Business Model Canvas

Business Model Canvas is strategic management and lean startup template for developing new or documenting existing business models.

It is a visual chart with elements describing a firm's or product's value proposition, infrastructure, customers, and finances. It assists firms in aligning their activities by illustrating potential trade-offs.

The Business Model Canvas was initially proposed by Alexander Osterwalder based on his earlier work on Business Model Ontology. 

If you are looking for the complete guide about Business Model Canvas check out this guide: The Business Model Canvas Explained in 7 steps

How to use this Canvas?

The right side of the Business Model Canvas is focused on the customer, while the left side on the business. The right and left side come together with Value Propositions in the center to signify the exchange of value between your business and the customers. The sequence of the steps is as follow :

1. Customer Segment

For whom are we creating value?
Who are our most important customers?

Mass Market
Niche Market
Segmented
Multi-sided Platform

2. Value Proposition

What value do we deliver to the customer? Which one of our customer's problems are we helping to solve? What bundle of products and services are we offering to each Customer Segment? Which customer needs are we satisfying?

Characteristics

  • Newness
  • Performance
  • Customization
  • "Getting the job done"
  • Design
  • Brand/Status
  • Price
  • Cost Reductions
  • Risk Reductions
  • Accessibility
  • Convenience/Usability

3. Channels

Through which Channels do our Customer Segments want to be reached?
How are we reaching them now?
How are our Channels integrated?
Which ones work best? Which ones are most co-efficient?
How are we integrating them with customer routines?

Channel Phases

  • Personnel Assistance: How do we raise awareness about our company's products and services?
  • Evaluation: How do we help customers evaluate our organization's Value Proposition?
  • Purchase: How do we allow customers to purchase specific products and services?
  • Delivery: How do we deliver a Value Proposition to customers?
  • After-Sales: How do we provide post-purchase customer support?

4. Customer Relationships

What type of relationship does each of our Customer Segments expect us to establish and maintain with them?
Which one have we established?
How are they integrated with the rest of our business model?
How costly are they?

Examples

  • Personnel Assistance
  • Dedicated Personnel Assistance
  • Self-Service
  • Automated Services
  • Communities
  • Co-Creation

5. Revenue Streams

For what value are our customers really willing to pay?
For what do they currently pay?
How are they currently paying?
How would they prefer to pay?
How much does each Revenue Stream contribute to overall revenues?

Types Fixed Pricing Dynamic Pricing
Assets Sell List Price Negotiation (bargaining)
Usage Fee Product Feature Dependent Yield Management
Subscription Fees Customer segment dependent Real-time-Market
Lending/Renting/Leasing Volume Dependent  
Licensing    

6. Key Activities

What Key Activities do our Value Proposition require?
Our Distribution Channels?
Customer Relationships?
Revenue Streams?

Categories

  • Production
  • Problem Solving
  • Platform/Network

7. Key Resources

What Key Resources does our Value Proposition require?
Our Distribution Channels?
Customer Relationships?
Revenue Streams?

Type of Resources

  • Physical
  • Intellectual (Brand Patents, Copyrights, data)
  • Human
  • Financial

8. Key Partners

Who are our key partners?
Who are our key suppliers?
Which key resources are we acquiring from partners?
Which key activities do partners perform?

Motivations For Partnerships

  • Optimization and economy
  • Reduction of risk and uncertainty
  • Acquisition of particular resources and activities

9. Cost Structure

What are the most important costs inherent in our business model?
Which Key Resources are most expensive?
Which Key Activities are most expensive?

Is Your Business More

Cost Driven (Leanest cost structure, low price value proposition, maximum automation, extensive outsourcing)
Value-Driven (Focused on value creation, Premium value proposition)

Sample Characteristics

Fixed Costs (Salaries, Rent, Utilities)
Variable Costs
Economies of Scale
Economies of Scope
Economies of Scope

Business Model Canvas Tools & Templates 

Try Business Model Canvas Online 

We have canvas modeling tool that makes your stuff easy, Let's get started with upmetrics and invite your team to create your first business model canvas in no time.

Download Business Model Canvas Templates 

Would you like to try with a pen and paper? Try downloading BMC templates Download PPTX or Download PDF and make a print on a large paper, attach it on the blackboard and start collaborating with your team.

Business Model Canvas by Alexander Osterwalder.
The Business Model Canvas itself is licensed under the Creative Commons Attribution-Share Alike 3.0 Un-ported License.

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