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How Does Zoom Work: Business and Revenue Model Explained

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The blend of coronavirus, social distancing, and remote working is the talk of the town. And you know who is giving fire to these talks? Obviously, mobile apps! 

While there is no doubt in saying that the usage of almost all types of apps has increased in these days of quarantine, the limelight stealers are Video Chat Apps .  By turning social distancing into distant socializing – these apps are making big bucks with every passing day. The unbelievable growth of apps like Zoom is proof. 

According to a report by Sensortower , Zoom registered almost 131 million new installs in the month of April which is almost 60X growth when compared to April 2019. 

With these astonishing stats, the app also became the most-downloaded non-game app globally for the month of April 2020 leaving big giants like TikTok and Facebook behind. Now, the question arises, how? A number of entrepreneurs who want to replicate the success of apps like Zoom want to know “How Does Zoom Work and Earn Money?”

In this blog, we will find answers to all such questions by analyzing Zoom Business Model. So, let’s get started.

Zoom Stats and Facts: Funding and Major Milestones

  • Founded/launched: 2011/2013
  • Headquarters: San Jose, California
  • Founder and CEO: Eric Yuan 
  • Total Funding Amount: $146M
  • Valuation at IPO: $9.2B
  • Number of Investors: 17
  • Zoom Business Model Type: Freemium

The Inspiring Success Story Behind Zoom

Before we answer How Does Zoom Work – let’s put some spotlight on how the app came into existence.

While getting extensive popularity and coming to run profitably enough over the last few years, Zoom actually entered the space of famous apps during the coronavirus pandemic. And, because of its amazing value propositions, this video conferencing solution is the talk of the town today.

The story behind it is inspiring because it was founded by a man whose visa was rejected by the US not just once, but repeatedly 8 times. Yes, Eric Yuan – the founder of Zoom is basically from China and was a part of WebEx, before the company was acquired by Cisco in 2007. 

When Yuan decided to enter an already crowded space of video conferencing – his friends called him insane because he was trying to make a space in the market that was already occupied by big giants like Microsoft and Google with their amazing products.

But, Yuan was confident enough to make it big in the video chat app market. He believed that he could build a product more enjoyable than even Skype with his strong industry insights and experience.

Well, it would not be wrong to say today that his confidence paid off. The software he launched in 2013 registered 1 million users within a few months, 10 million users a year later, and around 40 million after the two years of its launch. Over all these years, Zoom’s focus was just on developing its product better with advanced features and as per the feedback of the users.

At that time as well – the Zoom’s revenue was generated using its premium features over its free offering. By 2017, Zoom had become a unicorn and this continued success reached a climax in Zoom’s IPO 2019. The company impressed several investors in it by revealing the fact that it is already operating on a profit. And the rest is history.

The company truly took off in March of the year 2020. Yuan expressed in a blog post that through the period of that month, Zoom was getting  200 Million daily users on its app. The next month, this figure reached 300 million which is surely an incredible success.

Or, we would say it was an opportunity well used at the right time. Let’s now check out How Does Zoom Work and continues its operations.

How Does Zoom Work: Zoom Business Model Explained

Zoom is a video conferencing application, designed for business use. The product basically has a mass-market business model with no noteworthy differentiation between customer segments. 

It targets businesses of all sizes and industries that seek video conferencing solutions and has established a strong brand as a result of its incredible performance. It serves more than 300,000 organizations, including prominent users, like Arista, SolarCity, and UCLA. 

Here is How Does Zoom Work and maintain its position in the market:

1) The users can utilize Zoom Video Conferencing Solution on a number of platforms like iOS, Android, Mac, PC, and Linux.

2) The communication over the application can happen through chat, video, audio, or a mix of all the three which is actually the software’s value proposition. It is a one-stop solution for all types of needs for collaboration as it allows every mode of communication – may it be chatting, video conferencing, group meetings or simply calling.

3) The answer to How Does Zoom Work is by using the Freemium Business Model. It offers 4 different membership plans, one out of which is a free plan. The solution’s free plan is all that a regular user needs as it lets you have video conferences of as long as 40 minutes and with up to 100 members. 

4) But, that doesn’t mean you can say that Zoom is a free-to-use app. You have to pay a fee to use its special features, for example, – the ability to add 100+ members,  increased meeting hours, and integration with other services. 

5) As mentioned above, Zoom offers four pricing plans to let its users enjoy these special features and they are called Zoom Pro, Zoom Business, Zoom Enterprise, and Zoom Rooms. You can get details about its pricing here . 

6) Zoom’s core features involve one-on-one meetings, group video conferences, and screen sharing where users can meet one-on-one or in large groups and share their screen to see what others are doing. Its global adoption is however fueled by its two main products i.e Zoom Meeting and Chats. 

7) Users can attend Zoom Meetings using an internet browser, or mobile apps and desktop. The Chat comes as an extension to its Meeting product where users can connect through a chat with one another, share documents, or make groups. 

8) Zoom Rooms and Zoom Workspaces are also its products but the paid ones that allow organizations to use hardware such as a tablet, computer, microphone, camera, and some more to plan virtual meetings. These solutions are specifically meant for larger-scale businesses that need to work and collaborate across various offices.

9) Along with the above mentioned four products, the company has other products as well like Zoom Phone, Zoom Video Webinars, and an App Marketplace where its users can install and use third-party apps like HubSpot, Trello or Slack to enhance the functionality.

10) All in all it is not wrong to say that its freemium business model has helped increase its adoption rate and its non-stop updates over the time made it the best in the industry and a great fit for present time needs.

Now that we know all about it –  How does zoom work, what are its features, and the Zoom business model – it is time to see how the app makes money to continue its operations and ways it use to stay profitable while serving its users in the best possible way.

Also Read: Find Out 8 Hidden Costs of Developing an Application

How Does Zoom Make Money: The Revenue Model

To be very precise – Zoom’s focus was never on generating skyrocketing revenues. 

The present state of the company may look like an overnight success – but it is not. The focus of Eric was always on making a product that can sell itself and make its users happy. In other words, we can say that the key aspect of Zoom’s growth plan has always been to let their product do most of the talking. 

To prove it, here is what its founder and CEO told Forbes in an interview:

In spite of prevalent thinking that Zoom is an overnight success, it has consistently been in the spotlight at the correct places. The August 2018 Gartner quadrant for meeting applications put Zoom among the visionary leaders and it was positioned alongside Microsoft and Cisco, and well in front of Google and Adobe. Even in the stock market, Zoom has been a top performer.

Its revenue grew from $60M in 2017 to around $330M in 2019. However, 2020 was a different level of growth for Zoom. The only first quarter’s revenue of Zoom in 2020 was $121 million. 

And what is shocking is that its only source of revenue is still its subscriptions. As mentioned above, Zoom offers 4 subscription plans for its users called Zoom Basic, Zoom Pro, Zoom Business, and Zoom Enterprise. Here is how these plans vary depending on their offerings:

The Basic plan of Zoom is free to use and it permits its users to have up to 100 members in a single meeting, unlimited 1 to 1 meeting, online customer care services, and some extra features for group meetings. The main restriction in its free plan is that the duration of group video meetings is constrained to 40 mins. 

The Pro Plan of Zoom comes at $14 per month and persists all the features provided by the free plan alongside added advantages, like, – group video call duration increased to twenty-four hours as opposed to 40 minutes, the capacity to add more than 100 members, integration with Skype for Business and a lot more other features. 

Zoom Business

The Zoom Business plan comes at $19.99 per month and needs at least ten group members in your team to function. As the name suggests, this plan is more appropriate for small or medium-sized businesses. 

Zoom Enterprise

The Zoom Enterprise plan comes at $19.99 per month and needs at least 50 members in your team. Again, as the name suggests, it is a great fit for large businesses and organizations.

That’s all about How Does Zoom Work and makes money. The application is presumably a redefiner with regards to video conferencing and making an application like Zoom won’t be simple without a doubt. To put it all together, you will need to consider a number of aspects like market research, competitor analysis, app development, new features to add, back-end development, and marketing to build an app like Zoom.

So, if you are really serious about replicating the success of Zoom – you must learn a number of things from Zoom business model and strategies they adopted to stand tall in the market. Here are a few key takeaways on which you can focus while planning to develop an app like Zoom.

3 Lessons to Learn From Zoom’s Incredible Success

1. be user-centric always.

Since the year 2013 to 2020 – the thing that was consistent in Zoom’s journey was its priority for its users. The team at zoom never dreamed of overnight success or fast publicity. The founder and CEO of Zoom said in an interview that keeping their existing customers happy was always the first priority of the team at Zoom – even if that forced them to slow down sometimes.

So, before you plan on replicating Zoom’s success – fit the user-centric strategy at the back of your mind.

2. Focus on Making Your Product Better

At Zoom, collecting and analyzing user’s feedback is the way using which they have been able to create a world-class product. Here is a small note by Zoom Founder that shows why they are so successful today:

We always worked on making our free product work incredibly well. We provide most of our features free and that helped us build a loyal user base. That is the reason every day there are such a huge number of users coming to our website, free users. If they find our product useful, very soon they are going to pay for the membership – Eric Yuan

3. Never Believe That There Is No Space

When Eric founded Zoom, there were a number of doubts. Wasn’t the market already targeted? How can one fight against rivals like Google and Microsoft? However, the man behind Zoom – Eric Yuan – was confident about his idea. He understood that there is a lot that can be done to make things better in this industry.

And this should be a thumb rule for every startup – either solve a big problem or solve the already solved problem in better ways. Eric chose the latter and became what he is today – the CEO of a billion-dollar company.

Wrapping Up

So that was all about How Does Zoom Work. It is a great example of how video-conferencing apps should be. With its amazing business model – the software is winning market shares and giving neck-to-neck competition to big players in the market like Sykpe. 

Well, if you too want to create an app like Zoom – you must pull your socks now. No doubt there are still a lot of ways to stand-out for new players in the market. But, the journey to follow all of them would not be an easy one. 

The benefits and returns on investment of making video conferencing apps like zoom are clear enough with such apps getting immense success. Also, their trend is not going anywhere anytime soon with the world adopting work from home policies.

So, what are you waiting for? Invest in your idea today to reap big benefits in the near future. Get in touch with our expert consultants to develop an app like zoom.

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Humane yet subtle, Naiya is a girl full of ideas about almost everything. After earning a bachelor’s degree in computer science and engineering, she decided to merge her technical knowledge with her passion for writing – to accomplish something interesting with the fusion. Her write-ups are usually based on technology, mobile apps, and mobile development platforms to help people utilize the mobile world in an efficient way. Besides writing, you can find her making dance videos on Bollywood songs in a corner.

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Zoom Video Communications: Business Model, SWOT Analysis, and Competitors 2023

Inside This Article

Zoom Video Communications has become a household name in the world of video conferencing, especially in the wake of the COVID-19 pandemic. The company's cloud-based platform has enabled remote work and virtual meetings to take place seamlessly. But what is the business model behind this success, and how has Zoom managed to maintain its competitive edge? In this blog post, we will conduct a SWOT analysis of Zoom, explore its business model, and take a closer look at some of its key competitors as we head towards 2023.

What you will learn:

  • You will learn about the ownership of Zoom Video Communications, including who founded the company and who currently owns it.
  • You will discover the mission statement of Zoom Video Communications and what the company aims to achieve.
  • You will understand the business model of Zoom Video Communications, how the company generates revenue, and how it differs from its competitors. Additionally, you will learn about the Zoom Video Communications Business Model Canvas and its key components. Finally, you will explore the SWOT analysis of Zoom Video Communications to identify its strengths, weaknesses, opportunities, and threats in the market.

Who owns Zoom Video Communications?

Zoom Video Communications is a publicly traded company, meaning that it is owned by its shareholders. The company's shares are traded on the NASDAQ stock exchange under the ticker symbol "ZM". As of June 2021, Zoom had a market capitalization of over $100 billion, making it one of the most valuable companies in the world.

The largest shareholders of Zoom are institutional investors, such as mutual funds, pension funds, and hedge funds. For example, as of March 2021, the Vanguard Group, BlackRock, and Fidelity Investments were among the top institutional holders of Zoom stock.

However, it's worth noting that the company's co-founder and CEO, Eric Yuan, still holds a significant stake in the company. According to SEC filings, Yuan owns over 20 million shares of Zoom, which represents roughly 6% of the company's outstanding shares.

Zoom's ownership structure is typical of many large technology companies that have gone public in recent years. While the company is technically owned by its shareholders, the founders and early investors often retain a significant amount of control over the company's direction and strategy.

Overall, Zoom's ownership structure reflects its status as a rapidly growing and highly successful technology company. As the company continues to expand and innovate, it's likely that its shareholder base will continue to evolve and shift over time.

What is the mission statement of Zoom Video Communications?

Zoom Video Communications is a company that has been widely recognized for its video conferencing software, which has become increasingly popular in recent years. The company's mission statement is based on its commitment to providing a platform that facilitates seamless and effortless communication, regardless of physical location or communication device. The company's mission statement is simple, yet powerful: "Our mission is to make video communications frictionless."

At the core of Zoom's mission is the belief that video communication should be easy, reliable, and accessible to all. This is reflected in the company's focus on simplicity, ease of use, and the development of features that enhance the user experience. For example, Zoom's platform is designed to be user-friendly and intuitive, with features such as screen sharing, virtual backgrounds, and breakout rooms that make it easy for users to collaborate and communicate effectively.

In addition to its focus on user experience, Zoom's mission statement emphasizes the importance of innovation and continuous improvement. The company is committed to staying ahead of the curve in terms of technology and features, and to constantly exploring new ways to enhance the video communication experience. This commitment is reflected in the company's investment in research and development, as well as its close partnerships with leading technology companies.

Overall, Zoom's mission statement reflects the company's commitment to providing a video communication platform that is accessible, easy to use, and continuously evolving to meet the needs of its users. This mission has been the driving force behind the company's success, and it is likely to continue to guide its growth and development in the years to come.

How does Zoom Video Communications make money?

Zoom Video Communications is a cloud-based video conferencing platform that has become increasingly popular in recent years, especially due to the COVID-19 pandemic and the rise of remote work. While it offers a free version of its software, Zoom does make money through a variety of different revenue streams.

One of the main ways that Zoom generates revenue is through its subscription plans. The company offers a tiered pricing structure, with different levels of functionality depending on the plan. For example, the basic plan is free and allows for up to 40 minutes of group meetings, while the Pro plan costs $14.99 per month and offers unlimited meeting time and additional features like user management and reporting. The Business and Enterprise plans offer even more advanced features and customization options, with prices ranging from $19.99 to $19.99 per month per host.

In addition to its subscription plans, Zoom also makes money through its add-on features. For example, the company offers a Zoom Rooms package that allows businesses to set up dedicated conference rooms with hardware and software that is optimized for Zoom meetings. It also offers a Zoom Phone service that allows users to make and receive phone calls directly from the Zoom platform.

Another way that Zoom generates revenue is through its partnerships and integrations. The company has partnered with a variety of other software providers to integrate its video conferencing platform with other tools like Slack, Salesforce, and Microsoft Teams. These partnerships not only help to expand Zoom's reach, but also provide additional revenue opportunities through referral and integration fees.

Finally, Zoom also generates revenue through its advertising platform. The company offers targeted advertising opportunities to businesses and organizations that are looking to reach its user base. While this is a relatively small part of Zoom's overall revenue stream, it does provide an additional source of income for the company.

Overall, Zoom's revenue model is based on a combination of subscription plans, add-on features, partnerships and integrations, and targeted advertising opportunities. As the demand for remote work and virtual communication continues to grow, it's likely that Zoom will continue to find new ways to monetize its platform and expand its reach.

Zoom Video Communications Business Model Canvas Explained

Zoom Video Communications has become a household name during the pandemic as it has emerged as the go-to platform for virtual meetings, webinars, and online events. But have you ever wondered how Zoom makes money? In this section, we will explain Zoom's business model canvas and how it generates revenue.

Value Proposition: Zoom's value proposition is simple yet effective - it offers a reliable and user-friendly platform for video conferencing, webinars, and virtual events. Zoom's video and audio quality is superior to other platforms, and it offers a range of features such as screen sharing, recording, and virtual backgrounds.

