Select Page

There are many different types of business models out there. When you’re starting out, it’s important to choose the one that is best suited to your business concept. Here, we’ll introduce some of the main types of business model (hint: it’s not an exhaustive list!)

 First, what is a business model?

A business model is not focused on what you sell, but how your business creates, delivers, and captures value. In other words, we’re talking about how your business makes money from its operations. The best way to explain how a business model works is by looking at some examples.

 Here are 7 key types of business model:


A manufacturer takes raw materials and makes finished products. The manufacturer may then sell these products directly to the consumer or sell them to a middleman (such as a retailer or distributor) that sells to the consumer.


Franchising is hugely popular in Australia. As at 2016, there were 1,160 Australian franchise systems and around 79,000 franchise units in Australia, representing 4% of our economy. With this business model, the franchise owner (franchisee) pays a fee in return for the right to offer, sell or distribute goods or services under a business system determined by the business founder (franchisor). The franchisor supports the franchised business group by providing leadership, guidance, training, marketing and a brand name in return for ongoing service fees. Anytime Fitness, Battery World and MacDonald’s are examples of successful franchise business models in Australia.


With this business model, the basic product or service is cost-sensitive and therefore priced as low as possible. For every other service that comes with it, an additional amount is charged. For example, Jetstar (or any budget airline for that matter), charges the lowest possible price for the flight then adds fees for luggage, seat selection, priority boarding, and so on.

 On Demand 

As consumers demand greater convenience, speed, and simplicity, a growing number of businesses are moving to an on-demand business model – where customers get immediate access to products and services by means of technology. Uber is an example of the on-demand business model in action – today it facilitates 15 million rides a daywithout owning a single cab. Read more about how to make money in the on-demand economy.

Direct Sales 

Of all the direct-selling businesses out there, Tupperware is probably the brand most people think of. Tupperware is a true direct sales model in that the products are not sold in stores – they can only be purchased through Tupperware’s website or through a Tupperware consultant. But does direct selling still work in the internet era? Yes – in fact, social media allows sellers to reach more people than ever.

 High Touch

Think of this as a “person-centric” model in which the relationship between the business employees and the customers have a major impact on sale and retention. Much like in your sustainable energy rating business it’s all about building trust and relationships. For example, professional services such as accounting firms and financial services are high-touch businesses, as are beauty salons.

 Low Touch

By contrast,a low-touch business requires minimal involvement or assistance from employees when selling a product or service. The customer will buy the product or service without placing much value on the individual selling. IKEA is a great example of this in action with its hugely successful self-service business model. Shoppers leave the showroom, pick up their flat-packed goods from the warehouse, put the boxes on trolleys, and bring them to the checkout themselves – no staff required.

 Final Thoughts

New business models are continuously being created to meet changing consumer needs and evolving technologies. Here’s the thing: you do not need to use any of the existing business models when setting up your business – you can innovate and design your own to suit your business. This is the idea put forward by Alexander Osterwalder in his book Business Model Generation.We’ll discuss this more in the coming weeks, so stay tuned!

Want to learn more about business models?This article introduces more examples of business models, this one talks about how business models can be used for disruption and this Hubspot article is a great introduction to business model innovation.

Take our self assessment survey

Are you interested in finding out if you have options for Recognition of Prior Learning (RPL) for a qualification?

Do you have some work experience or have been in the workforce for a number of years but not sure how you can apply your existing knowledge to achieving a qualification?

Our self assessment survey will give you more information for what your self paced learning pathway looks like based onyour work and life experience – ie do you have options for Recognition of Prior Learning (RPL) or is a distance package best for you – or a blend of both.

The survey is free and it takes just 10 mins to complete and within 24 hours you will have a response from a Transformed team member with your recommended learning pathway as well as the fee to complete and the next steps should you wish to enrol. We have payment plans to suit all budgets.

It’s that easy – click on the orange button to take a survey for the qualification you are interested in NOW.