What is a Business Model?
A business model explains how a company creates, delivers, and captures value. It includes how revenue is generated, who pays, and how pricing supports the value proposition.

A business model only focuses on product design, not revenue generation.

What does a business model help explain?

Common Tech Business Models
SaaS: Subscription-based (e.g., Salesforce).
Marketplace: Buyer-seller platform, earns commissions (e.g., Airbnb).
Ad-Supported: Free product, earns through ads (e.g., YouTube).
Open Source + Support: Free core, paid premium/support (e.g., GitLab).
Transactional: Pay per use (e.g., Stripe).

YouTube’s free version is an example of an ad-supported model.

Which business model connects buyers and sellers and earns fees?

Evaluating Competitor Business Models
Look at who pays, revenue predictability, value at each customer stage, and alignment with product design and market strategy.

When evaluating a competitor's business model, it’s important to know who is paying.

Which question is relevant when evaluating a business model?

How Business Models Influence Product Strategy
Freemium affects feature access. Subscriptions support customer segmentation. Marketplaces drive user acquisition strategy. Each model shapes product design and marketing.

Freemium models often require gating premium features.

Which strategy is most influenced by marketplace business models?

Summary
Understanding pricing and business models helps PMs align product value with monetization. It supports strategic decisions that drive sustainable, competitive products.

Evaluating business models helps in designing competitive, sustainable products.

What is the ultimate benefit of comparing competitor business models?