How to profit using these business models:

1. Customer relations model – lose money getting your software inside your customers’ systems, but increase revenues and lower expenses as time passes.
2. Pyramid model – sell a low-cost product to prevent cheap knockoffs from entering the market, and supplement that with higher margin items at higher price points. Think of Barbie dolls ($10, $20, $100 dolls) and gas pumps (unleaded, premium, and super-premium)
3. Multi-Component Business – the exact product sold in different markets. Think of Coca-Cola selling soft drinks at ballparks, restaurants, supermarkets, vending machines, or hotels selling the same room at different price points.
4. Switchboard Model – Think of the talent agency, where instead of representing one star (i.e., Tom Cruise), the business represents several, and they are a package deal. You’re essentially the network and can increase profitability and power in this model.
5. Time Model – Being first to market and reap profits before competitors can replicate the product and tap into their profits. Think of Intel and new computer chips or Bayer and patented prescription drugs.
6. Blockbuster model – Think Disney, a business model that dominates the market doing colossal product launches.
7. Profit-Multiplier Model – Think Honda, selling virtually the same product with slight variations to different markets. Honda makes small engines, cars, industrial, and outboard boat engines. They don’t have to reinvent the wheel, and they can leverage their brand.
8. Entrepreneurial profit model-keep expenses low, experiment a lot, and if it does not work, cut back heavily, have fun, play hard, and promote those who excel. Think Sam Walton and his book Made in America.
9. Specialist profit model – Think cardiovascular or neurosurgeons, anti-trust and patent lawyers, and anyone who specializes rather than generalizes.
10. Installed Base Profit – think razor-blades, electric toothbrushes, Amazon Kindles. Small margins on the hardware and more prominent on the consumables though a lower price overall. The seller has the power because now the buyer is locked into the hardware.
11. Upgrade Profit Model – Think Microsoft, where you control the various iterations of the software (Microsoft 95 or Oracle 5.0). You gain market share each time one of the competition clients comes over to you, but they also pay 20 to 30% for free marketing.
12. De Facto Standard Profit: The more people buy, the more valuable you become. Network effects drive your profit up.
13. Brand Profit: Pay enough for your brand, and you win because people know you.
14. Specialty Product Profit: Develop new niche products and create them with above-average materials, then charge a premium price.
15. Local Leadership Profit: Be everywhere, and then every store is like a billboard (Starbucks, Walmart, etc.)
16. Transaction Scale Profit: Specialize in high-paying, highly profitable markets. (Think: a real estate agent who only sells $1M+ homes.)
17. Value Chain Position Profit: Certain places in the value chain are incredibly profitable while others are not. Look for these key control points.
18. Cycle Profit: Adjust rates based on the cycle. (Think: Travel industry rates for low, mid, and high seasons.)
19. After-sales market model – though the upfront sale is much like the installed base model profit model, the aftermarket sales are not as sexy but accrue a lot of profit.
20. New product profit model: There is a profit explosion at the beginning of a product’s life.
21. Relative Market Share Profit: Companies with higher market share tend to be more profitable.
22. Experience Curve Model: Experience in serving the market results in lower transaction costs and, eventually, higher profit.
23. Low-cost business model profit: The lower the costs of running your business, the higher your profit will be. You don’t need high revenues to profit from a low-cost business. This is one of the reasons why digital businesses are so attractive.