Customer segments: zoom targets both individuals and businesses of all sizes. its free plan allows individuals to host virtual meetings for up to 40 minutes, while its paid plans cater to businesses and organizations that require longer meetings and more advanced features., channels: zoom's primary channel is its website, where users can sign up for a free or paid plan. the platform also uses content marketing, social media, and email marketing to reach its audience., customer relationships: zoom focuses on building strong customer relationships through its excellent customer support. it offers 24/7 support via chat and email, and its customer success team works with businesses to ensure they are utilizing the platform effectively., revenue streams: zoom's revenue streams come from its paid plans. it offers four different plans, ranging from $14.99 to $19.99 per month per host, depending on the features and number of participants required. zoom also generates revenue from its webinar and virtual event platform, which is priced based on the number of attendees., key activities: zoom's key activities include software development, marketing, customer support, and infrastructure maintenance. the company continuously updates its platform to improve performance and add new features., key resources: zoom's key resources are its technology, infrastructure, and human resources. its platform is built on a cloud-based infrastructure, which allows for scalability and reliability. the company also has a team of engineers and developers who work on improving the platform., key partners: zoom's key partners include video conferencing hardware providers, such as poly and logitech, who offer hardware solutions that integrate with zoom's platform. the company also partners with software providers, such as salesforce and dropbox, to offer integrations with their platforms..

In conclusion, Zoom's business model canvas is centered around providing a reliable and user-friendly platform for video conferencing, webinars, and virtual events. By offering a range of features and pricing plans, the platform has become the go-to solution for individuals and businesses alike. Zoom's revenue streams come from its paid plans and its webinar and virtual event platform, and it focuses on building strong customer relationships through its excellent customer support.

Which companies are the competitors of Zoom Video Communications?

Zoom Video Communications has seen a significant rise in popularity since the outbreak of the COVID-19 pandemic, as people have turned to video conferencing solutions for remote meetings, online classes, and virtual events. However, Zoom is not the only player in the video conferencing market. Here are some of the competitors of Zoom Video Communications:

Microsoft Teams: Microsoft Teams is a collaboration platform that includes video conferencing capabilities. It has gained popularity among businesses and schools due to its integration with other Microsoft products, such as Office 365. Microsoft Teams offers similar features to Zoom, such as screen sharing, virtual backgrounds, and chat.

Google Meet: Google Meet is a video conferencing tool that is part of the Google Workspace suite of productivity apps. It offers features such as screen sharing, virtual backgrounds, and closed captions. Google Meet has gained popularity among educators due to its integration with Google Classroom.

Cisco Webex: Cisco Webex is a video conferencing platform that is popular among businesses. It offers features such as screen sharing, virtual backgrounds, and whiteboarding. Cisco Webex is known for its security features, such as end-to-end encryption and password-protected meetings.

Skype: Skype is a video conferencing solution that has been around for a long time. It offers features such as screen sharing, virtual backgrounds, and chat. Skype is popular among individuals and small businesses.

GoToMeeting: GoToMeeting is a video conferencing platform that offers features such as screen sharing, virtual backgrounds, and drawing tools. It is popular among businesses due to its integration with other productivity tools, such as Salesforce and Microsoft Office.

In conclusion, Zoom Video Communications is not the only player in the video conferencing market. Microsoft Teams, Google Meet, Cisco Webex, Skype, and GoToMeeting are some of the competitors of Zoom. Each of these platforms offers unique features and benefits, so it's essential to evaluate them carefully before choosing the best one for your needs.

Zoom Video Communications SWOT Analysis

SWOT analysis is a strategic planning tool used to identify the strengths, weaknesses, opportunities, and threats of a company. Here's how Zoom Video Communications stacks up:

User-friendly platform: Zoom's easy-to-use platform has made it a popular choice among users, even those who are not tech-savvy.

Versatile features: Zoom offers a wide range of features, including screen sharing, virtual backgrounds, and recording options, allowing users to customize their video calls according to their needs.

Integration with third-party apps: Zoom integrates seamlessly with other apps such as Slack, Salesforce, and HubSpot, making it easy for users to schedule and join meetings.

Robust security measures: Zoom has implemented several security measures to protect users' privacy, including end-to-end encryption, waiting rooms, and password protection.

Weaknesses:

Security concerns: Despite the security measures Zoom has put in place, the platform has faced several security issues in the past, including "Zoom-bombing" and data breaches.

Reliability issues: Zoom has experienced occasional reliability issues, such as outages and connectivity problems, which can be frustrating for users.

Limited customer support: Zoom's customer support has been criticized for being slow to respond to user complaints and requests for help.

Opportunities:

Expansion into new markets: Zoom has the potential to expand into new markets, such as healthcare and education, which have seen increased demand for video conferencing solutions.

Continued growth in remote work: As more companies adopt remote work policies, the demand for video conferencing platforms like Zoom is likely to continue to grow.

Acquisition of new technology: Zoom could acquire new technology to enhance its platform's features and capabilities, such as AI-powered virtual assistants or augmented reality tools.

Increased competition: Zoom faces stiff competition from established players like Microsoft Teams and Google Meet, as well as newer entrants like Slack and Facebook's Workplace.

Economic downturns: Economic downturns can lead to budget cuts, which could impact businesses' ability to pay for video conferencing solutions.

Regulatory challenges: Increased regulatory scrutiny could lead to stricter data privacy and security regulations, which could impact Zoom's ability to operate in certain markets.

Key Takeaways

  • Zoom Video Communications is a publicly traded company, with a majority of its shares owned by institutional investors.
  • The mission statement of Zoom Video Communications is to "make video communications frictionless and secure."
  • Zoom Video Communications primarily makes money through subscription fees for its various plans and services.
  • The company's Business Model Canvas includes key partners such as hardware and software providers, as well as channels including direct sales and online marketplaces.
  • Competitors of Zoom Video Communications include other video conferencing platforms such as Microsoft Teams and Cisco Webex, as well as communication tools like Slack and Google Meet.
  • A SWOT analysis of Zoom Video Communications highlights strengths such as its user-friendly interface and weaknesses such as potential security concerns, as well as opportunities for growth in expanding its services and threats from increasing competition in the market.

In conclusion, Zoom Video Communications is a leading video conferencing platform that has revolutionized the way people communicate and collaborate remotely. Founded by Eric Yuan, the company's mission statement is to make video communications frictionless, secure, and reliable for everyone. Zoom generates revenue primarily through subscription fees for its various plans and add-ons. The company's business model canvas includes key elements such as customer segments, value propositions, channels, relationships, revenue streams, key activities, key resources, and key partners. Despite its success, Zoom faces stiff competition from companies such as Microsoft, Google, Cisco, and others. Finally, a SWOT analysis of Zoom reveals its strengths, weaknesses, opportunities, and threats, which the company needs to address to maintain its leadership position in the video conferencing market.

What are the weaknesses of Zoom?

Security and Privacy Concerns: Zoom has been criticized for its data security and privacy practices. It has been reported that Zoom’s encryption practices are not up to par with industry standards and that the platform is vulnerable to “zoom bombing”, where uninvited guests can join private meetings.

Limited Support for Third-Party Apps: Zoom does not support integration with third-party applications. This means that users cannot access other applications while using Zoom.

Difficulty Managing Multiple Participants: Zoom can be difficult to manage when there are too many participants in a meeting. It can be difficult to monitor who is speaking and who is not, and it can be difficult to keep track of who is in the meeting.

Lack of Advanced Features: Zoom does not offer some of the more advanced features that other video conferencing solutions offer such as screen sharing, whiteboarding, and file sharing.

What is SWOT analysis in communication?

SWOT analysis is a tool that helps analyze the Strengths, Weaknesses, Opportunities, and Threats of a communication situation and is often used in strategic planning. It is a way to evaluate the potential success or failure of a communication effort. By taking into account all of the different factors that can affect the communication process, a SWOT analysis provides a comprehensive view of the challenges and opportunities that lie ahead.

What are the disadvantages of Zoom in communication?

Security and Privacy Concerns: Zoom is not as secure as some other video conferencing apps. It has faced security breaches in the past, which has led to concerns about privacy.

Limited File Sharing Capabilities: Zoom's file sharing capabilities are limited, which can be a problem for teams that need to collaborate on documents and other files.

Limited Integration with Other Apps: Zoom doesn't integrate well with other apps, which can be a problem for teams that need to collaborate with other applications.

Limited Number of Participants: Zoom has a limited number of participants that can join a conference. This can be a problem for larger teams or meetings.

Potentially Poor Video Quality: Video quality can suffer if users don't have a good internet connection or if their computer isn't powerful enough.

What are the benefits of Zoom in communication?

Increased Connectivity: Zoom allows for more people to join in on a meeting or conversation than ever before. This makes it easier to stay in touch with colleagues, family, and friends, both locally and internationally.

Cost Savings: Rather than spending money on travel or phone bills, Zoom allows you to communicate with people all around the world for free.

Improved Collaboration: Zoom provides multiple tools that make working together easier, such as group chat, video conferencing, file sharing, and screen sharing.

Increased Productivity: With Zoom, you can set up meetings quickly and easily without any hassle. This helps to save time and get more work done faster.

Increased Engagement: Zoom allows for more personal interaction, which helps to keep participants engaged in the conversation.

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Zoom Business Model

How Does Zoom Make Money? Analyzing Its Business Model

Executive Summary:

Zoom is a cloud-based conferencing tool that allows users to virtually interact with each other through audio, video, and chat. The company’s competitive advantage is centered around the product’s ease of use as well as high-quality audio/video output.

Zoom makes money via subscription fees, hardware sales, advertising, as well as by investing into other startups. It operates on a freemium business model.

Founded in 2011 by a former Cisco executive, Zoom became an instant success due to its product’s superiority. This culminated in the company’s IPO in 2019. Zoom is currently valued at $47 billion.

What Is Zoom?

Zoom is a cloud-based SaaS application that allows private individuals as well as businesses to virtually interact with each other. Communication can occur via text, audio, video, or a combination of the three.

Users can hold one-on-one meetings or conduct video conferences with up to 500 participants. Screen sharing allows meeting participants to better coordinate within meetings and distribute information.

The worldwide adoption of Zoom is powered by its two core products: Zoom Meetings and Chat as well as Zoom Rooms and Workspaces.

Zoom Meetings can be attended and held via a web browser, or desktop and mobile applications. The  Chat works as an extension to the Meeting product where users can interact through a chat with each other, share files, or create groups.

Rooms and Workspaces, on the other hand, allows businesses to utilize hardware such as a computer, tablet, camera, microphone, and more to hold virtual meetings. The product is specifically aimed at larger-scale organizations, which need to hold meetings across different offices.

To make integration with the hardware easier, Zoom even offers its own set of hardware that they developed in collaboration with other manufacturers (including the Poly X Series or DTEN ON).

Other products the company has developed are:

  • Zoom Phone, a cloud phone system that comes with features such as intelligent call routing, automated attendants, voicemails, dialing personas, call recording, and many more
  • Zoom Video Webinars, a conferencing tool that allows businesses to easily conduct large online events with audio, video, and screen sharing
  • An app marketplace, where existing customers can install third-party applications such as HubSpot , Slack, or Trello to enhance the functionality of the product experience

Zooms applications and hardware products are available across the globe. The company counts worldwide renowned businesses as customers, including the likes Uber, Rakuten, TransferWise , and many more.

Apart from visiting its website or downloading its desktop or browser clients, Zoom can also be accessed on Android and iOS phones and tablets.

A Short History Of Zoom

Zoom was founded in 2011 by Eric Yuan (CEO), a former executive at the video and web conferencing company Cisco WebEx.

Prior to starting Zoom, Yuan spent 14 years leading various engineering teams – first at WebEx, then at Cisco after its acquisition of WebEx in 2007.

He joined WebEx as one of the company’s first software engineers in 1997 after his 9 th visa application finally got approved.

At Cisco, he often saw how frustrated the company’s customers were with their inability to listen to their demands and the slow product iteration process.

For instance, every time a user logged into a WebEx conference, the company’s systems would have to classify which version of a product (Android, iPhone, Mac, or PC) to execute, which slowed things down tremendously. If too many people were on the line, the connection would be severely strained, which led to bad audio and video quality. Plus, the applications lacked features such as screen-sharing for mobile phones.

In 2011, Yuan decided to pack his bags and venture out on his own – making sure to take a team of 40 Cisco engineers with him in the process.

Initially, the company started out as Saasbee, but rebranded to Zoom soon after. In the early days, Zoom faced the problem of attracting investors since nobody believed existing giants such as Skype, Hangouts (by Google), and WebEx could be dethroned.

Luckily, Yuan’s network, which included former WebEx CEO Subrah Iyar, as well as his deep technological experience provided him with the necessary credibility to raise $3 million for Zoom’s seed round.

Two years later, in 2013, Zoom finally launched its first product (while announcing a $6 million Series A round).

The quality of the product stood out immediately and allowed the small software startup to become one of the leaders in the video conferencing industry. Video conferences could be held on all hardware platforms (i.e. desktop, mobile, tablet) with the ability to host 40 people at the same time.

Because Zoom’s pricing was significantly cheaper, customers were flooding in right from the get-go. Soon after its launch, the company amassed a customer base of over 1,000 businesses which hosted a total of 140,000 meetings. By May 2013, Zoom crossed the magic mark of 1 million participants .

Over the years, Zoom quietly added more and more features as well as customers to its platform.

The continued success culminated in the company’s IPO in April 2019. At the time, Zoom surprised many investors due to the fact it already operated on a profit. This stood in stark contrast to its tech counterparts including Uber, Lyft , or Pinterest, which continued to burn money at excessive rates.

In 2020, as a result of the coronavirus pandemic, Zoom rose to worldwide prominence as many companies began to use it to conduct meetings and organize their work processes. With its rise to worldwide fame, the company received some backlash for its handling of security matters.

There were several reported instances of unintended people joining existing meetings, a term referred to as Zoombombing . For instance, a recent Holocaust memorial was attacked and bombarded with images of Hitler.

During a zoom meeting on the eve of #Holocaust Memorial Day by the Embassy of Israel in Berlin that hosted survivor Zvi Herschel, anti-Israel activists disrupted his talk posting pictures of Hitler and shouting anti-Semitic slogans. The event had to be suspended. 1/ — Jeremy Issacharoff (@JIssacharoff) April 21, 2020

Multiple government entities, including the US or Germany, advised its administrative workers to avoid using Zoom .

Furthermore, more than 500,000 Zoom accounts were supposedly being sold on the dark web and hacker forums.  The company responded to these events by upping its security features as well as acquiring messaging platform Keybase . Despite these hiccups, the company has been on an absolute tear, seeing its stock value almost triple.

Additionally, the company added a variety of features, such as the ability to suspend participant activities as well as reporting unwelcomed users, in November 2020.

However, the vast adoption of its product also led to what many began calling ‘Zoom fatigue’. In March 2021, for example, Citigroup’s CEO Jane Fraser instituted a Zoom-free Friday to allow employees to recover from constantly being online. Even CEO Yuan himself later acknowledged that he suffered from Zoom fatigue.

In order to accelerate adoption of its products, Zoom also introduced its own app marketplace as well as began investing in other startups with the launch of a $100 million investment fund.

To capitalize on its astronomic stock price, Zoom, in July 2021, also announced it intended to acquire Five9, a maker of cloud-based customer service software, for $14.7 billion in an all-stock deal.

Unfortunately, the deal was called off in October as Five9 shareholders vote against the acquisition over concerns about Zoom’s slowing growth. Additionally, a U.S. Justice Department-led panel had grown increasingly concerned with Zoom’s ties to China and said an acquisition would pose serious national security concerns.

In the meantime, in August, Zoom also reached a $85 million settlement with users who accused the company of sharing data with third parties without permission, thus enabling the previously mentioned Zoombombing incidents.

With more and more people returning to the office, Zoom’s stock, despite record sales numbers, also took a big plunge. Despite its recent woes, Zoom continues to be one of the world’s leading video conferencing tools out there.

How Does Zoom Make Money?

Zoom makes money via subscription fees, hardware sales, advertising, as well as by investing into other startups.

The company operates on a freemium model , which means that customers can use Zoom’s products for free.

