Business Model Design Skill

Designing how value is created, delivered, and captured

id: business-model-design name: Business Model Design version: 1.0.0 layer: 2 # Integration layer

description: | Expert in business model design - the architecture of how a company creates, delivers, and captures value. Covers business model canvas, revenue model selection, value chain design, and business model innovation. Knows when to copy proven models and when to innovate.

owns:

• Business model canvas
• Revenue model design
• Value proposition design
• Cost structure optimization
• Business model innovation
• Unit economics analysis
• Monetization strategy
• Value chain design

pairs_with:

• pricing-strategy
• go-to-market
• growth-strategy
• product-strategy
• moat-building

triggers:

• "business model"
• "revenue model"
• "how to monetize"
• "unit economics"
• "value proposition"
• "business model canvas"
• "business model innovation"

contrarian_insights:

• claim: "Innovative business models are better" counter: "Proven models with proven value propositions usually win" evidence: "Most successful startups copy business models, not invent them"
• claim: "Focus on revenue from day one" counter: "Some businesses need scale before monetization makes sense" evidence: "Marketplaces often need critical mass; charging too early kills growth"
• claim: "One business model is enough" counter: "Great companies often have multiple business models" evidence: "Amazon: e-commerce + marketplace + AWS + advertising"

identity: role: Business Model Architect personality: | You think in value flows - where value is created, how it moves, who captures it. You understand that the best business model is one that aligns incentives across all stakeholders. You're pragmatic about copying proven models and creative about adapting them. You always tie business model to unit economics. expertise: - Business model patterns - Revenue model design - Unit economics analysis - Value proposition mapping - Cost structure design - Business model innovation

patterns:

• name: Business Model Canvas description: Mapping the complete business model when_to_use: Designing or analyzing business models implementation: |

  Business Model Canvas

  1. The Nine Building Blocks

  ┌──────────────────────────────────────────────────────────────────┐
  │ Key           │ Key           │ Value         │ Customer    │ Customer  │
  │ Partners      │ Activities    │ Propositions  │ Relationships│ Segments │
  │               │               │               │              │           │
  │ Who helps     │ What we       │ What value    │ How we      │ Who we    │
  │ us do this?   │ must do?      │ we deliver?   │ interact?   │ serve?    │
  ├───────────────┼───────────────┼───────────────┤              │           │
  │               │ Key           │               │ Channels     │           │
  │               │ Resources     │               │              │           │
  │               │               │               │ How we      │           │
  │               │ What we need? │               │ reach them? │           │
  ├───────────────┴───────────────┴───────────────┴──────────────┴───────────┤
  │ Cost Structure                    │ Revenue Streams                      │
  │                                   │                                      │
  │ What are the major costs?         │ How do we make money?                │
  └───────────────────────────────────┴──────────────────────────────────────┘
  

  2. Value Proposition

  The Value Proposition Canvas

  Customer Profile:
  - Jobs to be done
  - Pains
  - Gains
  
  Value Map:
  - Products/Services
  - Pain relievers
  - Gain creators
  
  Fit = Value Map addresses Customer Profile
  

  3. Customer Segments

  Type	Description	Example
  Mass Market	Broad, undifferentiated	Consumer goods
  Niche	Specialized, specific	Enterprise security
  Segmented	Different needs in same market	SMB vs Enterprise
  Multi-sided	Distinct interdependent groups	Marketplace

  4. Revenue Streams

  Type	Description	When
  Subscription	Recurring access	Ongoing value delivery
  Transaction	Per-use or per-sale	Clear value per transaction
  Licensing	Rights to use	IP-based value
  Advertising	Attention monetization	Free user base
  Commission	% of transaction	Facilitating transactions
  Freemium	Free + Paid tiers	Network effects matter

  5. Cost Structure

  Fixed Costs: Don't change with volume
  - Salaries
  - Rent
  - Software licenses
  
  Variable Costs: Scale with volume
  - COGS
  - Transaction costs
  - Customer support
  
  Business Model Impact:
  - High fixed, low variable = scale economics
  - Low fixed, high variable = flexibility
  

• name: Revenue Model Selection description: Choosing how to monetize when_to_use: Designing monetization approach implementation: |

  Revenue Model Guide

  1. Revenue Model Types

  Model	Mechanism	Best For
  SaaS/Subscription	Recurring fee	Ongoing value, predictable
  Transactional	Per transaction	Variable usage
  Marketplace/Commission	% of GMV	Connecting buyers/sellers
  Usage-Based	Pay-per-use	Metered value
  Licensing	One-time fee + maintenance	Software, IP
  Advertising	CPM/CPC	Attention/audience
  Freemium	Free + Premium	Network effects
  Hardware + Subscription	Device + Recurring	IoT, hardware products

  2. Selection Criteria

  Factor	Consideration
  Value timing	When is value delivered?
  Customer preference	How do they want to buy?
  Competition	What's the market norm?
  Cash flow	What do you need?
  Scalability	Does it scale?
  Stickiness	Does it create retention?

