade and Product. The trade is productized rather than just doing the trade itself. A platform is created to bring buyers and sellers to the table and facilitate trades.
- The Subscription Archetype: is a combination of Product and Service. A product is not just created but also managed and the customers are supported in the process. Money is made by subscription fees rather than a single-time sale of the product. Examples include Software as a Service (Saas) and Content as a Service (CaaS).
- The Ecosystem Archetype: combines all three primaries together – Trade, Product and Service. Often times this starts off as a product but then turns into something much more over time when other business base their livelihood on the success of the platform. Magento and Salesforce are great examples of this archetype, as they have built entire ecosystems within the marketplace.
“These seven, fundamental business personalities make up the Business Model Archetypes.” Cabage concludes. “Hopefully this is helpful to you as you start to structure your business or look for opportunities in the marketplace.”