Launching a startup is more than just having a great idea — choosing the right business model is crucial to growth and sustainability. In this blog, we’ll explore 8 startup business models you should know in 2025, how they generate revenue, and examples of successful companies using them. Complete with detailed examples of companies like Slack, Netflix, Amazon, and Uber. Understand how each model works and why it succeeds.
Choosing the right business model can make or break your startup. It defines how you’ll generate revenue, attract customers, and scale. Let’s explore 8 popular business models, with real-world examples that show how each one works in practice.
What is a startup business model?
A startup business model is a simple plan that explains how a new company will make money. It outlines what product or service the startup offers, who the customers are, how the company will reach them, and how it will earn revenue. In short, it’s the strategy that shows how the startup creates value for customers and turns that value into profit.
1. Freemium Model
Overview: Offer a free version of your product to attract users, then monetize with premium upgrades.
Example: Slack is one of the most well-known examples. It offers a robust free tier for team messaging and collaboration. As companies grow, they often upgrade to the paid version for features like unlimited message history, enhanced security, and app integrations.
Freemium works well for SaaS businesses that want fast user acquisition and have clear upgrade paths.
2. Subscription Model
Overview: Charge customers on a recurring basis, typically monthly or annually.
Example: Netflix revolutionised video streaming with its subscription model. Users pay a fixed monthly fee for unlimited access to content. This ensures predictable revenue and builds long-term customer relationships.
Other great examples include Spotify, Adobe Creative Cloud, and Notion.
3. Marketplace Model
Overview: Connect buyers and sellers and earn a commission from transactions.
Example: Amazon is the gold standard for marketplace models. It connects third-party sellers to millions of buyers, charging a referral fee on each sale. Airbnb does the same for travel, and Fiverr connects freelancers with clients.
Marketplaces thrive when they achieve liquidity (enough buyers and sellers) and trust.
5. Razor-Blade Model
Overview: Sell a base product at low or no profit, and make recurring revenue from consumables.
Example: Gillette popularized this model. Razors are inexpensive, but blades are sold at a premium.
Modern examples include gaming consoles (e.g., PlayStation + games/DLC) and printers (e.g., HP + ink cartridges).
6. Aggregator Model
Overview: Bring together multiple providers under a single brand and user experience.
Example: Uber doesn’t own cars but connects riders to drivers via its app. Uber controls the brand and experience while working with independent contractors.
Zomato, Ola, and Practo also use this model effectively in food delivery, transport, and healthcare respectively.
7. Franchise Model
Overview: Replicate a successful business model by licensing it to others.
Example: Domino’s Pizza is a franchise-driven company. Entrepreneurs pay a franchise fee to use its brand, systems, and recipes, while Domino’s earns through royalties and support fees.
Franchising is great for scaling physical businesses while maintaining brand control.
8. Brokerage Model
Overview: Earn revenue by acting as a middleman and charging commission on deals.
Example: eBay connects sellers and buyers for second-hand goods and collectibles. eBay charges a commission per sale, enabling low inventory risk.
Brokerage models work well when you can streamline transactions and add trust to both sides.
9. EdTech Model
Overview: Sell access to learning platforms, content, or services as a product.
Example: Coursera partners with top universities to offer courses online. While many courses are free, users can pay for certificates or degree programs. This dual model makes it accessible and profitable.
EdTech businesses often combine freemium, subscription, or pay-per-course models.
Conclusion: Choosing the right startup business model can define your startup’s direction, monetization strategy, and scalability. Whether you’re building a subscription-based SaaS, launching an educational platform, or aggregating local services — understanding these models helps lay a strong foundation for sustainable growth.
Useful Links
- Learn how we build scalable platforms for startup business model on our Custom Software Development page.
- Explore more models with this in-depth Harvard Business Review article on business models
Tip: When selecting the right startup business model, start by deeply understanding your target audience—how they discover, use, and pay for similar products or services. Consider their preferences: do they value flexibility through subscriptions, or do they prefer one-time purchases? Your model should also align with your product’s core value and delivery method. For example, if your product is digital and scalable, a freemium or SaaS model might be ideal. Test early with real users, and be open to refining your startup business model based on feedback and market demand.
