The Best B2B Business Models

The typical business model is you charge money for something that reduces someone else’s risk somehow. You have lemonade and you hand it over to people after they give you cash. But it doesn’t have to be this way.

The largest and most successful companies in history have played around with this model over and over until it is impossible not to consider their service. For whatever reason, these models don’t quite work for direct to consumer businesses.

From a good business model to amazing:

Average – Takes your money before you make money

This is the typical SASS business. You input your credit card and in the a good case you pay a monthly charge and can cancel when you stop using it. Anything worse than this like getting locked into years of service is typically seen as a bit scammy and annoying.

Good – Heavily discounted until you make money

Some companies have a huge discount until you make money. Autodesk, Unity, any locked in software tool that college students like to play with will offer a free version to them and an extremely expensive version for the company those students inevitable work for.

Better – Only charge when you make money pay as you go

AWS makes almost every service they have pay by the hour which is basically as pay-as-you-go as you can get with software cycles. I don’t think anyone is complaining they only wanted 20 minutes of a server and paid for an 60. In the case of lambda, they pay by the compute cycle.

Great – Something free even when you make money to a point

Even better than heavily discounted like Unity is a free service that only starts charging you money after you use it awhile. These businesses make people happy and they are far too locked in by the time they have to start paying for it. Slack and Gmail do this really well.

Many Venture-Backed startups try to use this business model. It is perfect for fundraising. You need to raise a bunch of money upfront to burn and lock in as many customers as possible until they finally switch to paid customers and you make endless amounts of money.

Impossible to turn down – Literally give you money before you make money

Venture funds and Y Combinator itself follow this model. There is literally nothing to complain about. They give you a life changing amount of money to turn into even more money. It’s not debt, your life isn’t ruined like it is with a loan. You simply get to walk away if it all gets burned. This business model gives even the most successful content person pause when they get an offer.