Are you planning to start your own business or trying to grow a company? If so, you might want to review the different types of business models. The latter is a company’s way of keeping their business profitable. It acts as a guideline to doing business, planning, connecting with customers, and selling products or services to a niche market. It doesn’t have to be inflexible, even established companies reassess their model and determine if they need to make changes to it. Learning more about different models enables you to identify which is the most effective for your company.

These are the types of business models you might want to implement for your company.

Fee for Service

This type of business model focuses on providing labor and services for a fee. The strategy is to charge hourly, or a fixed cost based on the agreed upon contract. If your team has a specialized set of skills you can leverage in a niche, this model can be a profitable one. This model requires specific knowledge and technical know-how that provides your team with an advantage. If you can provide unique insights, you’ll be able to distinguish your company from your competitors.


Reduce your business risk by following a tried and tested model such as retail. The retailer buys from distributors or manufacturers then brands the items they buy. They sell directly to customers online and/or through a physical store. This simple model is a popular option for many startups. This also allows you to directly interact with your target market.


A manufacturing business model sources raw materials and produces finished goods with the use of equipment and labor. They can produce customized products or mass-produced alternatives. They also have the option to move items to retailers or customers directly.


This model aims to bundle multiple products and pitch them to a customer. A business offers complementary items together and lets the customer decide whether they think this provides them with value or not. You can integrate this model with the current one you’re already using. You can group related products together and offer them at a discounted price to customers. This approach boosts your chances of converting a visitor or a casual customer into a long-term consumer.


This model often includes partnerships with content creators and influencers. A company pays a partner a fixed amount or a commission whenever their partner generates a sale for them. This model allows you to reach a broader audience through promotions or ads that your partners post on their sites or social media platforms.

Razor Blade

One of the types of business models you might want to consider is the razor blade. This follows the strategy that a company sells a durable item at a lower price then creates profits by moving a disposable part of that item, much like a razor and blade. Before implementing this model, identify the needs of your target audience and determine if the sales you generate are enough to offset costs and still make a profit.

Pay as You Go

This model is often used by utility companies wherein customers pay an amount based on their consumption. With this model, you can charge a fixed amount for the services you provide plus the amount based on customer usage of a product or additional service.


A company profits from this type of model by creating a platform that hosts business transactions. The value they provide is that they attempt to simplify, secure, and make sales faster. One successful example of this model is eBay.

Reverse Razor Blade

This model is the opposite of the razor blade. This approach sells a high-margin and high value item straight away. Then customers can purchase or receive free related items. Businesses that use this model promote an immediate sale of the high-margin item because further use reduces their profit margins.


If you use Spotify or Netflix, then you’re familiar with the subscription business model. This model relies on ongoing long-term payments of customers. Businesses that use this offer a fixed duration for their services or products. You must distinguish your company from the competition to keep them interested, engaged, and subscribed.


Franchising provides many advantages to those that are willing to invest in a proven business model. Fitness centers and food chains are the primary successful examples of this model. A franchiser works with franchisees regarding financing, operations, and finding an ideal location to open a store, center, or restaurant. They get a percentage of the profit generated by their franchisees. You can launch your own franchise if you have the resources to do so.


This strategy aims to attract potential customers by offering basic items through a trial basis or short-term plan. After a customer uses a product, a company then pitches an advanced version full of features and benefits. The improved version requires payment. Businesses provide the option to stay on a freemium product, but they highlight the advantages of upgrading on a frequent basis.


This is a model usually associated with real estate companies. A broker connects buyers and sellers for a possible deal. They then get a percentage of the amount agreed upon after negotiations.

Get ideas on how to create a profitable company by considering these types of business models. These are proven models that many big and small companies implement to reach their target audience and generate revenues. Identify which model works best for your business. You don’t have to stick with one throughout the lifespan of your company. You can always customize your approach as you see fit or change your approach completely. You can combine different models based on the products or services you offer and what type is the most convenient for your customers. Successful companies are flexible and can adapt to changes in their niche.

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