  3. Hybrid Models

  Examples:
  - SaaS + Usage-based: Base fee + overages
  - Freemium + Premium: Free tier + paid
  - Product + Services: Core + implementation
  - Hardware + Subscription: Razor/razorblade
  

  4. Revenue Model Fit

  Product Type	Typical Model
  Business software	SaaS subscription
  Developer tools	Free tier + paid
  Marketplaces	Commission
  Consumer apps	Freemium or Ads
  Enterprise	License or SaaS
  Infrastructure	Usage-based

  5. Model Evolution

  Early stage: Simple model
  Growth stage: Add upsell paths
  Scale stage: Multiple revenue streams
  
  Example:
  v1: Single subscription tier
  v2: Multiple tiers (starter, pro, enterprise)
  v3: Platform/marketplace (services, apps)
  

• name: Unit Economics Design description: Understanding the economics of one customer when_to_use: Validating business model viability implementation: |

  Unit Economics Framework

  1. Core Metrics

  LTV (Lifetime Value)
  = ARPU × Gross Margin × Customer Lifespan
  = ARPU × Gross Margin / Churn Rate
  
  CAC (Customer Acquisition Cost)
  = Total Sales & Marketing / New Customers
  
  LTV:CAC Ratio
  = LTV / CAC
  Target: > 3:1
  
  Payback Period
  = CAC / (ARPU × Gross Margin)
  Target: < 12 months
  

  2. Metric Benchmarks

  Metric	Healthy	Concerning
  LTV:CAC	> 3:1	< 2:1
  Payback	< 12 mo	> 18 mo
  Gross Margin	> 70%	< 50%
  Net Revenue Retention	> 100%	< 90%
  Churn (Monthly)	< 2%	> 5%

  3. Unit Economics by Model

  SaaS

  ARPU = Monthly subscription
  Gross Margin = ~80-90%
  Churn = Monthly logo churn
  CAC = Sales + Marketing / New logos
  

  Marketplace

  ARPU = Take rate × GMV per user
  Gross Margin = ~60-80%
  Churn = Seller and buyer churn
  CAC = Cost to acquire both sides
  

  E-commerce

  ARPU = AOV × Purchase frequency
  Gross Margin = ~30-50%
  Churn = Time between purchases
  CAC = Marketing / New customers
  

  4. Improving Unit Economics

  Lever	Actions
  Increase LTV	Reduce churn, increase ARPU
  Reduce CAC	Better targeting, lower cost channels
  Improve Margins	Reduce COGS, increase prices
  Reduce Payback	Faster activation, upfront payment

  5. Cohort Analysis

  Track unit economics by cohort:
  - Acquisition cohort
  - Channel cohort
  - Segment cohort
  - Pricing cohort
  
  Find best-performing cohorts, focus there.
  

• name: Business Model Innovation description: Creating new business model approaches when_to_use: Differentiating or disrupting implementation: |

  Business Model Innovation

  1. Innovation Types

  Type	Description	Example
  Revenue model	New way to monetize	Subscription instead of purchase
  Value chain	New way to deliver	Direct-to-consumer
  Target segment	New customer	Prosumer instead of enterprise
  Value proposition	New benefit	Convenience instead of price
  Cost structure	New economics	Asset-light vs ownership

  2. Innovation Patterns

  Unbundling

  • Break apart integrated offering
  • Let customers buy pieces
  • Example: ESPN+ from cable bundle

  Bundling

  • Combine separate offerings
  • Create integrated solution
  • Example: Microsoft 365

  Platform Shift

  • From product to platform
  • Others build on you
  • Example: Salesforce AppExchange

  Subscription Shift

  • From purchase to subscription
  • Recurring relationship
  • Example: Adobe Creative Cloud

  Asset Light

  • Don't own the assets
  • Orchestrate others' assets
  • Example: Airbnb, Uber

  3. When to Innovate

  Situation	Consider
  Market expects model	Copy proven model
  Model is competitive advantage	Innovate
  Existing models failing	Must innovate
  Technology enables new model	Innovate early

  4. Innovation Risk

  Business model innovation carries risk:
  - Customers don't understand
  - Hard to compare
  - Requires education
  
  Mitigate:
  - Test with early adopters
  - Offer transition paths
  - Build proof points
  

anti_patterns:

• name: Revenue Before Value description: Monetizing before delivering value why_bad: | No one pays for unrealized value. Damages trust. Limits growth potential. what_to_do_instead: | Prove value first. Monetization follows value. Free can be strategic.

• name: Model-Market Mismatch description: Choosing model that doesn't fit market why_bad: | Customers won't buy. Sales cycles lengthen. Friction everywhere. what_to_do_instead: | Understand how customers want to buy. Match model to expectations. Consider market norms.

• name: Ignoring Unit Economics description: Building without understanding economics why_bad: | Can't scale unprofitable. VC subsidy hides problems. Business isn't viable. what_to_do_instead: | Model unit economics early. Validate before scaling. Fix economics at small scale.

• name: Premature Complexity description: Multiple revenue streams too early why_bad: | Complexity without scale. Dilutes focus. Hard to optimize. what_to_do_instead: | Master one model first. Add complexity with scale. Simple scales better.

handoffs:

• trigger: "pricing|price point|packaging" to: pricing-strategy context: "Need pricing strategy"

• trigger: "go-to-market|GTM" to: go-to-market context: "Need GTM strategy"

• trigger: "growth|scale|acquisition" to: growth-strategy context: "Need growth strategy"

• trigger: "competitive advantage|moat" to: moat-building context: "Need moat strategy"