Usually, when we think about creating a new business model, it revolves around pricing. It often revolves around, what are we going to charge for?

If you think about what Netflix did when they first launched, you may recall Blockbuster was renting movies by the night, they were charging late fees. Most of their profit came from their late fees. Netflix on the other hand decided to offer a subscription where you could have one, two, or three DVDs at your house at any point in time, and you just paid a flat monthly fee. There were no late fees. What they did was changed the business model. They changed the pricing model.

Now, how does this help everyone?

Well, it helps everyone in the sense that now there's a group of people who prefer the subscription to the daily rental and they can go subscribe. We didn't eliminate one, although eventually, we did, but we didn't eliminate one, we just said let's offer more options to the marketplace. But in this case, especially the Netflix versus Blockbuster case, it was such a powerful thing that it really did eliminate the daily rental business. So they changed an entire industry.

Take a moment. Step back. Think about how your customers really get value from your products, what they truly value, and can you change your business model to make your customers happier about the way they pay for your products? You might change your own industry.

We hope you enjoyed this memecast. If you have any questions or feedback, please email me [email protected].

Now, go make an impact.

 

Connect with Mark Stiving:

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