If they intend to access more advanced features, such as being able to host up to 500 participants being able to record calls, customers will have to pay a fee.

However, Zoom also has started to monetize freemium users through the introduction of ads.

Regardless of its monetization methods, Zoom’s competitive advantage continues to be grounded in its ability to deliver a flawless product experience characterized by fast loading times, high-quality audio and video output, as well as its ease of use.

Without further ado, let’s take a closer look at each of the Zoom’s revenue streams in the section below.

Subscription Fees

The vast majority of revenue that Zoom generates comes from charging various subscription fees in exchange for access to its suite of software products.

Zoom’s flagship product is its Meetings platform which enables teams and businesses to communicate online via audio, video, and text.

Apart from its free Basic plan, Zoom offers paid versions such as Pro , Business , and Enterprise .

These products are all aimed at a different set of customers and, depending on the price paid, allow them to host varying numbers of participants, obtain recording transcripts, or even host conferences in the firm’s native branding.

Zoom is then being able to cross-sell by offering ancillary services, such as more cloud storage or premium support, for an additional fee.

Similarly, it also monetizes its other software products, such as Zoom Rooms or Zoom Events & Webinar , via monthly or yearly software licensing fees.

Additionally, Zoom offers dedicated plans and products for a variety of industries including education and healthcare.

By tailoring its service to a specific customer segment, Zoom vastly increases the possibility of selling into that customer type.

On top of that, some of these customers, such as universities, are not very likely to replace Zoom (and thus churn) due to the sluggishness that comes with being an academic institution.

As a result, once Zoom has managed to engrain itself into such an organization (or even larger enterprises), it is unlikely to be replaced to the complexity being involved.

This, in turn, allows Zoom to better forecast its future revenue, which it can then use to buy up other companies (for example to extend its product suite) or invest into startups (more on that later).

Hardware Sales

Next to its software products, Zoom also offers various hardware items that enhance the experience of its software suite.

More precisely, Zoom offers dozens of different telephones, tablets, speakers, whiteboards, and more.

These products are offered in cooperation with other hardware manufacturers such as DTEN, Yealink, Neat., and more.

Customers then pay a monthly subscription fee for every hardware device that they source.

Zoom then shares that revenue with the hardware device manufacturer that takes care of the installation as well as maintenance service.

Advertising

Another, albeit very small, stream of revenue are the ads that Zoom shows after a meeting commences.

Originally introduced in November 2021, ads are only being displayed to free Basic users who don’t pay for its product.

Consequently, this finally enables Zoom to also monetize the users that do not want or need to pay for its products.

Just like with any other form of online advertising, Zoom is likely being compensated on a per-impression basis. That means whenever a user sees an advert, Zoom generates a small amount of revenue.

With tens of millions of active users, this can quickly compound into a significant portion of revenue.

Investments

As previously stated, Zoom, in April 2021, unveiled a fund with which it would invest into startups that build on top of its ecosystem.

Over the course of 2021, Zoom has invested in more than 20 startups out of its $100 million-strong Zoom Apps Fund.

Zoom generates money from the fund whenever it is able to sell shares in the companies it invests in for a greater price than they were purchased for.

It has to be noted that such a liquidation event is likely only occurring after multiple years have passed. Zoom can sell those shares during a secondary funding round (when existing investors get the chance to cash out), a sale, or IPO.

Apart from making money from those investments, the goal is to actually enhance the ecosystem around its product.

This allows Zoom to onboard a whole new set of customers, which may originally come from the startups it funds. Additionally, the more integrations Zoom possesses, the more attractive its products generally become.

To that extent, Zoom has also introduced its own app marketplace, allowing other software companies to integrate into Zoom’s product suite. However, Zoom does currently not monetize its app marketplace but could do so in the future, for example by charging a listing fee or taking a percentage cut from every sale.

Zoom Funding, Valuation & Revenue

According to Crunchbase , Zoom has raised a total of $276 million in eight rounds of venture funding.

Notable investors include the likes of Horizons Ventures, Emergence Capital, Sequoia Capital, and many others.

Zoom raised another $356.8 million in its IPO, which was announced in April 2019. At the time, public investors valued Zoom at $9.2 billion. Its valuation has now risen to over $47 billion.

For the fiscal year 2020, Zoom has recorded total revenues of $2.65 billion, up from just $623 million in the year prior. Profits surged to nearly $1 billion, up significantly from the $101.3 million it posted in 2019.

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Last Updated on January 2, 2023 by Viktor Hendelmann

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Zoom Business Model: How Zoom Makes Money

When Eric Yuan, Zoom’s CEO, decided to go after the video conferencing market in 2011, the market was already  flooded with incumbents  like Microsoft-owned Skype, Google Hangouts & the then market leader Webex, owned by Cisco.

Eric served as the VP of Engineering at Webex when he decided to venture out independently. So why did he quit Webex, start Zoom & how did he turn Zoom into a leading video conferencing software with almost 50% market share ?

There’s no denying that the coronavirus propelled Zoom’s growth in a way nobody could have predicted, not even Eric himself, but Zoom was a successful product even before the whole virus thing happened.

Let’s find out the exciting backstory behind what might look like an overnight success before we delve into Zoom’s’ Business Model.

The Zoom Backstory

Convinced that the internet was the next big thing, Eric decided to migrate to the US from China in the mid-’90s. The first time he applied for a US Visa, his application was rejected. The US customs misunderstood Eric as a part-time contractor because his business card listed him as a consultant. After that incident, the now-skeptical immigration services rejected his Visa 7 more times, but Eric did not give in.

“I told myself, okay, great. I’ll do all I can until you tell me that I can never come here anymore. Otherwise, I’m not going to stop.” He continued reapplying for two years until he was finally accepted on the ninth try. 

In 1997, Eric joined Webex as a founding engineer. Operating in the space of real-time video collaboration, the company had half a dozen employees at the time. Webex grew quickly & went public in 2000, riding the exuberance wave of the dot-com bubble. In 2007, Webex was acquired by Cisco for $3.2 billion. By that time, Eric had climbed the ranks to become VP of Engineering.

Eric continued to work on Webex, which was now a part of Cisco, until 2010, when he realized many of Webex’s customers were unhappy with the product. Why were the customers unhappy? The product had not evolved to keep up with the times. 

For example, every time users logged into a Webex conference, it took a lot of time to get down to business because the company’s system would first have to identify the version of the product (Android, iPhone, Mac, or PC). If too many people joined the conference, Webex’s system wouldn’t be able to handle the strain, leading to a decline in the audio and video quality. And not just that, Webex also lacked modern features like screen sharing for mobile.

Eric tried to convince his bosses to upgrade the product for a year, but they wouldn’t budge. In 2011, Eric finally decided to leave to give a shot at the video-conferencing business, taking his new product in the direction he wanted Webex to follow. More than 40 engineers followed Eric and left Webex to become a part of his venture.

However, with the market already saturated with products like Skype, Google Hangouts & the then market leader Webex, investors were skeptical of putting money into Eric’s new venture. Fortunately, former Webex CEO Subrah Iyer believed enough in Eric to give him a seed funding of $3 Million.

Two years later, in 2013, Zoom launched its first iteration,  raising a $6 Million Series A round at the same time. By May 2013, Zoom’s superior product capabilities helped it reach 1 million participants, connecting more than  400,000 meetings & 3500 businesses .

Zoom managed to get traction because it differentiated itself in many different ways from the existing players. Zoom video conferences were easy to set up and compatible with all devices, including desktop and mobile, via Android and iOS apps. Zoom was able to handle a data loss of up to 40%, so it worked with a weak internet connection. To top it all off, Zoom had a $9.99 per host plan ($14.99 now), which made it cheaper than its competitors.

Zoom kept growing, adding new features along the way. In October 2018, Zoom launched the Zoom App Marketplace , allowing third-party developers to build applications on top of Zoom. The app marketplace, now a common growth lever used by SaaS companies, helped accelerate Zoom’s growth by improving user experience.

In April 2019, Zoom went public at a share price of $36, valuing the company at $9.2 Billion. When Zoom went public, it was already operating at a profit, unlike other tech companies like Uber, Lyft & Pinterest, which went public at around the same time.

In 2020, the pandemic, which forced many businesses to adopt remote work, increased Zoom’s’ popularity in unprecedented fashion overnight. In Dec 2019, 10 million users were participating in daily Zoom meetings. By April 2020, the daily meeting participants had increased to 300 million.

Another indicator of Zoom’s insane success is the company’s growth. In Q2 of 2021 alone, Zoom made more money ( $1.021 billion ) than it made in the financial year of 2020($622 million). The total revenue earned in 2021 amounted to $2.6 billion.

In July 2021, Zoom announced a $100 million investment fund to stimulate the growth of the ecosystem of Zoom apps, integrations, developer platform, and hardware.

How Zoom Makes Money

Zoom primarily makes money from Zoom Meetings, the core offering it sells using a freemium model. Zoom also generates revenue from 5 subscription-based offerings: Zoom Phone, Zoom Events & Webinar, Zoom Rooms, Zoom United, and Zoom Contact Center. A portion of Zoom’s revenue also comes from the hardware sales and ads shown to free tier users.

Let’s look at each of the subscription revenue sources individually before we move on to discussing company financials.

1. Zoom Meetings

Zoom Meetings allow users to connect through audio & video. It is also the most commonly used and popular service provided by Zoom. Meetings also include Zoom chat, allowing users to share text, images, audio files & content.

Pricing plan of Zoom Meetings

The  basic plan is free , but it has restrictions like a 40-minute time limit & 100 participants at most for the group meetings. Zoom offers Pro, Business & Enterprise plans for small teams, small & medium-sized businesses & large enterprises respectively, with features suited as per the size and the needs of the customer.

2. Zoom Rooms

Zoom rooms are conference room systems  that allow users ( mostly large organizations ) to have Zoom video meetings seamlessly.

Rooms come with a 30-day free trial. If users wish to continue using Rooms once the trial ends, they can buy a subscription at $49/month per room. The more the number of conference rooms the organizations want to connect through Zoom rooms, the more money they have to shell out. For example, to purchase a plan for ten rooms, organizations would have to shell out $490 per month.

Zoom Rooms Pricing: Free, Rooms Licenses & Rooms Enterprise

Suppose the customers already have conference rooms set up using Polycom, Cisco, or Lifesize equipment. In that case, they can use the Zoom conference room connector to start Zoom Meetings directly from existing conference room systems.

If they do not have existing conference rooms set up, they can purchase hardware from Zoom’s hardware partners, which include companies like  HP, Lenovo & Logitech  to name a few. If needed, Zoom also provides customers with installation support for the conference rooms.

3. Zoom Phone

A  cloud-based calling solution  available as an add-on to the existing Zoom service, Zoom Phone brings traditional phone capabilities directly into the Zoom application, turning Zoom into a complete collaboration product by providing voice, conferencing, messaging, and video services together.

Starting at $10/month per user , it comes with features like auto-attendant, call recording & many more.

Zoom Phone Pricing Plans: US & Canada Metered, US & Canada Unlimited, Pro Global Select

4. Zoom Events & Webinars

With Zoom Video Webinars, users can host online web conferences. The offering comes at $79/month/license for up to 500 attendees—the $79 base price increases as the number of attendees increases.

While Zoom Webinars are useful for single-session, one-to-many presentations, Zoom events add to the capability of webinars by allowing to connect multiple webinar sessions. Events also come with event management features like branded events hubs, registration and ticketing, and enhanced reporting. The Event offering comes at $99/month/license for up to 500 attendees.

Zoom Events & Webinar Pricing for up to 500 attendees

5. Zoom United

A bundled offering, Zoom United clubs together Zoom Meetings & Zoom Phone under one subscription plan. Users can choose from Pro, Business & Enterprise plans, depending on the features and seats required.

Zoom United Pricing Plans: Pro, Business & Enterprise

6. Zoom Contact Center

Contact center technologies are mostly optimized for voice. But Zoom Contact center, a new Zoom offering launched in feb 2022 , is an omnichannel contact center platform optimized for channels like video, voice and messaging. Zoom does not reveal pricing for the ‘Zoom Contact Center on its website’, revealing it only to companies who reach out to the Zoom.

Zoom Financials

Zoom’s revenue had been doubling every year since 2017, but the 2021 financial year has proven to be a breakout year for the company. In FY 2021, Zoom’s’ revenue grew almost 4x compared to FY 2020, increasing from $622 million in FY 2020 to $2.6 billion in FY 2021.

Zoom Revenue & Profit from 2017 to 2021

To measure company performance, Zoom measures two key business metrics — customers with more than 10 employees & customers contributing more than $100,000 of trailing 12 months’ revenue — both of which have been recording positive growth.

As of Jan 2020, Zoom had approximately 81,900 customers having more than 10 employees. By Jan 2021, these customers had grown by almost 5x, with Zoom having around 467,100 of them.

After the pandemic, Zoom’s’ customer cohort with 10 or fewer employees expanded as businesses and individuals adopted Zoom. 36% of Zoom’s’ revenue in the year ended Jan 31st, 2021 came from the 10 or fewer employees cohort, compared to 18% in the previous year.

The ‘‘ customers contributing more than $100,000 of trailing 12 months revenue’’ metric represents Zoom’s’ ability to scale with customers & attract larger organizations, acting as a testament to Zoom’s’ growth potential. In the fiscal year Jan 31st, 2021, Zoom had 1644 such customers, more than double the 641 customers it had as of Jan 2020.

As far as geographic distribution of Zoom’s’ revenue is concerned, 69% of it came from America, 13% from APAC & 18% from EMEA in the year ended Jan 31st, 2021.

Zoom Geographical Revenue Breakdown across US, EMEA & APAC from 2019 to 2021

In the future, non-American markets can be expected to be one of Zoom’s’ key areas of growth.

Zoom ended FY 2021 with a profit of $672 million, up exorbitantly from the $25 million profit it made in FY 2020.

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Zoom Business Model: How Zoom Makes Money

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Zoom Business Model and How it Makes Money

Zoom

Zoom has recently become a well-known app in the technology industry. The app’s popularity has come due to the recent COVID-19 pandemic. Due to the limits put on physical contact, most businesses and individuals needed a solution that allowed them to collaborate and meet online. Zoom’s product was the perfect solution for their needs.

Zoom was founded in 2011. However, it wasn’t until late 2012 that the company launched its online app and platform. The company also went public in 2019, getting a valuation of $16 billion by the end of the first trading day. Zoom had many high-profile clients, such as the University of Stanford. However, it experienced a significant surge of new customers during the pandemic.

Zoom reported 200 million+ daily meeting participants recently compared to the 10 million in December 2019. Similarly, the app broke many records on various app stores for the most downloaded app. Due to the significant increase in the downloads and customer count, Zoom also generated significant revenues. Zoom’s business model was the centre of attention for many.

Zoom’s business model has allowed it to be a profitable business. However, most people wonder what Zoom’s business model is and how it makes money. Given below is a description of both of these.

What is Zoom’s Business Model?

Zoom’s business model is straightforward and something that has existed for a long time. Zoom uses a freemium business model . With this model, companies provide products and services for free. However, they put specific limits on their products, after which customers have to pay. The freemium business model is highly successful in the technology industry.

Zoom offers customers a free plan. Through this plan, customers can have unlimited one-to-one meetings. The limit on the app comes for group meetings, where it only allows 40 minutes of meetings with up to 100 participants. For most customers, the free plan may be enough to benefit from the app’s features.

However, most corporate and professional clients may use the paid features that increase the limits for usage. For example, schools, colleges, and universities using the app pay to use the professional features. Through this, Zoom makes a significant amount of money. In this aspect, Zoom uses a subscription-based model, where customers have to pay a monthly fee to use the app.

Zoom’s business model is highly dependent on its number of users. The more users that use the app, the more Zoom can make money. Due to the recent influx of users to the platform, Zoom’s profitability has increased significantly. Zoom made revenues of only $2.651 billion in 2021. However, the app significantly improved its revenues in 2022.

In 2022, Zoom generated revenues of $4.099 billion (As of 31 January 2022). It was a staggering increase of 55% over the revenues generated in 2021. It was before the pandemic, which shows the app was successful before the pandemic. However, it was also the same year as the company went public. So, some experts believe that it may have had an impact on the revenues.

