Business Models — slides
Financial Literacy Club
Understanding Businesses · Lesson 7
Business Models
Subscriptions, marketplaces, advertising, licensing, and more.
12-minute lesson · learnwithflc.org
Business Models · 1 / 17
Financial Literacy Club
Understanding Businesses · Lesson 7
Business Models
Subscriptions, marketplaces, advertising, licensing, and more.
12-minute lesson · learnwithflc.org
Today's goals
By the end of class, you'll be able to…
- Define a business model
- Compare subscription, marketplace, advertising, licensing, and one-time sale models
- Identify the key risk in each model
Warm-up
Name three apps you use for free. How do you think each one makes money?
Think, then write your answer.
The big idea
Business Models
Subscriptions, marketplaces, advertising, licensing, and more.
Understanding Businesses · Lesson 7
A business model is the answer to "How does this company make money?" Two companies can sell similar things with completely different models.
Understanding Businesses · Lesson 7
Some patterns show up everywhere:
- Subscription: customers pay regularly for ongoing access. Recurring revenue is predictable.
- Marketplace: connects buyers and sellers and takes a cut of each transaction.
- Advertising: the product is free to users; advertisers pay to reach them.
- Freemium: a free basic version, with paid upgrades.
- Retail / resale: buy goods and sell them for more.
- Razor and blades: sell the main product cheaply and earn on refills or add-ons.
- Licensing and franchising: let others use your brand, content, or system for a fee.
Understanding Businesses · Lesson 7
"If it's free, you might be the product"
When a service is free, ask who's paying. With advertising models, your attention and data are often what's being sold.
See it
Subscription businesses earn recurring payments and must keep customers. Marketplaces earn a cut of each transaction and need both buyers and sellers. Advertising businesses earn from advertisers and need large audiences. Razor-and-blades businesses earn on refills and depend on repeat purchases.
| Who pays | Key challenge | |
|---|---|---|
| Subscription | Customers, every month or year | Keeping customers from canceling |
| Marketplace | A cut of each sale | Attracting both buyers and sellers |
| Advertising | Advertisers | Building a huge, engaged audience |
| Freemium | The few who upgrade | Converting free users to paid |
| Razor and blades | Buyers of refills and add-ons | Keeping customers buying refills |
Real example
Three ways to sell music
- Subscription streaming: listeners pay a monthly fee for access to everything.
- Ad-supported free tier: listeners pay nothing; advertisers pay to play ads between songs.
- Digital downloads: listeners buy individual songs or albums, once.
Same songs. Different models mean different customers, different risks, and different numbers to watch — cancellations for subscriptions, audience size for ads, and sales volume for downloads.
Activity · small groups · 10 min
Model Match
- Give groups eight business cards: a video streaming service, a ride-share app, a free social media app, a video game sold once, a music publisher earning from songs used in ads, a gym membership, an online marketplace for used clothes, a printer company that sells ink.
- Groups name each business model and the biggest risk for it.
- Each group presents one card and the class challenges or agrees.
Check for understanding · 1 of 3
An app connects dog owners with local dog walkers and keeps 20% of every booking.
What business model is this?
- AMarketplace
- BRazor and blades
- CFranchising
- DRetail
A. Marketplace
It connects two sides — owners and walkers — and takes a cut of each transaction.
Check for understanding · 2 of 3
A printer company sells printers below cost but earns high profits on ink cartridges.
What model is this?
- AAdvertising
- BSubscription
- CMarketplace
- DRazor and blades
D. Razor and blades
A cheap main product with profitable refills is the razor-and-blades model.
Check for understanding · 3 of 3
For a subscription business, keeping existing customers is usually just as important as finding new ones.
- True
- False
True
Every cancellation removes recurring revenue, so high churn can sink even fast growth.
Remember
Key takeaways
- Business model = how a company makes money.
- Subscriptions → watch cancellations. Marketplaces → need both sides.
- Advertising → you're the audience being sold.
- Same product, different model, different risks.
Discuss
Talk it over
- Pick an app you use for free. How does it make money?
- Would you start a subscription business or a marketplace? Why?
Exit ticket
What is a business model?
Answer on your exit ticket before you leave.
Nice work today.
Review this lesson anytime — free, no account needed:
learnwithflc.org/courses/understanding-businesses/business-models
Next up: finish your worksheet.