What are pattern-based business models?
The business world is dynamic and full of opportunities for those who know how to structure their business effectively. Many wonder how some companies can offer free services and remain profitable. The answer lies in the strategic use of pattern-based business models. These models use patterns in which services appear to be free, but behind the scenes, they generate revenue efficiently. Let's explore some of these models that not only drive profitability but also foster growth.
How does the freemium model work?
The freemium model is a powerful strategy that combines the best of both worlds: a free service for most users and an enhanced, paid version for those looking for something more. Imagine using Spotify, LinkedIn or Dropbox.
- Spotify offers free music with ads, but for a seamless experience, payment is required.
- LinkedIn has free basic features, while premium options are reserved for paying users.
- Dropbox provides cloud storage, but the additional space is for customers who choose a paid plan.
This model not only optimizes profitability by keeping the costs of the free service low, but also facilitates virality and word-of-mouth marketing. Statistics reveal that between 10% and 15% of free users eventually opt for the paid version, offering a steady stream of user conversion.
What is affiliate marketing, advertising and sponsorships all about?
Here we enter a field where promotion and visibility become allies of economic gains.
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Affiliate marketing: In this model, influencers or people with a loyal audience can promote products or services. In return, they receive commissions for the sales generated. Platforms such as YouTube allow influencers to register affiliate programs with Amazon and other companies, generating income while offering free content to their audience.
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Advertising: Platforms such as Google and Facebook offer their services for free because they collect revenue from advertisers interested in capturing the attention of active users. Access to information or social networks is supported because other companies are willing to pay for advertising.
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Sponsors: Similar to advertising, sponsored events allow free public participation while sponsors finance the event. This practice is common in congresses and competitions, where companies pay for exposure to a relevant audience.
The secret behind these strategies is to understand the cost of customer acquisition and the return over time, which allows you to operate efficiently in the market.
What is a multi-sided platform?
Multi-sided platforms have become an exponentially growing phenomenon. This approach brings together two different customer segments, such as suppliers and buyers, and acts as an intermediary facilitating their interactions. Think of it as going to a window to buy something, where the platform is the window that connects the two parties.
- Examples of multi-sided platforms:
- Uber connects passengers with drivers.
- Airbnb connects travelers with people willing to rent their properties.
- Credit cards connect consumers with stores.
One of the main advantages of this model is that you don't always have to charge both customer segments. The key is to offer both groups a value proposition attractive enough for them to actively participate.
These pattern-based business models have proven to be effective and are widely deployed around the world. Explore, experiment and get inspired by these ideas to innovate your venture. Remember, the key is to adapt these patterns to the specific needs of your market, always seeking to maximize both customer satisfaction and your profitability.
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