Business model
A description of how an organization creates, delivers, and captures value through its customers, offerings, activities, and revenue sources.
Business Model Canvas: A strategic template that maps nine elements of an organization’s business model on one page. Its nine blocks turn the model’s customers, value, infrastructure, and finances into a shared map.
Network effect: A change in a product’s value to users caused by a change in the number of users. Some models become more valuable as participation by customers or partners grows.
Freemium: A pricing strategy that offers a basic product free and charges for advanced features or use. It uses free access to attract users and paid tiers to capture revenue.
Business strategy: A set of choices about how an organization competes and seeks advantage in a market. Strategy explains competitive choices; the business model explains how value and income flow.
Business model innovation: The creation or substantial redesign of the way an organization creates, delivers, or captures value. Changing the model can open new markets or disrupt established industry economics.
Value proposition: A statement of the benefits an offering provides to a defined group of customers. It specifies the value the model promises to create for its customers.
Cross-subsidization: The use of profits from one product, service, or customer group to support another. It explains how a business can offer one part of its model cheaply or free.
Franchising: A business arrangement in which a franchisor licenses its brand and operating system to independent operators. It lets a business expand through partners who invest in local operations.
Business plan: A document outlining a venture’s goals, market, operations, and financial projections. A plan presents forecasts and execution details, while a model describes the underlying value logic.
Disruptive innovation: A process in which a simpler or more accessible offering can displace established competitors over time. A different business model can let entrants serve customers incumbents overlook.