Similarly, Zoom generated revenues of $2.651 billion in 2021. While it was a significant increase of 326% from 2020. Compared to 2018, the company increased its revenues by more than five times. The significant increase in profits was primarily due to the rise in the number of users.

Lastly, the company experienced almost double revenues in each quarter of 2020. Given below is a summary of Zoom’s quarterly revenues in the last two years.

How Does Zoom Make Money?

Zoom earns its revenues from several sources. It provides its customers with different plans and packages from which they can choose. Zoom does not make money from its free features. Unlike other apps that use the freemium model, Zoom does not display ads on its app. Therefore, it cannot generate any ad revenues. However, the free version of the app does a great job of showing its features and attracting new users.

Zoom makes money from its paid services. These include the following plans and packages.

Subscription Plans

Zoom has four different subscription plans through which it earns money. The company has its basic plan where it does not charge anything from its customers. As mentioned, it allowed unlimited 1-to-1 meetings, 40 minute limit on group meetings, up to 100 participants, and some other basic features.

The second plan is the pro plan. Zoom charges its customers $149.90/year/license from its customers. The pro plan includes up to 30 hours of group meetings, social media streaming, 1 GB cloud recording per license, and up to 1,000 participants with large meetings. It also includes better support compared to basic users.

Zoom Business

The next plan is for small and medium businesses. It can host up to 300 participants and increase the limit to 1,000 with a large meetings add-on. It includes other features such as recording transcripts, managed domains, company branding, single sign-on, and all pro-plan features. This plan costs $199.90/year/license.

Zoom United Business

The next plan is the Zoom United Business plan. This plan costs $350/year/license. Similarly, it includes all the features that come with other plans. On top of that, it includes Zoon United Pro phone features, unlimited calling within global select, optional add-ons. It also has meeting features such as host meetings of up to 300 participants and other features.

Zoom Enterprise

Zoom enterprise is Zoom’s largest plan for customers. IT costs $240/year/license. It includes all features available in the other plans. It also includes meetings that can host up to 500 participants, unlimited cloud storage, a dedicated customer success manager, and other custom features. It also includes executive business reviews and bundle discounts.

Zoom Enterprise Plan

Zoom Meetings Add-Ons

Add-ons are features that are not a part of the Zoom subscription plans. These add-ons allow users to increase their limits or order other features without paying for higher plans. These include features such as video webinars or increasing group meeting participant limits. These add-ons are only available to pro and business plan users.

Free users can’t get these add-ons. Similarly, higher plans already have most features included and may not need to order them separately. Add-ons also come with a monthly subscription plan.

Zoom Meeting Add-on Plans

Zoom also provides phone plans to users. These include four tiers of paid plans. With the phone feature, customers can receive features, such as a US & Canada or a direct dial number. They can also call domestic or international numbers based on the plan they choose. Zoom Phone also comes with SMS and MMS features.

It also includes other features such as advanced phone features, making and receiving calls from multiple devices, unlimited calls and much more. Customers have to pay for this package in addition to the Zoom Meeting plan. Zoom phone plans include $120, $180, $240 and $350 plans per year per license. Given below is a summary of the plans.

Zoom Phone Plans

Zoom Phone Add-Ons

Zoom Phone also comes with add-ons. These include International Calling Add-On for $120 per year. Similarly, it allows additional phone numbers, which start at $60 per year. As with the meeting add-ons, customers have to be subscribed to a licensed plan to use these.

Zoom Phone Add-ons

Zoom Video Webinar

Zoom also has a video webinar feature that lets hosts conduct online webinars. It allows various features such as interactive video panellists, Q&A feature, in-webinar text-chat, polling, muting options, performance reports, etc. It also has several other features that allow both the hosts and participant more flexibility in their options. Given below is a list of all the features for the Video Webinar feature.

Zoom Video Webinar

The Zoom Video Webinar features allow the app to earn more than any other plans or features. There are six different plans for users to choose from based on the number of attendees they expect. The plans start from $400/year/license for 100 attendees up to a whopping $64,900/year/license for 10,000 attendees. Zoom also offers bigger plans. However, customers have to get in contact with the team to get custom prices.

Given below is all the plans for the Zoom Video Webinar feature.

Zoom Video Webinar Plans

Zoom Video Webinar Add-Ons

Like other features, users can also choose from different add-ons for the video webinar plan. These include an Audio plan at $1200 per year and cloud storage at $480 per year. Here’s the summary.

Zoom Video Webinar Add-on

Zoom also has rooms features, which allows easier meeting solutions. It has a 30-day trial plan that users can use for free. However, after that, users must pay $499/year/room and purchase up to 49 Zoom Rooms license. They can also get better enterprise solutions by contacting support. A list of all the features for Zoom Rooms is as below.

Zoom Rooms

Zoom Room Add-Ons

Zoom Rooms has three add-ons. These include conference room connector, hardware as a service and professional services. Given below is a summary of these add-ons.

Zoom Rooms Add-on

Zoom United

Zoom also bundles various packages into one through its Zoom United plan. The prices may be different from other packages. However, it allows customers to order several Zoom plans for lower prices. Here is a summary of the Zoom United plans that customers can get.

Zoom United

Zoom United Add-Ons

Zoom United also comes with add-ons. These include international calling and additional phone numbers, same as for Zoom Phone plans.

Zoom United Add-on

Zoon is an online video conference and collaboration tool. The app gained significant popularity during the pandemic. While Zoom uses a freemium business model, it still makes income. The primary source of income for the app is through its subscription plans. These include Zoom Meetings, Zoom Phone, Zoom Video Webinar, Zoom Rooms and Zoom United. Zoom also has several add-ons for each of these packages for which customers have to pay.

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What is a business model canvas? Overview with template

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In 2013, I co-founded a startup in the Indian online gifting industry with three friends. It was my first involvement with a startup. Startups are fascinating — they’re small, agile, and quick. However, another key feature of startups is their ability to creatively solve problems.

What Is A Business Model Canvas Overview With Template

At that time, we aimed to target India’s gifting market, which was more than 90 percent offline. We had plans to establish an online shop selling a wide variety of gifts. But before we got started, we decided to document our idea. Amidst many templates, we discovered the business model canvas, a lean tool for outlining business models. It was neat, straightforward, and free. This tool brought remarkable clarity to our idea.

Despite shutting down the startup in 2015, I gained a wealth of knowledge during those two years. One major takeaway was the tools and techniques I learned along the way. The business model canvas was one of them. Even after seven years, I still use the business model canvas in my role as a product manager.

In this blog post, we’ll explore how product managers and entrepreneurs can effectively use a business model canvas.

What is a business model canvas?

The business model canvas is a template introduced by Alexander Osterwalder in 2005 as part of his Ph.D. studies under the supervision of Yves Pigneur. The business model canvas outlines nine crucial elements of a business model in an easy-to-understand visual template: customer segments, value proposition, channels, customer relationships, revenue streams, key activities, key resources, key partnerships, and cost structure.

Various companies, including startups, scale-ups, and large software organizations, have utilized this template since its inception to simplify their business strategy and improve their understanding of the overall business structure. However, before we delve into what a business model canvas entails, it’s important to comprehend why simplifying business strategy and structure is essential.

The last company I was part of employed 10,000 individuals. It ran more than 20 different businesses, each generating millions in revenue. When operating on such a large scale, it’s vital to have a clear strategy that outlines the business models. This strategy should define who the customers are, identify key partners, elaborate on the value proposition, and explain the cost structure, among other things.

The strategic blueprint serves as a go-to source of information whenever confusion arises. While this is true for large corporations, it’s equally applicable to smaller scale-ups and startups. It’s crucial to understand the business strategy and models from the onset. This comprehension aids in crafting a framework that can be applied when tackling complex issues or determining priorities.

This is where the business model canvas proves invaluable. It assists in laying out business models in a straightforward, user-friendly format.

What are the 9 components of the business model canvas?

The business model canvas comprises nine key elements:

Customer segments

Value proposition, customer relationships, revenue streams, key activities, key resources, key partnerships, cost structure.

9 Components Of A Business Model Canvas

These components cover the three main areas of a business: desirability, viability, and feasibility. The nine components also aim to bring transparency and understanding to a broad audience, which can include upper management and internal teams such as engineering, design, product management, marketing, sales, legal, and customer service.

Collectively, these elements capture the essence of a business model. They help map the relationship between these elements and how they intertwine with one another. Let’s take a more in-depth look at each element.

Everything starts with the customers, which is why this is the first element of the business model canvas. This component identifies the different customer segments a company targets. These can vary across business models.

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For example, while working at Zalando (one of Europe’s largest fashion eCommerce companies), there were multiple business models. One focused on end customers, while another focused on partners selling products on Zalando. The business model canvas helps outline these customer segments in a single snapshot.

Try to avoid being too detailed. Mention who the partners are, but there’s no need to note the demographics, age, gender, etc., of the customer segment unless required.

This term refers to the unique advantage or value a business provides. It’s what sets the business apart from competitors. This could be a product or a service that the business uses to solve a customer’s problem.

For instance, Uber’s value proposition is its ability to help customers travel from point A to point B on demand.

Channels are the various ways through which a business intends to interact with customers and/or partners. For Airbnb, their website and apps are the primary channels. But they also leverage social media, offline hoardings, email marketing, and community forums to reach their audience.

This element addresses the various ways a business interacts with customers to improve satisfaction and the overall experience. Monitoring customer feedback and how they interact with a company’s product is critical in a competitive landscape.

Amazon, a company that prioritizes customer focus, includes 24/7 customer support, personalized recommendations, regular newsletters, ratings and reviews, Amazon Prime membership, and community engagement as part of its customer relationships.

This component lists the different ways a company plans to generate revenue. For Google, revenue streams include advertising, the Google Play Store, Google Cloud, and hardware sales.

This section includes all necessary activities needed to keep the business functioning smoothly and to deliver value to all users. Microsoft’s key activities, for example, include software development, hardware development, cloud computing, gaming, research and development, and VR.

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As the name implies, key resources are the essential tangible and intangible resources needed to keep the business operational. These resources incur costs, making their documentation vital. An online gift-selling company would require a website/app, collaborations with manufacturers, and marketing capabilities.

This element focuses on the partnerships or collaborations a business might have with other companies to better serve customers, reduce risks, and increase profits. For Facebook, key partners include regular users who generate content, advertisers, and influencers who create content at scale.

This element outlines the costs and expenses associated with a business. For companies like Google and Facebook, costs can be substantial given their value propositions. While it may be difficult to capture the cost structure of these giants in a small space, it becomes easier and beneficial for smaller companies.

For example, McDonald’s cost structure would include manufacturing costs, service-based costs (such as employee costs), franchise costs, and infrastructure costs.

What are the benefits of using a business model canvas?

Indeed, using a business model canvas offers many advantages for businesses of all sizes. To summarize, some of the key benefits include:

Benefits Of Using A Business Model Canvas

Visual representation

A business model canvas provides a visual overview of all the critical elements of a business. This allows stakeholders to see how these elements relate to each other, facilitating understanding and decision-making.

The visual nature of the canvas makes it accessible to various stakeholders, including top management, engineers, designers, customer service, and operations teams.

Clear collaboration, communication, and alignment

Developing and managing products often require the input and collaboration of multiple stakeholders . A business model canvas provides a clear, concise tool for aligning all these parties, promoting better communication and collaboration. It also helps product managers secure buy-in from stakeholders at an early stage, reducing risks and fostering better alignment, especially in a cross-functional environment.

Strategic long-term thinking and analysis

By design, a business model canvas encourages long-term strategic thinking. It helps identify business strengths and weaknesses, facilitates brainstorming new ideas and improvements, and shapes long-term strategies to better serve customers.

Flexibility

Businesses and ideas evolve, and a business model canvas accommodates these changes. It offers a flexible template that can be easily modified, often featuring version numbers to track document evolution. This flexibility supports an iterative approach, ensuring the canvas captures all necessary information as the business evolves.

Business model canvas template

The internet is replete with various business model templates. A quick Google search will return 34,200,000 results. Here’s a quick template that I created on Google Sheets:

Business Model Canvas Template

Click here to access the business model canvas template. You can click File > Make a copy to download the canvas and customize it for your business.

Example of successful use of the business model canvas in product management

Here’s an example of a business model canvas for Facebook:

Business Model Canvas Facebook

How do I create a business model canvas for my business?

After you fill out the nine components we went over earlier, there are some other key points to keep in mind to successfully create a business canvas model.

Involve all the stakeholders early on

Since a business model canvas has elements ranging from tech to marketing, sales, and customer service, it’s important to involve these stakeholders right at the start. This reduces the risk and helps to bring everyone on the same page.

Keep it simple

Don’t use complex sentences while explaining the pointers under every element. Use simple and short words. Simplicity will make it easier for the audience to consume the information effectively.

Be data-driven

Let every pointer included in the business model canvas be data-driven. This will help lay down a strong foundation for long-term decision-making.

Focus on an iterative approach

It’s difficult to come up with a business model canvas right at the first go. Hence, it’s important to keep an iterative approach and let the document evolve depending on the feedback from the contributors. You can use versioning to keep track of all the changes.

Consider external factors

Currently, the growth of many businesses is slow and it’s projected to be the same for the entire year. It’s important to consider these external factors while coming up with a business model canvas since it helps to consider factors that might not be in control of a business.

Conclusion and key takeaways

A business model canvas can be a very effective tool if used right away. Product managers can use this tool before starting a product or a feature. It can help them have clarity on the idea before the actual development work starts.

Also, since it involves all the major stakeholders right at the start, a business model canvas can help mitigate risks early on. It’s a great tool for validating business ideas, products, or a feature.

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Business Model Canvas Examples

Kyrylo Iusov, Advisor & Co-founder

CPO in Jelvix with 8+ years in software development. He has been working as a project manager for more than 6 years. Kirill has managed a wide range of projects from various business segments and understands the processes that will drive the product to success. He started from managing small teams, and now he assembles an expert team of more than 40 software developers. His expertise and knowledge of the latest technical innovations have brought Jelvix to the ranks of the most distinguished custom software development companies.

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Over the last decade, the approach to planning and organizing a business changed a lot. In the past, business owners created extensive business plans that described the detailed specifics of value proposition and operations. Business plans aimed to foresee the situation in the scale of decades. 

However, the ever-changing startup climate that emerged over the last decade made this approach irrelevant. Spending time preparing business plans that end up being detached from reality led to increased expenses. After all, no matter how good your business plan is, it might not account for a global pandemic. 

What’s a Business Canvas?

Business canvas, also known as a lean business plan , is a time-saving approach to business planning, opposed to traditional planning methods. Rather than describing the detailed vision , mission , operations, it answers key questions – and the team derives the conclusion from this answer.

Business model canvas is more attainable than a business plan. Instead of describing the abstract vision, the document focuses on answering the following questions: 

  • What is the product/service?
  • What is the main value offered to a customer by a company’s product or service?
  • How much does it cost to start a business? What’s a brief estimate of major expenses?
  • What are your business key partners?
  • Who are the main customers? Business canvas can consider both primary and secondary target audiences . 
  • What are the main distribution channels and approaches to managing them?
  • The Format of Business Model Canvas Explained

The main advantage of switching from plain-text plans to visual canvas is its readability. Here’s a rundown of differences compared to the traditional approach. 

  • The document volume: just one page versus old-fashioned 20-30-page documents;
  • Clear structure: each section of a business model canvas is located within its “square”;
  • Fewer words, more meaning: the more concise canvas is, the better it’ll convey its key points;
  • The style: no sales talk on technical jargon, canvas describes the business model in everyday language;
  • Focus on practical matters: business model canvas features useful answers to urgent questions. No information is entered “just in case.”

The Structure of Business Model Canvas

The structure of Canvas

Business model canvas is easy to read because it always follows the same format. Investors, stakeholders, partners get used to seeing particular information where it belongs – so that everyone is literally on the same page.

  • Sections always follow a precise order. For example, the cost structure is always in the left bottom part together with revenue streams.
  • All sections are distributed based on their meaning. Key partners, activities, and resources are located together – because these aspects are closely related. Similarly, cost structure and revenue streams belong in the same row. 
  • More opportunities for branding. Since canvas encourages visual representations, businesses can show their tone of voice and approach clearer. Sure, there’s a format to follow, but deviations are possible in the tone of voice, fonts , narration style. 

