Business Model
Strategy
The business model section is where you answer the fundamental question: how does this business make money? It should clearly describe your revenue streams, pricing strategy, cost structure, and the unit economics that prove each sale is profitable. Investors read this section to determine whether your business can scale without proportional increases in cost.
What to Include
- ●Revenue streams and pricing model
- ●Value proposition and how you deliver it
- ●Customer acquisition and sales process
- ●Cost structure and key expense categories
- ●Unit economics and contribution margin
- ●Scalability analysis and margin improvement path
Example Outline
- 1.Revenue model: how you charge and get paid
- 2.Pricing strategy and rationale
- 3.Cost structure: fixed and variable costs
- 4.Unit economics and contribution margin
- 5.Customer acquisition and sales process overview
Common Mistakes
- ⚠Describing what you sell without explaining how revenue flows and how customers pay
- ⚠Presenting pricing without showing the cost analysis that validates your margins
- ⚠Ignoring unit economics, which are the most important indicator of whether the business model actually works
Tips
- ✓Show your unit economics clearly. Revenue per customer minus variable costs per customer equals your contribution margin. This number must be positive.
- ✓Explain your pricing rationale. Show how you arrived at your price point through cost analysis, competitive benchmarking, or value-based pricing.
- ✓Address scalability explicitly. Explain which costs scale linearly with revenue and which create operating leverage as you grow.
- ✓Include a customer journey map that shows how someone goes from awareness to purchase to repeat customer.
Frequently Asked Questions
Everything you need to know about BusinessIQ
A business model describes how your company creates and captures value: what you sell, how you price it, and your cost structure. A business plan is a comprehensive document that includes your business model along with market analysis, competitive analysis, financial projections, team overview, and operational details.
Start with your cost structure and required margins, then evaluate pricing models used by competitors and alternatives. Consider your customer's willingness to pay, purchasing habits, and budget cycle. Common models include subscription, usage-based, freemium, per-unit, and tiered pricing. The right model balances customer appeal with sustainable margins.
Unit economics measure the revenue and cost associated with a single unit of your business, typically one customer or one transaction. Key metrics include customer acquisition cost, lifetime value, and contribution margin. Positive unit economics prove that each sale generates profit, which is the foundation for scalable growth.
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