Over the years, as the creativity and knowledge of people grew, a lot of different businesses started to emerge. With the constant advancement of technology, the variety of businesses out there is even more today. Though these seem to be very different on the outside, they could be broadly categorized into 12 different types based on the forms of value they provide.
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1. Product
Product-based businesses make a tangible item, which is then sold and delivered at a price higher than the cost of making it. Providing value in product form is generally more lucrative because a product once created can be replicated and sold multiple times.
From high-end bikes to businesses selling clothes; expensive wristwatches to affordable edible snacks, all of them are businesses that provide value to the customer in the form of a product.
2. Service
A service is a form of value that involves helping or assisting someone in exchange for a fee. A service should always provide some benefit to the client. And, the more unique and beneficial your skill is, the more you can charge for it.
But, unlike a product, the service cannot really be replicated. It is non-tangible in nature and oftentimes requires spending your time and energy. Doctors, lawyers, actors, designers, strategists, and consultants are all referred to as ‘service’ providers.
3. Shared Resource
This involves creating a durable asset that’s useful for a number of people and then charging a fee in exchange for giving them access to the asset.
Gyms, movie theatres, amusement parks, and online course providers are some examples of businesses that have shared resources that people can use by paying a certain amount for a fixed time.
4. Subscription
Subscription-based businesses offer value to the customers on an ongoing basis and charge a recurring fee that’s collected periodically.
The value or benefit offered to the customer can be either tangible (product) or non-tangible (service).
Satellite television services, mobile network providers, and businesses that deliver milk daily are some examples of subscription-based offerings.
5. Resale
This involves buying assets as inexpensively as possible (usually in bulk) from a wholesale seller and then, selling them to retail buyers at a higher price.
Walmart, Target, and Walgreens fall in the resellers’ category as they buy products in bulk from manufacturers or other wholesalers and sell them to the end customer.
6. Lease
A lease is when you acquire an asset with the intention of letting other people use it for a predefined time duration, in exchange for a fee. Renting a house, a car, or a bike, are examples of value being delivered in the form of a lease.
7. Agency
Providing value in the form of an agency involves marketing and selling a product or service that you do not directly own and then, charging a transaction fee for helping make the sale happen.
This is, essentially, acting as a mediator for connecting the seller with the buyer and charging a commission for doing so. Through an agency, the seller gets assured of a valuable sale that might not happen otherwise, and the buyer gets assured of the quality of the asset depending on the agency’s track record.
Marketplaces like Amazon and Etsy, and freelance platforms like Fiverr and Upwork are some examples of Agency-based businesses.
8. Audience Aggregation
Audience aggregation revolves around getting the attention of a group of similar people (similar interests, similar age, similar hobbies, etc.), and then selling access to the group to a third party. This is generally used for the purpose of advertising and for helping businesses find their ideal target customers.
Blogs, magazines, TV channels, and YouTube videos are some examples that earn revenue by providing value in the form of audience aggregation.
9. Loan
A loan is simply lending money to someone for a certain period of time and then charging an interest amount periodically until the loan amount is paid completely, resulting in the total revenue being equal to the amount of money lent in addition to the recurring interests paid for the predefined duration.
Credit card companies and banks are some popular examples of loan providers.
10. Option
An option gives a customer the access to take a predefined action over a predefined time period, in exchange for a fee.
Some popular examples of option-based offerings are movie tickets (where you have the option of going to watch it or not), discount coupons (where you have the option of buying something at a discounted price, for a certain period), and pre-booking a car (which secures you the car in advance, without even paying the total cost of the car).
11. Insurance
Insurance is all about transferring the risk from the purchaser to the seller. This is a form of value where a business asks a customer to pay recurring amounts of money or a fixed fee for a certain period of time in exchange for the promise of giving the total amount back to the customer in case a particular event takes place. Otherwise, the business keeps all the money.
A health insurance company that promises to bear the policyholder’s bill in case of an accident to the policyholder, is an example of such a business. Similarly, some travel websites offer a complete refund of a ticket if you pay a small non-refundable fee.
12. Capital
Capital involves purchasing an ownership stake in a business and then collecting a corresponding portion of the profit as a recurring dividend or as a one-time payout.
Angel investors, venture capital firms, and retail investors who invest in publicly traded companies provide value via capital.
Modularity
In recent times, rather than a business offering value in any of the 12 forms, a lot of them usually provide value via a combination of 2 or more forms. This strategy is popularly known as ‘Modularity’ and is used by almost all successful companies.
Here are 6 examples of businesses that offer value in multiple forms:
1. An OTT platform like Netflix offers a digital collection of movies (Shared Resource) for a monthly or yearly fee (Subscription).
2. Magazines, in general, are sold for a recurring monthly fee (Subscription), while some pages of the magazine are dedicated to advertising (Audience Aggregation).
3. Travel websites are a combination of at least 3 forms of value: they offer flight tickets (Option), an optional fee for a complete refund on cancellation (Insurance), and space on the website for advertising (Audience Aggregation).
4. Similarly, movie theatres offer movie tickets (which is an Option) in exchange for a certain price, to enable you to watch a movie (which is a shared resource).
5. An E-commerce platform like Amazon connects the buyer and the seller and collects a commission for doing so (in other words, provides value in the form of an Agency). Additionally, Amazon sells electronics and tools that they manufacture themselves (that is, Amazon offers value in the form of a Product as well).
6. While we are here, let’s talk about Brandzpree’s business as well. Brandzpree at this moment offers templates and guides (Product), and simultaneously offers branding and design consultation (Service). As per the plan, there would also be a collection of courses in the future (a Shared Resource) and additional offerings in exchange for a recurring fee (a Subscription).
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