Categories that are located on the left side of the canvas are the ones that require investments and nurturing. The aspects described on the right side refer to means of generating revenue. This is called a left/right split of the business canvas. 

This article will give a practical guide on how to describe business concept examples and analyze real-life business models. With a business model canvas, the entire team will have one-page guidance on developing a business model . 

  • Customer Segments

To define customer segments, you need to analyze your clients by demographic and behavioral characteristics. There are many ways of defining user performance and performing customer analysis, but here are few ideas. 

  • Basic demographic characteristics . Split your customers into segments by gender, age, location, occupation. These qualities will influence their behavior later on and allow you to perform basic targeting. 
  • B2B vs B2C segmentation . Often, businesses tend to gravitate to one or the other, but business models combine both. For instance, if you are building a booking or tourism-related platform, you interact with businesses and individuals. These users will have different needs and challenges.
  • Usage habits . Software development companies focus on types of devices, operating systems, browsers that users normally use. 
  • Purchasing trends . You can segment users by their favorite product categories, time of making a purchase, frequency, etc. 

Business canvas is supposed to be brief – so the best strategy is to choose 4-5 leading segments and focus on them. These should be the user types that have the potential of generating the most revenue for your business. 

  • Key Partnerships

Business canvas focuses on tangible aspects of business operations, and partnerships are among its key pillars. For this section, listing all partners is unnecessary. If you don’t have specific names in mind yet, you can list the types of partnerships and briefly describe strategies for attracting them. 

As a software development company, our clients and we typically consider the following key resources in the business model canvas . 

  • Suppliers : e-commerce stores, marketplaces, delivery applications rely on businesses that can steadily supply high-quality products. In your business canvas, list requirements for a supplier. 
  • Technical collaboration : to build the best product, development companies often need to cooperate with others. This section can feature commercial APIs , payment gateway partnerships, cooperation with development teams and agencies, and outsourcing providers. These businesses are also key partners of your business.
  • Cooperation with competitors : if there’s a strong player on the market, smaller businesses often team up to gain visibility. If you are entering an established field, consider looking for smaller competitors and making them a partnership offer. 

The focus on partnerships is one of the main advantages of business canvas over other methods. Too often, businesses don’t think about cooperation out-of-the-box and miss out on opportunities. When you build a business canvas, its structure motivates your team to consider these options. 

  • Key Activities

The operating model canvas describes your company and product’s processes to solve its target problems. For instance, for Uber, the key activity would be connecting drivers to clients and overseeing the safety of cooperation. Key activities tend to vary as the company scales, so most businesses frequently update this business model canvas section.  

The key activities of most IT businesses

  • Product ideation and development. The main value of a tech company lies in its product. Design , development , and testing are key activities that directly influence business success. 
  • Marketing. To reach new users and keep the existing ones satisfied, you need to plan marketing activities. This includes digital marketing and its components – Search Engine Optimization, content management, social media management. 
  • Sales. Sales activities allow companies to continually generate revenue, communicate with clients, and stay in touch with direct customer needs. Pre-sale and sale processes should be listed as one of the key activities in the canvas. 
  • Customer support. If the product is not working properly, or a user can’t understand the interface or functionality, customer support should promptly intervene. For an IT business, focusing on customer support quality is crucial for maintaining a good reputation. For instance, Google Cloud’s lack of customer support is what drives many away from embracing an otherwise great solution. 
  • Distribution and logistics. For businesses that deal with e-commerce and sell physical goods, distribution and logistics are key business model activities. Business model canvas should have information on responsible team members, costs, and requirements for the distribution cycles. 
  • Public relations. If a business is built around a community, communication and community management are key business activities. For NGOs and educational services, public relations are particularly important. 

The list of key activities is a defining feature of the business model. When you understand what operations are the most crucial for your business, you have a better idea of the end value. The key activities define your unique value proposition, operation costs, risks, and partnerships. This is why it’s the most important section in the entire strategy canvas template . 

Learn more about the main stages of product development lifecycle to build a sustainable product.

  • Revenue Streams

Revenue streams

Revenue streams also referred to as monetization, sum up your business strategies to leverage profit. A lot of businesses choose a single monetization strategy, while some combine multiple approaches. As a software development company, we can sum up the most common revenue streams for software businesses and tech-based models. 

Advertising . Users use the application for free; however, some of their personal data might be used for advertising targeting. The application offers the time and attention of their users to businesses – and gets paid a commission. It’s a great business model for attracting more users, as the service remains free.

However, to generate a lot of profit, it’s essential to have many users on the service. Advertising strategy, among others, is used by Facebook, Twitter, Youtube, Google, and others. It’s a common one for mobile applications and games. 

Subscriptions . To use a service, a user needs to pay every month, week, or year. It’s a common model for software-as-a-service, media platforms, learning services, online publishing, and entertainment. On-demand content providers like Spotify or Netflix use this business model with premium-level publishers like Quartz or The New Yorker. 

Affiliate Marketing . The platform gets revenue for referring users to other products. By tracking visits and purchases with on-page pixels and promo codes, affiliate systems calculate your revenue.

Affiliate marketing is frequently used among influencers (like when a sponsoring brand gives a Youtuber a promo code) and blogs (when a niche blog publishes a list of best tools to use or collects the best Amazon listings). Affiliate marketing can be beneficial both to users, referring platforms, and your partners – if recommendations correspond to your users’ needs. 

Donations from users . If you’d like to keep offering your service to the public for free without selling away user data, donations are another option. PayPal provides a donation getaway that can be embedded on the blog, application, or web service.

This strategy is common for businesses with a strong social mission and requires high user loyalty. Such business canvas examples include Wikipedia , The Guardian , and Khan Academy (the education platform that recently received a 5 million dollar donation from Elon Musk). 

Freemium . This business model offers basic features for free and provides updates on a paid subscription. It’s common among SaaS and publishing businesses. Use examples include Medium (users have a certain number of free stories every month) and Grammarly , where a free version recommends basic corrections. 

Commissions . Fee-based monetization is common for marketplaces, APIs, payment gateways. The use of service is typically free, but the intermediary withdraws a fee once a transaction is made. The commission can be fixed regardless of the purchase amount or depending on the percentage. This business model is used by Uber , Amazon , BlaBlaCar , and other services. 

  • Value Proposition

The Value Proposition is a concise sentence or, at best, paragraph that summarizes your company’s offer. It depicts users’ problems and ways to solve them. Let’s take a look at real value proposition canvas templates to make things more transparent. 

  • Slack’s value proposition is summarized in their slogan – be less busy. The full version is more specific: Slack is where teams can collaborate, send important information to the right people, and find tools when and where users need them. Still, the three-word slogan reflects the gist of it pretty well – after all, the purpose of Slack merely is making users less busy.
  • Paypal has two sets of value propositions – one for buyers and one for sellers. The sellers-focused version promises convenience, low cost, and security. Online stores can be sure that the payment will go through on any browser, with a low commission, and user data won’t be compromised. For buyers, the value proposition is focused on convenience, flexibility, and security. It takes little time to make a payment, it can be done from any device and browser, and all data is safe. 
  • Amazon is a super-aggregator of vendors and buyers, where buyers can find whatever they need at a given moment, and sellers can reach large audiences. The company’s value proposition is based on the platform’s functionality and popular community.
  • Distribution Channels

At this point, you can answer two major questions: what is your value, and who needs it. However, the picture is incomplete without knowing how the value will be delivered to customers. Answering this question is the responsibility of the “Distribution channels” sections. 

To plan channels in the business model canvas , we recommend getting acquainted with the buyer’s journey. In a nutshell, it consists of three stages: 

  • Awareness : the customer is aware of the problem but doesn’t yet know how to solve it. He’s not considering any particular help so far. It’s an exploratory stage. 
  • Consideration : the customer is aware of the importance of the problem and is ready to consider looking for help. At this point, the user is exploring multiple options, comparing pricing, advantages, reviews. 
  • Decision : the client spent a lot of time exploring the market and is ready to commit to the final option. At this point, all a customer needs is the last push that will fully persuade towards making a purchase. 

Distribution channels

A company should have distribution channels for all three stages of the buyer’s journey. It’s achieved with focused content marketing, Search Engine Optimization, email marketing, social media management. Here are some of our distribution channels – just to give you an idea.

Distribution channels in a business canvas example 

  • Company’s blog : Jelvix has a blog with in-depth guides like this for users in the awareness and consideration stage. Users get to know their problem better and move to the consideration stage. 
  • Newsletter : once a user considers our blog useful, the next option is to subscribe to our newsletter. This is where we inform about new content, special offers, additional materials (like free e-books or whitepapers).
  • Case studies . When users are deciding on partnering with the Jelvix team, they usually take a look at our case studies. Often, they reach out to us directly – and this is where the sales team comes in. 
  • Youtube channel . Often, clients in the awareness stage come to us from Youtube. They want to see an explanatory video that answers their questions – and this is how they come across our content. 

Distribution methods require a lot of investment at the early stages, but ultimately, they keep your business running in the long run. 

  • Key Resources

To execute plans outlined in the canvas, you need resources. For tech companies, this involves development, design, testing teams, HR specialists, security experts. Other things to consider are server costs, maintenance fees, API costs, office space, hardware, software (development environment, automation scripts, management tools). 

The business canvas should distinguish between already available resources and those that still require investments. To avoid leaving anything out, we recommend grouping resources into human, financial, intellectual, technical, and physical ones. 

  • Physical resources : office space, furniture, computers all fall in the realm of physical resources. 
  • Intellectual resources : if you need to acquire educational resources, patents, copyrights, creative licenses, these will be expenses on intellectual needs. 
  • Technical resources : we could consider those as an extension to intellectual resources, for tech companies, this category is one of the most relevant one – and it deserves own spot. Such resources include hardware for testing, development environments, emulators, additional tools, APIs, server cost, maintenance fees, etc. 
  • Human resources : development, design, testing teams, marketing specialists, sales and customer support department, legal and HR teams – everyone involved in your direct business operations falls into this category. These resources don’t have to be limited to the in-house team – you can include freelancers and contractors. 
  • Financial resources describe funds that the company already has and strategies for obtaining those in the future. You can plan out investments, loans, crowd-funding campaigns, strategic customers, and others in this category.
  • Customer Relation Strategy

To plan a business model canvas for customer relationships , you already need to understand the specifics of your target audience, value proposition, main activities, and available resources in sales, support, and marketing departments (all this was described in other sections). So, in this section, we suggest focusing on building and maintaining a customer relation strategy. 

  • First contact: what are the ways for your users to contact the company. The most common ones are on-site forms, email communication, phone calls, and Skype meetings. Which contact data is public to users, and what has to be obtained after direct contact? Specify these requirements. 
  • Pre-sale process . Canvas should describe the value that your customer receives on the pre-sale stage. In software development, it’s often done during the discovery session. A development team offers a free analysis of a business model and provides estimates. 
  • Sales meetings . Describe who’s responsible for converting qualified leads into sales. What are the channels of communication (Skype, Zoom, phone calls, in-person meetings, negotiation)? Establish the duration of such a cycle. 
  • Finalization . When is the sale process considered finalized? What are the documents that parties need to sign for sale to go through? What data does a customer relations team need to finish the process?
  • Communication . Keeping in touch with existing clients is as important as attracting new ones. What are the ways to stimulate the next purchases? This is where you can describe special offers, bonuses, loyalty programs. 

The customer relationship section usually describes programs for maintaining and attracting clients, communication strategies, and technical resources (software, browser extensions, social media).

Name of video

  • Cost Structure

The allocation of resources depends on your field and business model. As a tech company, we can give you an idea of an approximate cost structure for tech startups.

Statistics show that 10-20% are spent on development, whereas the most are invested in testing. Marketing tends to take up around 15-25% of the budget for new businesses and around 5-10% for established companies. 

Costs can be fixed and variable. In the cost structure business model canvas , define which expenses will be constant and require constant revision.

 types of cost

Main types of cost to consider

  • Operational costs : how much do you need to keep your product running? This includes testing, development, server costs. 
  • Marketing costs : how much do you pay for one client? What is your average promotion budget?
  • Support costs : how much do you pay support teams?
  • Overhead costs : these are costs that don’t impact the product quality directly but can’t be ignored – electricity bills, installation time, delays from human resources. 
  • Staff costs : investments into recruiting, hiring, training employees, and financing additional programs and bonuses. 

For tech companies, R&D departments are the main focus. Sales and marketing are the second priority – however, the business’s success still mainly depends on product quality.

Business Model Canvas Samples

canvas model

Let’s take a look at lean canvas examples for successful companies. There aren’t official versions – such documents are usually not published. The purpose of these examples is to give you an idea of how such businesses could formulate their lean canvas examples . 

Business model canvas - slack

To understand the key aspects of your business model in a few days, you can create a business canvas. It’s an efficient one-page representation of your unique proposition value, key activities, customers, distribution channels, cost structure, revenue sources, and other aspects. Unlike traditional business plans, it doesn’t give irrelevant details – the focus is on the pillars of the business. 

The business model canvas for tech companies has its structure and rules. From audience to cost allocation, the business climate of tech startups is different from traditional businesses. If you’d like to create a canvas for your concept, don’t hesitate to contact our team . We are happy to help you ideate the solution and bring our development team on board – to make the concept into a ready product. 

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The 9-Step Business Model Canvas Explained (2023 Update)

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Written by Raquel Alberdi

Business | entrepreneurship, 16 comments(s).

Business Model Canvas

Blog » The 9-Step Business Model Canvas Explained (2023 Update)

business model canvas zoom

“A major mistake made by many start-ups around the world is focusing on the technology, the software, the product, and the design, but neglecting to ever figure out the business . And by “business” we simply mean how the company makes money by acquiring and serving its customers”.

-Reid Hoffman

After meeting with hundreds of entrepreneurs and business owners over the years I believe the LinkedIn co-founder and Blitzscaling author Reid Hoffman’s got it spot on.

People tend to focus on specific parts of their business, such as which software packages are being used, which is the cheapest supplier, how to optimize internal processes…?

They get so bogged down in the details of the day-to-day running that they lose the overall vision of their business.

Without this vision they are unable to scale, they make marginal profits, miss opportunities, struggle to innovate, and end up running “just another” business.

Another handy metaphor in understanding this common mistake is the soldier in the trenches .

Every meter of ground gained comes at a heavy cost, mistakes are made, and progress is hard-fought and slow…a day-to-day experience for 99% of entrepreneurs and businessmen.

But when you do have that 360 vision you see the entire battlefield. Decisions are much clearer, fewer mistakes are made, and progress is fast and methodical.

Fortunately, a business model framework exists that gives you both vision and clarity .

The Business Model Canvas provides entrepreneurs, business owners, and strategists with a tool to analyze, structure, and evolve a business while always keeping the bigger picture front of mind.

So let’s take a closer look at how it works.

Table of Content

What is the Business Model Canvas?

Created by Swiss entrepreneur and Strategyzer co-founder, Alexander Osterwalder, the Business Model Canvas is a visual representation of the 9 key building blocks that form the foundations of every successful business. It’s a blueprint to help entrepreneurs invent, design, and build models with a more systematic approach.

Why is it so popular within the business community?

Its simplicity. The business model canvas allows us to carry out a high-level analysis without drilling down and getting lost in the details. You just draw out the 9 building blocks on a blank canvas, fill them in as each concept relates to your business, and hang it somewhere everybody can see.

It’s a visual overview of your entire business on a single canvas.

While the Business Model Canvas is an extremely fluid concept and hyper-specific to individual companies, each canvas is still broken down into these 9 key building blocks:

Customer Segments

Value propositions, customer relationships, revenue streams, key resources, key activities, key partners.

When laid out on the canvas the model will look something like this:

 Scheme of business model in which 9 important fields are developed for its execution.

While you’ve probably come across each of the 9 building blocks before, the attractiveness of the Business Model Canvas is that it confines them to a single page , not a traditional 42-page document.

This makes it a lot easier to digest, as well as assess existing business models or map out new ideas.

