When you start your own business, one of the most significant choices you will make is which business model to use. To make this decision, you will need to have a firm grasp on which pain points you hope to solve and why your approach works. You should know also how you expect to reach those customers.
Here are some of the business models you should consider:
Name Your Price
For some business concepts, allowing customers to name their own prices is a smart idea. You can see this with Priceline, eBay offers, or Everlane’s Choose What You Pay sales. Customers feel like they win by saving off the posted retail and you get valuable information about what price points your clientele tolerate best.
Low Price as an Advantage
You may also want to try being a low-cost leader. You provide a product or service at the lowest price possible — sometimes pricing things at cost — to attract people to your store or site. Amazon is a good example. They sell items as long as possible to attract people to their membership services. You can do something similar, even as a startup.
Position Your Business as a Luxury
If you have a product that no one else offers, you may want to consider the opposite and price your goods as high as you can while staying within the comfort level for your market. This works out well, but only if you have a truly unique offering and you back it up with excellent service and high-quality packaging.
Subscription models work too. Lots of people want the convenience of regular deliveries or the surprise of getting something new each month. You can offer to solve a regular need at a regular price or charge a premium for novelty. Either way, this model has worked wonders for some companies, such as the Dollar Shave Club.
Customization is another option. Consumer trends have been shifting to personalized goods. Monogramming is just the tip of the iceberg. From Coke and the names on its soda bottles to Sneaker companies letting customers pick their own color palettes or design features, people want custom goods no matter the industry.
Direct sales can be a major opportunity. You can choose to start your own direct selling business or work under the umbrella of an established company. When you are in direct selling, you earn a commission on each sale, or your salespeople do. This model works well because it lets salespeople leverage their networks and their personalities to sell a product in which they believe.
Amway has been using this model for decades because it works. While people may wonder if Amway is a scam or not, a quick look at the company’s website will show you that it’s not while helping you understand more about how direct selling could work for you.
When you start your own business, you could allow customers to name their own prices, become a luxury seller, or position yourself as the low-cost leader. You may also opt to offer subscriptions or offer customization services. Direct selling is an option as well, either for your own business or on behalf of an established company. Good luck!
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