The most commonly used digital business models

Anyone who has a business idea and wants to present it to someone—such as an investor or a startup-focused fund—needs a business model to show. It is the tool used to give concrete form to an idea and a roadmap to achieve it in the most repeatable, scalable, and profitable way possible.

What is a business model?

Using the words of Swiss scholar Alexander Osterwalder, a business model is a conceptual tool used to describe how a company creates, delivers, and captures value. It can therefore be defined as the set of organizational practices and strategic solutions through which a competitive advantage is achieved in the market, and it must be flexible and dynamic. Although this is the most well-known definition, there is still no universally accepted one.

What everyone agrees on, however, is that a company’s business model should illustrate its value proposition, clearly identifying the target audience, key suppliers, production process characteristics, distribution, promotion, and all other core aspects of the business. Understanding how and why to create a business model is one of the key components of academic programs in business administration, such as an Executive MBA or a Global MBA.

What is a business model used for?

A business model helps develop the initial idea, grow it, recruit staff, define a competitive strategy, optimize processes, retain customers, and reach new ones. But above all, it serves to clarify and give structure to an idea, since it is written down and carefully analyzed.

All of this happens in a flexible and highly dynamic framework. It would be unthinkable to assume that a successful business model will remain successful forever. That is why it must be continuously innovated and updated when new competitors emerge, customer needs change, or profit margins begin to shrink significantly.

How to build a business model

Over time, different tools have been developed to help entrepreneurs and startups represent their value proposition and build a business model. Among them, the most well-known is undoubtedly the Osterwalder and Pigneur Business Model Canvas. It is a simplified visual representation of the main activities on which a company’s model is based and helps highlight the logic through which value is created, delivered, and captured.

The Canvas is a visual and organizational technique widely used in planning. It is structured around nine elements divided into two sides: costs on the left and revenue on the right. It consists of a blank board where ideas are placed according to the following categories:

• Customer segments
• Value proposition
• Distribution channels
• Customer relationships and support
• Revenue streams
• Key resources
• Key activities
• Key partners
• Cost structure

Types of business models

There are different types of business models, some associated with companies that have achieved leadership positions in their industries, such as Netflix, Tesla, or Amazon, and others that aim to systematize key market approaches.

• Software as a Service (SaaS)

Used by software startups or app-based businesses. Instead of a one-time payment, customers pay a monthly subscription for the product or service.

• Transactional

The classic model of selling a product or service in a physical or online store.

• Marketplace

A model based on acting as an intermediary between one user and another, or between one company and another.

• Freemium

A product is offered for free but with limited features, while additional benefits are unlocked through a premium version.

• Pay as you go

Customers pay only for what they use. The more and longer they use it, the higher the cost.

• Leasing

Based on renting expensive products or services, generating income through interest and high margins.

• Affiliate

Works by promoting product links and earning commissions on sales.

• Advertising

A model that offers a free product or service and relies entirely on advertising revenue.

• Franchise

A legal and commercial relationship between the brand owner and the individual who chooses to operate under it (the franchisee).

Digital business models

The term digital business refers to companies that have undergone a digital transformation process to improve internal and external operations in order to deliver more value to customers. Developing a digital business strategy goes beyond following the latest technological trends; it means strategically integrating new technologies into products, services, and business operations because they are expected to have a tangible impact.

Compared to traditional market models, digital businesses produce services and products that are easy to create, replicate, and automate. This mainly affects costs and scalability: it is possible to sell products at large scale without incurring high additional costs.

Common examples of digital business models include:

• Everything-as-a-Service (XaaS): a model that replaces one-time purchases with subscription-based access to cloud services.
• Peer-to-peer services: platforms provided by third parties that allow users to share and access a common resource, from Uber ridesharing to Airbnb accommodation rentals.
• Multichannel retail: allows companies to operate across multiple sales channels beyond physical stores (e-commerce websites, social media, marketplaces, and affiliate programs).
• Open-source + for-profit model: combines open-source software development with a profit-driven business model, leveraging community contributions for development, distribution, and marketing while monetizing related services.