How do I fill out the Business Model Canvas?

To start your Business Model Canvas you will need to breakdown and analyze each of the 9 building blocks.

A good way to approach this is to gather the heads from marketing, sales, operations, finance, and manufacturing (if product-based) and pencil-in a morning where you can all meet together.

Then, after drawing a mock canvas onto a whiteboard, proceed to dissect and discuss each of the 9 building blocks as they relate to your business. You can use sticky notes to better organize your thoughts around the canvas.

If you are an entrepreneur or new business owner working alone and don’t have a team to bounce your ideas off, not to worry. You can still carry out your analysis before sharing it with a like-minded entrepreneurial community or forum, like those found on ThePowerMBA , to get useful, insightful feedback.

Whichever way you decide to approach it, I recommend you complete each block in the following order:

  • Cost structure

For continuity, I’m going to use the fashion retail giant Zara when analyzing each of the 9 key building blocks.

If you’d like to skip to another case study similar to your own business, navigate to the table of contents at the top of the page and select one of the other business model canvas examples.

Customer segment business model canvas for Zara company

The first block of the Business Canvas Model is about understanding who is the most important customer(s) you’re delivering value to. Or, in other words, who are they? What do they do? And why would they buy your product or service?

Not a single company exists without its clients, making customer segments the best block to start with while drawing out your business model canvas.

A great exercise to define your customer segments is to brainstorm and create your company’s buyer persona (s) .

Buyer personas are fictional depictions of an ideal or hypothetical client. Typically when brainstorming a buyer persona you’d want to define certain characteristics (age, demographic, gender, income, industry, pain points, goals, etc.)

However, remember at this stage we want a snapshot of our customer segment. There’s no need to jump into great detail just yet.

In the case of Zara, there are three distinct customer segments to whom they offer different products.

The products created for each of these customer segments (clothing, shoes, and accessories) are not trans-consumable. That is to say, a woman’s dress is highly unlikely to be worn by a 7-year-old child.

Once we know exactly who it is we are targeting, it’s time to look at what we as a company have to offer.

Zara Customer Segments business model canvas template showing the development of the 9 fields

The second phase is about figuring out your company’s value propositions , and importantly, your UVP (unique value proposition). The “what” that makes customers turn to you, over your competitors? Which of their problems are you best at solving?

Each value proposition consists of a bundle of products or services that fulfill the needs of a buyer persona from your customer segment. It’s the intersection between what your company offers, and the reason or impulse customers have for purchasing.

Some popular questions to ask while determining your UVP are:

  • Which specific customer pain point are you trying to solve?
  • What job are you helping customers get done?
  • How does your UVP eliminate customer pain points?
  • What products or services do you provide that answer this specific pain point?

So let’s try and apply this to Zara. Why do people choose to purchase from them, over their competitors?

Zara’s principal value propositions are fairly clear. They offer various ranges of stylish men’s, women’s, and children’s clothing and accessories at an affordable price.

But there’s more to it than that.

If we dive a little deeper we see Zara’s value propositions are more complex, which are behind the success of the brand:

Fast fashion

Zara adds new clothes and designs to its collections every 2-3 weeks, both in its stores and online. It keeps the brand updated, fresh, and modern while maintaining its all-important medium price point

Great eCommerce experience

Once you enter Zara’s online store you’re presented with a clean, easy-to-navigate, and high-end feel. The customer segments are visible on the left navigation bar with a search tab to further aid customers with their online experience.

Zara's Canvas business model where you can see the innovative presentation of its image

Localized stores

You can find a store in nearly all major retail locations (shopping malls, retail outlets, airports, etc.) meaning accessibility is not an issue for the majority of consumers.

Flagship stores

Zara demonstrates its aesthetic evolution to customers through its flagship stores. The recent opening of their Hudson Yards , New York City flagship is a great example of this. Customers shop around its vivid, minimalist layout offering them an experience aligned with the brand’s deeper, eco-friendly values.

Zara's Canvas business model where you can see the innovative presentation of the image of its stores

Zara Hudson Yards, New York

Business Model Canvas Template Zara - Value Propositions

The next step is to ask yourself how you are reaching your customers, and through which channels ?

This includes both the channels that customers want to communicate with you as well as how they’ll receive your products or services.

Is it going to be a physical channel? (store, field sales representatives, etc.) Or is it a digital channel? (mobile, web, cloud, etc.).

Zara has 3 primary channels in which they communicate and deliver products to its customers:

  • Direct sales through their stores
  • Online (both app and website)
  • Social media

Customers can go to a traditional “bricks and mortar” store to browse, model, and purchase different items of clothing at one of their retail stores.

Alternatively, they can shop online or through their mobile application and have the product delivered straight to their door or nearest store. The choice is completely up to them!

So that covers Zara’s commercial channels, but what about how they communicate with customers?

While they do communicate through their mobile app, their predominant channel is social media.

What’s more, they’re really, really good at it.

For example, did you know that Zara invests less than 0.3% of its sales revenue into advertising?

This is only possible due to an A-rated social media presence . Customer queries are not only dealt with quickly, but recommended re-works are sent back to HQ, forwarded onto in-house designers who then apply the feedback to future collections.

This customer-first approach through fluid communication channels has saved them thousands of dollars in marketing, strengthened their brand, and created a loyal customer base.

You should only step away from this building block once you’ve decided how each of your customer segments want to be reached.

Zara Channels business model canvas template where its components are developed

Once you have acquired customers, you will need to think about how you can build , nurture, and grow those relationships.

Now, this can be automated and transactional like large eCommerce brands Amazon or Alibaba. Or, it could be at the complete opposite end of the scale and require a more personal relationship you’d typically have with a bank or your local bike shop.

Zara’s relationship with its customers is threefold, and lies somewhere in the middle of transactional and personal:

  • Salesperson at store
  • Brand through social media
  • Sentimental attachment to a product

Yes, you have the initial transactional touchpoint at the store or online, something relatively impersonal and for many the only interaction they’ll have with the brand.

However, customers (especially in the fashion industry) are encouraged to continue to interact with a brand through social media platforms.

As we mentioned before when discussing channels, Zara has a very effective communication system in place. Not only can people instantly get in touch with the brand, but also engage with new posts, images, and collections uploaded to social media.

This personal approach to customer relationship building can, in some cases, lead to the natural growth of brand ambassadors and communities .

An attachment can also develop between customers and particular garments or accessories from one of their collections. The sentimental attachment to these products also creates another potential form of brand loyalty.

The relations with Zara's clients to give a Business Model Canvas where the 9 points to be developed are seen

Now that you’ve described how you are going to create real value for your customers, it’s time to look at how you plan to capture that value.

What are your revenue streams? Is it going to be a transactional, direct sales strategy ? Are you going to consider a freemium mode l, where you give a portion of your product or service away for free with the idea of converting later on down the line?

If you’re a SaaS company such as SalesForce or Strava , then it’s likely that a licensing or subscription revenue model will be more appropriate.

At Zara, it’s extremely simple. They make their money by selling clothes and accessories either at a store or online.

Zara business model canvas template for the development of Revenue streams within the 9 points to work

As you can see, we’ve filled in the entire right-hand side of our business model canvas. We touched upon:

Customer segments

  • Value propositions
  • Revenue streams
  • Distribution channels

Now it’s time to move over to the left side of the business canvas model and look at what we need, internally , to deliver our value propositions.

Key resources of the Zara Business Model Canvas

To start with, let’s take a look at key resources.

The key resources are all things you need to have, or the assets required to create that value for customers.

This could be anything from intellectual property (patents, trademarks, copyrights, etc.) to physical holdings (factories, offices, delivery vans, etc.) right down to finances (the initial cash flow perhaps needed to start your brand).

Another key resource every company needs to consider is its human capital . Are you going to need highly specialized software engineers? Or field-based sales teams?

They are relatively capital-heavy resources that need to be factored into your business model.

In the case of Zara, they are going to need a number of key resources if they hope to deliver their propositions:

  • Stock management
  • A large, interconnected network of physical stores
  • A strong brand
  • Logistics and supply chain infrastructure

Stock is vital for both online and offline customers.

If they are unable to supply their range of products and meet customer demands, satisfaction levels fall and they have a serious problem on their hands.

A large distribution network of brick and mortar stores combined with a strong brand name help mitigate these factors, as well as reinforce any ongoing marketing activities and communication efforts.

Finally, an efficient logistics process within Zara is critical, especially when you consider the complexities involved with such a large-scale operation.

They will require the necessary technology to analyze data on inventory, storage, materials, production, and packaging, with the staff to execute each of these stages and manage the delivery of the final products.

Zara business model canvas template where the Key Resources are developed

The next step is to define the key activities – the areas you need to be good at to create value for your customers.

To mix it up a little let’s take a look at a slightly different business in Uber .

Their key activities can be broken down into:

  • Web and mobile app development
  • Driver recruitment
  • Marketing: customer acquisition
  • Customer service activities : drivers’ ratings, incidents, etc.

They need a fast, clean UX for their customers using the app, drivers to carry out their service, and the ability to both market the product and deal with any customer queries.

Zara’s key activities will differ to those of Uber. Some of the things they need to consider would be:

  • Manufacturing
  • Retail process (point of sale and 3rd party management)
  • Distribution channel / logistics

Design is a key activity as Zara’s value proposition is to provide stylish garments at an affordable price. Their collections need to be constantly updated to follow the latest fashion trends at the time.

To produce their collections Zara will also require manufacturing capabilities. Now Zara doesn’t own their own factories (we will get to that in the Key Partners section) but they still need to be involved in the garment manufacturing process.

Everything from fabric selection to pattern making, to detailing and dyeing affects the outcome of the final product which of course they have to then go on and sell.

The effective management of the retail and distribution channels (online, offline, shipping, and communication with providers) is also key. A breakdown in either of these activities, such as a poor relationship with an important provider will have serious consequences for the business.

Zara business model canvas template showing the key activities for its development

Most modern business models now require brands to build out and work with various key partners to fully leverage their business model.

This includes partnerships such as joint ventures and non-equity strategic alliances as well as typical relationships with buyers, suppliers, and producers.

A great example of a strategic partnership would be between ThePowerMBA and Forbes . In exchange for exposure of our brand to the magazine’s global audience, we provide expertise and content on high-level business education programs.

As we touched upon when discussing key activities , Zara requires strategic partnerships with many different providers if they are to design and produce their collections.

Another key partner is their major holding company, Inditex .

Inditex has several subsidiaries including Massimo Dutti , Pull & Bear , and Oysho . Being a subsidiary of Inditex means they share a consolidated balance sheet, stakeholders, management and control, and various legal responsibilities.

While as a subsidiary Zara is afforded certain freedoms when it comes to design, delivery, and the general running of the company, the overall strategy will need to be aligned with Inditex and its other subsidiaries.

Zara Key Partners business model canvas template where the eighth point is developed

The final step of the Business Model Canvas is to ask yourself, how much is it going to cost to run this model?

This includes some of the more obvious needs such as manufacturing costs, physical space, rent, payroll, but also areas such as marketing activities.

If you are unsure of exactly what to include in your cost structure take a look at a Profit and Loss statement ( P&L ) from a competitor or company in a similar industry to yours. You’ll find many items overlap such as research and development ( R&D ), cost of goods sold, admin expenses, operating costs, etc.

Once that’s done you should prioritize your key activities and resources and find out if they are fixed or variable costs .

As Zara is such a large, corporate business they are going to have both fixed costs (rent, payroll, point of sales personnel) and variables, such as costs associated with the fluctuating sale of goods, purchase of materials and, manufacturing costs.

Once you’ve completed these 9 steps, your Business Canvas Model should look something like this:

Business Model Canvas Examples

Hopefully, you were able to get a good feel for the effectiveness of the business model canvas with our run-through of Zara.

However, if you found it difficult to follow due to the stark difference between your industries, I’m going to quickly go through 3 more companies to demonstrate the tool’s flexibility:

  • Netflix (Media service/production)
  • Vintae (Vineyard)

Even if these business model canvas examples don’t align exactly with your industry, I honestly believe that studying different models gives you a competitive advantage in your professional career regardless.

If you’re currently employed by a company, you’ll better understand how your specific role helps the company achieve some of its “long-term” goals.

Alternatively, if you are a business owner yourself (or perhaps thinking of starting your own business) you’ll have a better understanding of your business and where potential opportunities lay.

I’m sure you’re familiar with our next business model canvas example candidate, Netflix .

The global media company offers an online streaming service of various movies, documentaries, and TV programs produced in-house or licensed 3rd-party content. Their success sparked a revolution in the online media world with the likes of Amazon, Apple, Disney, HBO, and Hulu all rushing to launch their own online video streaming platforms.

Netflix started life as an online DVD rental company, basically a web version of the more popular (at least at that time) “bricks and mortar” Blockbuster.

Co-founder Reed Hastings predicted as far back as 1999 that the future of media was in online streaming, saying “postage rates were going to keep going up and the internet was going to get twice as fast at half the price every 18 months.”

It wouldn’t be until 2007 that Hasting’s prediction would become true when Netflix, as we now know it, was born.

So let’s take a current look at their business model canvas:

Netflix business model in which the 9 topics are taken into consideration

As you probably know, there are very few people out there who haven’t subscribed, watched, or at least heard of Netflix. There is content for everybody: wildlife documentaries, sci-fi movies, rom coms, action-thrillers, you name it – it’s there.

That’s why their customer segment can be classified as a “ mass market ” as the base is just so diverse.

All people require is a computer, TV, internet, and/or smartphone and they’re good to go. For most developed markets, that covers just about everybody.

Value Proposition

Whether on the train to work, sitting in the car (if you’re not driving!), or relaxing at home in front of the TV, you can consume their online, on-demand video streaming service.

They also have a huge library of content for consumers to choose from, ensuring that people keep coming back, as well as increasing their mass-market appeal.

They also produce high-quality, original content to differentiate themselves from their competitors.

Most people access Netflix either through their website or mobile/TV App . Another popular channel that you may have picked up on is their affiliate partners .

You’ve perhaps signed up for a mobile, TV, and internet package where the provider offers Netflix as an extra to sweeten the deal, so to speak.

That would be an example of an affiliate partnership between Netflix and mobile service providers.

I doubt many consumers have had direct contact with Netflix unless it’s to resolve a subscription issue or general query. It’s very much a self-automated service – you download the app, select the program you wish to watch, and hit play.

Very simple, very effective.

Again, this doesn’t need much embellishment. Netflix generates money from the different tiers and packages put together in their subscription services.

This varies depending on the region to account for local markets, but on the whole, it’s sold at a low price point.

Originally, Netflix’s Key Resources would have been their unrivaled DVD collection combined with a cost-effective mail-order system.

Nowadays it’s undoubtedly the rights to stream online video content. Netflix has brokered deals with some of the biggest production studios worldwide.

Combined with their huge library of in-house productions , it’s more than enough to encourage customers to renew their subscriptions.

To help sustain interest in their product, Netflix understands they need to serve-up relevant content for each sub-sector of their mass audience. Therefore their machine learning algorithm selects content for consumers based on streaming habits (what they watched, at what time, etc,.) to personalize the customer experience.

This explains why over 80% of all content streamed on Netflix was cherry-picked by this algorithm, making it a Key Resource for their business model.

Also, Netflix accounts for a whopping 12.6% of global bandwidth usage . The literal capacity to stream their services must be met meaning bandwidth must also be included here.

Content procurement is arguably their biggest Key Activity. They need to find people to produce and deliver their original content, including actors, studios, writers, etc. as well as secure the licensing and streaming rights from 3rd party producers such as Sony, Warner Bros, and Disney.

Finally, they need a fast, easy-to-use application to host their online streaming service. This needs to be available for both TV and mobile devices if they are to deliver their “on-demand” value proposition.

K ey Partners

Seeing as Netflix’s entire business model is largely based around streaming 3rd party content, key partnerships need to be built with production studios . No content, no Netflix!

Also, as we touched upon earlier Netflix is one of the largest consumers of bandwidth worldwide. If the speed and delivery of their streaming service are to be continued then deals will also need to be made with internet service providers (ISPs).

Netflix’s biggest expenditures come from both their in-house content procurement and 3rd party licensing agreements . The high-quality standard of video streamed on Netflix is only possible due to the speed and performance of its online platform and application , which has additional costs of staff, software, etc.

