What are some common patterns in startup business models?

In general, startups should think of business models that maximizes the lifetime value (LTV) for each customer they acquire - as well as business models that helps to create some level of predictability and repeatability.

For this reason, one-and-done strategies where you acquire a customer, they pay you once and you never see them again, is going to be very difficult - it can work if the transaction is very large in size and scope and you have a trained sales force to go after them in a direct sales strategy. This can be very difficult to sustain if you are attempting to sell products at a modest price to consumers.

In that case, you would be well advised to think about how you can come up with a recurring revenue stream, because that means you can predict a certain level of continuing revenue once you acquire a customer. For hardware products, if you can sell consumables, that's a classic way to generate a recurring revenue stream. For software products, subscription in a SaaS model is typical.

Anything can be made into a subscription. For example, if you sell pistachios, you can sell them in one or two ways:

  • One and done. Your customer goes to the store and buys the pistachios and pays for it on the spot.  This is what you do at a grocery store, or indeed at any retail outlet.
  • Subscription - Your customer signs up to get periodic refills of the pistachios.  This is what you do if you go on Amazon.com and try to buy some pistachios.  Oftentimes you will be offered two choices: You can either do the one time payment, or you can save money by subscribing. 
 
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