To show you just how flexible the business model canvas can be, I wanted to throw in a slightly leftfield example. Vintae is a Spanish wine producer who, after a detailed analysis of the business model canvas, was able to innovate and disrupt one of the world’s most competitive industries.

As some of you may know, the wine industry is extremely competitive. It’s also steeped in history and tradition , making it very challenging for newcomers to grab market share, let alone think about year-on-year growth and revenue.

However, CEO “Richi” Arambarri looked at the traditional “ bodega ” business model and saw a chink in its armor.

A “small” innovation in the business canvas model helped them to become one of the region’s most important winery groups, with over 10 installations and a presence across all regional denominations (Rioja, Priorat, Rias Baixas, etc.) with year on year growth of 30% – practically unheard of in such a competitive industry.

So how did Vintae analyze the business model canvas to find a niche in their market?

To answer that question, we must first look at the traditional winery business model .

Traditional Winery Business Model with its 9 developed points

As you can see, the wine industry has historically been patrimonial. Vineyards and estates are passed down through generations with the winery responsible for all phases of production, clarification, and distribution.

The traditional winery business canvas model suggests you must be the owner of the winery/vineyard where the wine is “manufactured”, meaning physical assets are a key resource of the business model.

So, if you wanted to start producing a Rioja, for example, you’d have to set up your vineyard in the region.

This is monumentally expensive as you need to:

  • Purchase the land
  • Plant a vineyard
  • Absorb set-up and installation costs
  • Deal with maintenance costs

It’s here where Vintae saw their opportunity.

What if we move vineyard ownership across the business model canvas from key resources to key partners ?

By leasing the equipment and space of large wineries (of which there was plenty), they could still produce their wine but reduce the cost and exposure associated with land purchase, crushing equipment, huge storage tanks, vineyard maintenance, and their bottling line.

This enabled them to focus on their sales, marketing, and distribution channels to create a better brand experience for their customers.

Also, it afforded them more flexibility when creating new wines as they were no longer confined to the limitations of grapes grown on their vineyard.

The lightness of this new business model eliminates maintenance overheads, channels energy into personalizing the customer experience, and allows for unprecedented levels of growth in one of the world’s most competitive industries.

Vinate business model

Business Model Canvas Software

Although I did mention starting with a large whiteboard, sticky notes, and a pack of colorful sharpies there are several options in which you can digitize the business canvas model production process.

While I still believe the aforementioned process is extremely valuable (it gets your entire team’s input in a single hour-long session) you may decide it more viable for each member of management to pool their ideas digitally before sharing with the rest of the group.

If that’s the case, then take a look at some of the following software tools for creating your business model canvas.

Strategyzer

Created by the founders of the business model canvas Alex Osterwalder and Yves Pigneur , Strategyzer offers a range of business model canvas templates for you to get started with.

If you opt for the paid model (there is a 30-day free trial period) they offer a series of various classes that teach you how to build and test different value propositions and business models.

A real-time built-in cost estimator analyzes the financial viability of some of your business ideas, identifying alternative areas you may wish to explore with your model.

All-in-all, it’s a great resource to play around with and test some of your business ideas, with the option to dive into further detail if you see fit.

Canvanizer is a free, easy-to-use web tool that allows you to share links between team members who are brainstorming ideas for a business model canvas, but working remotely.

Like Strategyzer, there are several business model canvas templates provided to help you get started with your analysis. The strength of this platform is its accessibility. Much like a Google Doc., several people can brainstorm on the same canvas simultaneously with changes being synchronized automatically.

Business Model Canvas Tool

A ThePowerMBA alumni, impressed by the simplicity and effectiveness of the tool, went ahead and created the free application Business Model Canvas Tool .

It’s an incredibly intuitive, and easy-to-use tool that allows you to create templates simply by clicking the + button in each building block.

Each business model canvas created can be downloaded and shared as a pdf. with the rest of the team.

Would You Like to Learn More about Business Models?

If, after going through our 9-step guide on how to use the Business Model Canvas you’d like to learn more about different business model analysis tools , take a look at our alternative MBA business program .

As you’ll see, the course gives students a 360-degree view of business and management practices – such as engines of growth, segmentation and targeting, and value propositions.

I highly recommend you go check it out.

Regardless, I’d love to hear what you thought about this guide. Was it helpful? Would you like to see additional business cases analyzed from your industry?

Let us know in the comments below.

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16 Comments

Ayeah Goodlove

Perfect thought

kourosh abdollahzadeh

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KJ Hwang

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Reza Ebadi

Dear Sir many thanks for you guideline. it was very effective for me. Thanks a Million

Debashis Rout

Well explained with practical business case

Allen

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NIMAKO JAMES

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Claudia Roca

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Franco

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Jude

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Praveen

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Efi

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  • Zoom Video Communications

business model canvas zoom

Careers at Zoom Video Communications

Zoom’s mission is to make video and web conferencing frictionless.

Eric Yuan was the VP of Engineering at online meeting company WebEx. When Cisco Systems acquired WebEx, he joined the parent firm as a Corporate Vice President. While there, he received feedback from clients about their video conferencing system challenges. These included making the solutions mobile-friendly and integrating them with existing hardware-based conference products.

Yuan decided that he wanted to build an offering that would address several of these problems. So in 2011 he left Cisco to found a company called Zoom Video Communications. He was joined by former engineering colleagues at WebEx, and they were able to receive seed funding from venture capitalists – starting with $3 million the first year. For two years, the group developed their product.

The solution was an all-in-one platform combining online meeting, cloud video conferencing, and group messaging capabilities. During the two-year period Zoom tested it with beta customers, including Stanford University’s Continuing Studies department, which became its first paid client. By the time the firm officially launched in January 2013, it had over 140,000 users.

business model canvas zoom

Business model of Zoom Video Communications

Customer segments.

Zoom has a mass market business model, with no significant differentiation between customer segments. The company targets organizations of all industries and sizes that seek videoconferencing solutions.

Value Proposition

Zoom offers three primary value propositions: accessibility, performance, and brand/status.

The company’s solution creates accessibility by providing a wide variety of options. It offers video conferencing, group messaging, simple online meetings, and a software-defined conference room feature. Furthermore, it can be used on the Windows, Linux, Mac, iOS, Blackberry, Android, and Zoom Rooms systems, as well as H.323/SIP room systems such as Cisco Tandberg and Polycom.

The company’s solution has demonstrated strong performance through tangible results for clients. High-profile examples of positive outcomes include the following:

  • Trend Micro used Zoom’s solution to simplify its communication platforms, increasing its productivity by 20-39% when compared with its previous systems
  • Global logistics company JAS used Zoom’s solution to increase its capacity for large meetings to as many as 100 two-way video participants, particularly useful for training sessions
  • Focus Investment Banking used Zoom’s solution to host a wide variety of meetings, saving at least $25,000 a year in air travel while increasing brand exposure
  • Access Physicians used Zoom’s solution to expand care access, resulting in reductions in critical care and emergency room visits, translating to significant savings for patients and its facilities
  • BAYADA Home Health Care used Zoom’s solution for its 300 offices, resulting in increased efficiency, higher adoption rates, and lower total cost of ownership

Zoom’s impressive performance has led to strong approval from customers. The company had a third party conduct a survey of its clients that showed a Net Promoter Score of 69, as well as these results:

  • 94% of respondents said Zoom’s solution is easier to use than that of the competition
  • 92% of respondents said Zoom’s solution is of a higher quality than that of the competition
  • 87% of respondents said Zoom’s solution is more reliable than that of the competition
  • 75% of respondents said Zoom’s solution has enhanced their productivity by at least 40%

The company has established a strong brand as a result of its performance. It serves over 300,000 companies, including prominent clients such as Arista, UCLA, and SolarCity. It has also won many honors, including recognition as one of Trust Radius’s Top Rated Web Conferencing Software solutions (2016), Frost & Sullivan‘s Entrepreneurial Company of the Year (2016), an Emergence Award from Emergence Capital (2015), and recognition as a Gartner Cool Vendor (2014).

Zoom’s main channel is its website, through which new customers sign up for an account; however, it also maintains a direct sales team. The company promotes its offering through its social media pages, live demos, webinars, and participation in symposiums and conferences.

Customer Relationships

Zoom’s customer relationship is primarily of a self-service nature. Customers utilize the service through the main platform while having limited interaction with employees. The company’s website features self-help resources such as online training and answers to frequently asked questions.

That said there is a personal assistance component in the form of phone and e-mail support.

Key Activities

Zoom’s business model entails designing/developing its software and maintaining/updating its software-as-a-service platform for customers.

Key Partners

Zoom maintains the following types of partnerships:

Integration Partners - The company works with firms that integrate their offerings into its product for an enhanced solution. Integration categories and some of their specific partners are as follows:

  • Content Sharing – Microsoft (One Drive), Google Drive, Box, Dropbox
  • Scheduling & Starting Meetings – Slack, Salesforce, Skype, Firefox, Microsoft (Outlook)
  • Unified Login – Facebook, Google, Centrify, Okta, Microsoft (Active Directory)
  • Marketing/Process Automation – Marketo, Zapier, Pardot, Infusionsoft
  • Room Collaboration – Intel Unite, Kubi

Technology Partners - The company works with firms that pair their offerings with its solution to produce complementary benefits. Partner types are technology vendors, application providers, and manufacturers. Specific partners include Altia Systems, Biscotti, CVI Gear, HoverCam, InFocus, Logitech, OpenSignal, Phoenix Audio Technologies, Revolve Robotics, Vaddio, and Yealink.

Refer-A-Friend - The company invites customers to refer its solution to their friends and associates. Referrals that lead to a purchase result in commissions for the customer.

Reseller Partners – The company works with firms that promote and sell its products to their customers in order to extend its reach. Partner types are value-added resellers and systems integrators with specializations in AV Technology and Video Collaboration.

Partners receive the following benefits:

  • Permission to use the Zoom logo
  • Co-selling opportunities with Zoom’s salesforce
  • Access to competitive incentive programs
  • Joint demand-generation activities
  • Continuous interoperability testing
  • Frequent market and product updates

Key Resources

Zoom’s main resources are its human resources, who include the engineering employees that design its software and maintain its platform, the sales staff that promote it, and the customer service staff that provide support.

As a relatively new startup it has relied heavily on funding from outside parties, raising $45.5 million from 15 investors as of February 2015.

Cost Structure

Zoom has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is likely sales/marketing, a fixed expense. Other major drivers are in the areas of customer support/operations and administration, both fixed costs.

Revenue Streams

Zoom has one revenue stream: the subscription fees it charges for monthly access to its software platform. Subscription plans are as follows:

  • Basic – Free
  • Pro - $14.99 per month per host
  • Business - $19.99 per month per host (minimum of 10 hosts)
  • Enterprise – Sales staff must be contacted for price quotes

info: Eric graduated from the Stanford University Executive Program. He previously served as Corporate Vice President of Engineering at Cisco, as VP of Engineering and a founding engineer at WebEx, and as an Adviser at Affectiva.

info: David earned a B.A. in Business Administration from University of San Diego, CA. He previously served as President of RingCentral, President and CEO of Affectiva, and President of Worldwide Sales and Services at Cisco WebEx, and worked at ADP for six years.

info: Janine earned a B.S. in Marketing at San Jose State University. She previously served as Senior Manager of Marketing of WebEx Online at Cisco and as Online Marketing Manager and Advertising Specialist at WebEx. She has more than 10 years of marketing experience.

info: Roy earned a B.A. in Economics and Accounting from the Rupin Academic Center. He previously served as VP and Head of Finance at WatchDox and as Corporate Controller at Chegg.com, and worked in the technology groups at Deloitte and PwC.

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Business Model Canvas: Explained with Examples

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Got a new business idea, but don’t know how to put it to work? Want to improve your existing business model? Overwhelmed by writing your business plan? There is a one-page technique that can provide you the solution you are looking for, and that’s the business model canvas.

In this guide, you’ll have the Business Model Canvas explained, along with steps on how to create one. All business model canvas examples in the post can be edited online.

What is a Business Model Canvas

A business model is simply a plan describing how a business intends to make money. It explains who your customer base is and how you deliver value to them and the related details of financing. And the business model canvas lets you define these different components on a single page.   

The Business Model Canvas is a strategic management tool that lets you visualize and assess your business idea or concept. It’s a one-page document containing nine boxes that represent different fundamental elements of a business.  

The business model canvas beats the traditional business plan that spans across several pages, by offering a much easier way to understand the different core elements of a business.

The right side of the canvas focuses on the customer or the market (external factors that are not under your control) while the left side of the canvas focuses on the business (internal factors that are mostly under your control). In the middle, you get the value propositions that represent the exchange of value between your business and your customers.

The business model canvas was originally developed by Alex Osterwalder and Yves Pigneur and introduced in their book ‘ Business Model Generation ’ as a visual framework for planning, developing and testing the business model(s) of an organization.

Business Model Canvas Explained

What Are the Benefits of Using a Business Model Canvas

Why do you need a business model canvas? The answer is simple. The business model canvas offers several benefits for businesses and entrepreneurs. It is a valuable tool and provides a visual and structured approach to designing, analyzing, optimizing, and communicating your business model.

  • The business model canvas provides a comprehensive overview of a business model’s essential aspects. The BMC provides a quick outline of the business model and is devoid of unnecessary details compared to the traditional business plan.
  • The comprehensive overview also ensures that the team considers all required components of their business model and can identify gaps or areas for improvement.
  • The BMC allows the team to have a holistic and shared understanding of the business model while enabling them to align and collaborate effectively.
  • The visual nature of the business model canvas makes it easier to refer to and understand by anyone. The business model canvas combines all vital business model elements in a single, easy-to-understand canvas.
  • The BMC can be considered a strategic analysis tool as it enables you to examine a business model’s strengths, weaknesses, opportunities, and challenges.
  • It’s easier to edit and can be easily shared with employees and stakeholders.
  • The BMC is a flexible and adaptable tool that can be updated and revised as the business evolves. Keep your business agile and responsive to market changes and customer needs.
  • The business model canvas can be used by large corporations and startups with just a few employees.
  • The business model canvas effectively facilitates discussions among team members, investors, partners, customers, and other stakeholders. It clarifies how different aspects of the business are related and ensures a shared understanding of the business model.
  • You can use a BMC template to facilitate discussions and guide brainstorming brainstorming sessions to generate insights and ideas to refine the business model and make strategic decisions.
  • The BMC is action-oriented, encouraging businesses to identify activities and initiatives to improve their business model to drive business growth.
  • A business model canvas provides a structured approach for businesses to explore possibilities and experiment with new ideas. This encourages creativity and innovation, which in turn encourages team members to think outside the box.

How to Make a Business Model Canvas

Here’s a step-by-step guide on how to create a business canvas model.

Step 1: Gather your team and the required material Bring a team or a group of people from your company together to collaborate. It is better to bring in a diverse group to cover all aspects.

While you can create a business model canvas with whiteboards, sticky notes, and markers, using an online platform like Creately will ensure that your work can be accessed from anywhere, anytime. Create a workspace in Creately and provide editing/reviewing permission to start.

Step 2: Set the context Clearly define the purpose and the scope of what you want to map out and visualize in the business model canvas. Narrow down the business or idea you want to analyze with the team and its context.

Step 3: Draw the canvas Divide the workspace into nine equal sections to represent the nine building blocks of the business model canvas.

Step 4: Identify the key building blocks Label each section as customer segment, value proposition, channels, customer relationships, revenue streams, key resources, key activities, and cost structure.

Step 5: Fill in the canvas Work with your team to fill in each section of the canvas with relevant information. You can use data, keywords, diagrams, and more to represent ideas and concepts.

Step 6: Analyze and iterate Once your team has filled in the business model canvas, analyze the relationships to identify strengths, weaknesses, opportunities, and challenges. Discuss improvements and make adjustments as necessary.

Step 7: Finalize Finalize and use the model as a visual reference to communicate and align your business model with stakeholders. You can also use the model to make informed and strategic decisions and guide your business.

What are the Key Building Blocks of the Business Model Canvas?

There are nine building blocks in the business model canvas and they are:

Customer Segments

Customer relationships, revenue streams, key activities, key resources, key partners, cost structure.

  • Value Proposition

When filling out a Business Model Canvas, you will brainstorm and conduct research on each of these elements. The data you collect can be placed in each relevant section of the canvas. So have a business model canvas ready when you start the exercise.  

Business Model Canvas Template

Let’s look into what the 9 components of the BMC are in more detail.

These are the groups of people or companies that you are trying to target and sell your product or service to.

Segmenting your customers based on similarities such as geographical area, gender, age, behaviors, interests, etc. gives you the opportunity to better serve their needs, specifically by customizing the solution you are providing them.

After a thorough analysis of your customer segments, you can determine who you should serve and ignore. Then create customer personas for each of the selected customer segments.

Customer Persona Template for Business Model Canvas Explained

There are different customer segments a business model can target and they are;

  • Mass market: A business model that focuses on mass markets doesn’t group its customers into segments. Instead, it focuses on the general population or a large group of people with similar needs. For example, a product like a phone.  
  • Niche market: Here the focus is centered on a specific group of people with unique needs and traits. Here the value propositions, distribution channels, and customer relationships should be customized to meet their specific requirements. An example would be buyers of sports shoes.
  • Segmented: Based on slightly different needs, there could be different groups within the main customer segment. Accordingly, you can create different value propositions, distribution channels, etc. to meet the different needs of these segments.
  • Diversified: A diversified market segment includes customers with very different needs.
  • Multi-sided markets: this includes interdependent customer segments. For example, a credit card company caters to both their credit card holders as well as merchants who accept those cards.

Use STP Model templates for segmenting your market and developing ideal marketing campaigns

Visualize, assess, and update your business model. Collaborate on brainstorming with your team on your next business model innovation.

In this section, you need to establish the type of relationship you will have with each of your customer segments or how you will interact with them throughout their journey with your company.

There are several types of customer relationships

  • Personal assistance: you interact with the customer in person or by email, through phone call or other means.
  • Dedicated personal assistance: you assign a dedicated customer representative to an individual customer.  
  • Self-service: here you maintain no relationship with the customer, but provides what the customer needs to help themselves.
  • Automated services: this includes automated processes or machinery that helps customers perform services themselves.
  • Communities: these include online communities where customers can help each other solve their own problems with regard to the product or service.
  • Co-creation: here the company allows the customer to get involved in the designing or development of the product. For example, YouTube has given its users the opportunity to create content for its audience.

You can understand the kind of relationship your customer has with your company through a customer journey map . It will help you identify the different stages your customers go through when interacting with your company. And it will help you make sense of how to acquire, retain and grow your customers.

Customer Journey Map

This block is to describe how your company will communicate with and reach out to your customers. Channels are the touchpoints that let your customers connect with your company.

Channels play a role in raising awareness of your product or service among customers and delivering your value propositions to them. Channels can also be used to allow customers the avenue to buy products or services and offer post-purchase support.

There are two types of channels

  • Owned channels: company website, social media sites, in-house sales, etc.
  • Partner channels: partner-owned websites, wholesale distribution, retail, etc.

Revenues streams are the sources from which a company generates money by selling their product or service to the customers. And in this block, you should describe how you will earn revenue from your value propositions.  

A revenue stream can belong to one of the following revenue models,

  • Transaction-based revenue: made from customers who make a one-time payment
  • Recurring revenue: made from ongoing payments for continuing services or post-sale services

There are several ways you can generate revenue from

  • Asset sales: by selling the rights of ownership for a product to a buyer
  • Usage fee: by charging the customer for the use of its product or service
  • Subscription fee: by charging the customer for using its product regularly and consistently
  • Lending/ leasing/ renting: the customer pays to get exclusive rights to use an asset for a fixed period of time
  • Licensing: customer pays to get permission to use the company’s intellectual property
  • Brokerage fees: revenue generated by acting as an intermediary between two or more parties
  • Advertising: by charging the customer to advertise a product, service or brand using company platforms

What are the activities/ tasks that need to be completed to fulfill your business purpose? In this section, you should list down all the key activities you need to do to make your business model work.

These key activities should focus on fulfilling its value proposition, reaching customer segments and maintaining customer relationships, and generating revenue.

There are 3 categories of key activities;

  • Production: designing, manufacturing and delivering a product in significant quantities and/ or of superior quality.
  • Problem-solving: finding new solutions to individual problems faced by customers.
  • Platform/ network: Creating and maintaining platforms. For example, Microsoft provides a reliable operating system to support third-party software products.

This is where you list down which key resources or the main inputs you need to carry out your key activities in order to create your value proposition.

There are several types of key resources and they are

  • Human (employees)
  • Financial (cash, lines of credit, etc.)
  • Intellectual (brand, patents, IP, copyright)
  • Physical (equipment, inventory, buildings)

Key partners are the external companies or suppliers that will help you carry out your key activities. These partnerships are forged in oder to reduce risks and acquire resources.

Types of partnerships are

  • Strategic alliance: partnership between non-competitors
  • Coopetition: strategic partnership between partners
  • Joint ventures: partners developing a new business
  • Buyer-supplier relationships: ensure reliable supplies

In this block, you identify all the costs associated with operating your business model.

You’ll need to focus on evaluating the cost of creating and delivering your value propositions, creating revenue streams, and maintaining customer relationships. And this will be easier to do so once you have defined your key resources, activities, and partners.  

Businesses can either be cost-driven (focuses on minimizing costs whenever possible) and value-driven (focuses on providing maximum value to the customer).

Value Propositions

This is the building block that is at the heart of the business model canvas. And it represents your unique solution (product or service) for a problem faced by a customer segment, or that creates value for the customer segment.

A value proposition should be unique or should be different from that of your competitors. If you are offering a new product, it should be innovative and disruptive. And if you are offering a product that already exists in the market, it should stand out with new features and attributes.

Value propositions can be either quantitative (price and speed of service) or qualitative (customer experience or design).

Value Proposition Canvas

What to Avoid When Creating a Business Model Canvas

One thing to remember when creating a business model canvas is that it is a concise and focused document. It is designed to capture key elements of a business model and, as such, should not include detailed information. Some of the items to avoid include,

  • Detailed financial projections such as revenue forecasts, cost breakdowns, and financial ratios. Revenue streams and cost structure should be represented at a high level, providing an overview rather than detailed projections.
  • Detailed operational processes such as standard operating procedures of a business. The BMC focuses on the strategic and conceptual aspects.
  • Comprehensive marketing or sales strategies. The business model canvas does not provide space for comprehensive marketing or sales strategies. These should be included in marketing or sales plans, which allow you to expand into more details.
  • Legal or regulatory details such as intellectual property, licensing agreements, or compliance requirements. As these require more detailed and specialized attention, they are better suited to be addressed in separate legal or regulatory documents.
  • Long-term strategic goals or vision statements. While the canvas helps to align the business model with the overall strategy, it should focus on the immediate and tangible aspects.
  • Irrelevant or unnecessary information that does not directly relate to the business model. Including extra or unnecessary information can clutter the BMC and make it less effective in communicating the core elements.

What Are Your Thoughts on the Business Model Canvas?

Once you have completed your business model canvas, you can share it with your organization and stakeholders and get their feedback as well. The business model canvas is a living document, therefore after completing it you need to revisit and ensure that it is relevant, updated and accurate.

What best practices do you follow when creating a business model canvas? Do share your tips with us in the comments section below.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

FAQs About the Business Model Canvas

  • Use clear and concise language
  • Use visual-aids
  • Customize for your audience
  • Highlight key insights
  • Be open to feedback and discussion

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Amanda Athuraliya is the communication specialist/content writer at Creately, online diagramming and collaboration tool. She is an avid reader, a budding writer and a passionate researcher who loves to write about all kinds of topics.

business model canvas using Lucidchart

A quick and dirty guide to the Business Model Canvas

Reading time: about 8 min

  • Product development

Of course, evaluating your business model can be daunting. With so many moving parts to sort through, it can be hard to know where to start. 

That’s where the Business Model Canvas template comes in. 

Using 9 key building blocks, the Business Model Canvas helps leaders conduct high-level analysis of their operations and map their business model in a simple, easy-to-understand visual document. 

Use this Business Model Canvas guide to learn how it works and how to use a Business Model Canvas template to kickstart your planning process. 

business model canvas

What is a Business Model Canvas?

A Business Model Canvas is an easy-to-digest one-page document that succinctly summarizes how your business should work based on the best information you currently have.

Created in the mid-2000s by business theorist and Strategyzer founder Alexander Osterwalder, it’s a strategic management and lean startup tool that condenses your strategic planning onto a single page. It’s used by successful innovators around the world like Intel, Panasonic, 3M, and Mastercard.

It’s like a mini business plan, but it’s much faster to put together. A business plan, on the other hand, is a detailed projection of what your company hopes to achieve and how it hopes to achieve it. 

A comprehensive business plan is typically between 30 and 50 pages long. In contrast, the one-page Business Model Canvas template makes it easy for an organization to describe its model.

Organizational factors

Need an even simpler, quicker way to visualize your business strategy? Try the Lean Canvas Model.

Benefits of using a Business Model Canvas

There are risks to plunging ahead without making a plan since, according to the U.S. Bureau of Labor Statistics, 50% of businesses fail within their first five years. 

Whether or not you make a profit depends on how well you design and implement all the activities and resources that make up your business. You can use the Business Model Canvas to avoid getting overwhelmed by these pressures and get going on your new business.

  • Plan your strategy: The Business Model Canvas helps you plan and evaluate your assumptions quickly and efficiently so you can spend more time growing your business.
  • Be flexible: It makes it much easier to change things on the fly since you write down just the essentials.
  • Find gaps: It gives you a bird’s-eye view of your business so you can quickly see where you need to focus your energies.
  • Drive innovation: It encourages understanding, discussion, creativity, and analysis within your team.
  • Share your vision: It helps you create a complete pitch for potential investors or partners.

What is an entity relationship diagram?

Develop a plan for achieving your organizational goals through the strategic planning process.

Key elements of the Business Model Canvas

The Business Model Canvas consists of nine areas of strategic planning. If you’re starting a new business from scratch, don’t worry too much about the details––just get your vision down so you can get moving. Include the following elements of the Business Model Canvas: 

Value proposition

Your value proposition should be easily communicated in a single sentence, and it should inform everything you do. What’s your mission? What problem are you going to solve, and how are you going to solve it? What products and services will you offer to meet customers’ needs (these may vary by customer)? 

Most importantly, you want to define how your brand will be different from what’s already out there.

Customer relationships

Think about the kinds of relationships you want to establish with your customer segments. How will you communicate and build rapport with your customers throughout their journey? Will you offer personal assistance, create a community environment, or present a self-serve model? Consider how and where your customers like to communicate. Every communication should drive home the problem you solve and why your solution is the best (or, better yet, only) one around. 

Customer and market segments

These are the people and organizations for whom you create value. Who could really use the solution you’re offering? If there are multiple groups, list them all out.

You may need to investigate potential buyer personas, find niche markets that fit your offerings, or come up with a multi-sided market strategy that brings together different groups of customers.

Channels are the points at which you interact with customers to deliver value. How are the people who need your solution going to buy it? Take a look at your customer segments. Where do they spend money right now? Try to make it as easy as possible for a customer to say “yes” to buying your solution.

Key partners

You’ll probably rely on other people––suppliers, distributors, etc.––to create and deliver value to your customers. What individuals or entities outside of your business will you need to work with in order to produce, market, and deliver your solution? What key activities or resources can someone else take care of so that your business can focus on your value proposition?

Key activities

If an activity isn’t directly tied to delivering on your value proposition, then it isn’t key, and you probably shouldn’t be doing it. So what do you absolutely have to do in order to produce, market, and deliver your value proposition? 

Key resources

If the resource isn’t necessary to deliver on your value proposition, ask yourself if you really need it. What do you absolutely need to have in order to produce, market, and deliver your solution? These could be human, financial, physical, or intellectual resources.

Cost structure

This should be a description of the costs of operating your business. How much will your key activities, resources, and partners cost you? At this point, it may be a good idea to take a second (and a third) look at each of these categories and cut out everything that isn’t absolutely essential to delivering on your value proposition.

Pay attention as well to any fixed costs you’ll have to incur, variable costs you’ll need to keep an eye on, and changes in costs as you scale.

Revenue streams and pricing model

Decide what customers will pay for and how they will pay you. How much do you need to charge? Keep in mind that you need to make enough to cover your costs and have something left over to grow your business and reward you for your efforts.

Additionally, will your solution be subscription-based? Will you offer individual purchases? Choose a pricing model that will fit best with your customer base and your cost structure.

How to use a Business Model Canvas

The main goal of using the Business Model Canvas is to validate your business model. By laying out all the components, you can find simple, small-scale ways to test each aspect of your business model in a cycle of improvement.

1. Fill out the canvas

Filling out the canvas is quick and painless, and it should give you a lot of clarity. Try to finish it in just 30 minutes. Start with the value proposition and then proceed in the order outlined above, moving from the theoretical to the more concrete aspects of your strategy.

To demonstrate what a filled-out canvas might look like, imagine that a seventh-grader named Timmy wants to start a neighborhood lawn mowing business over the summer. His Business Model Canvas might look something like this:

business model canvas example

2. Identity and test your assumptions

It’s smart to have a plan. It’s even smarter to make sure that it actually works. Maybe you think that offering a subscription plan is the best pricing model, but once you run an A/B test, you realize that your customers prefer paying each time for your services. 

Find the key metrics that you can track to better understand your customers and your success in reaching them. If you aren’t doing well, these metrics will also help you understand why.

3. Adapt your strategy

Once you test your assumptions, make the necessary tweaks to your business strategy. You could even fill out a new Business Model Canvas to keep track of your changes and have a visual reminder of what you’re aiming for.

For example, you can make multiple copies of your canvas document in Lucidchart to explore potential future iterations of our business model, highlight areas where costs can be reduced, and map out relationships between key partners and their various functions.

4.  Repeat the cycle

The best way to grow your business is to continually reexamine your vision and performance. In effect, your Business Model Canvas should be a living document that represents your best hypothesis in an evolving landscape. Markets, customers, and trends change, and you need to be able to change with them. 

Whether you write your Business Model Canvas in the kitchen or the boardroom, you’re ready now to come up with a clear and effective business model. You can get started on your Business Model Canvas quickly in Lucidchart. 

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Looking for more ideas? Explore another way to define your business with a strategy mapping template.

Lucidchart, a cloud-based intelligent diagramming application, is a core component of Lucid Software's Visual Collaboration Suite. This intuitive, cloud-based solution empowers teams to collaborate in real-time to build flowcharts, mockups, UML diagrams, customer journey maps, and more. Lucidchart propels teams forward to build the future faster. Lucid is proud to serve top businesses around the world, including customers such as Google, GE, and NBC Universal, and 99% of the Fortune 500. Lucid partners with industry leaders, including Google, Atlassian, and Microsoft. Since its founding, Lucid has received numerous awards for its products, business, and workplace culture. For more information, visit lucidchart.com.

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How to make a great Business Model Canvas

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Most of us are familiar with business models, which are a company’s plan for making a profit. A typical business model identifies the products or services that the company intends to sell, the target market, and any possible expenses.

Since a business model is so high-level, it can be hard to visualize how it might work in practice. It can be even harder to connect an organization’s everyday roles, responsibilities, projects, and functions to the overall business model. That’s where the business model canvas comes in.

This blog will introduce you to the business model canvas, a strategic tool that allows you to visually develop and display your business model. By the end of the blog, you’ll have a deeper understanding of what makes a business model canvas so important and how to create your own.

  • What is a Business Model Canvas?

The business model canvas was first developed by Alexander Osterwalder in his book Business Model Ontology . Osterwalder broke down the segments that form a basic business model into a one-page canvas.

A business model canvas is a strategic tool that enables you to look systematically at your business model, understand how it works, and keep everyone in your organization aligned. Think of it as a North Star that outlines everything that makes your business tick: key partners and activities, your value proposition, customer relationships and segments, resources, distribution channels, cost structures, and revenue streams.

The Business Model Canvas Explained

Whether you’re at a new business or an established one, a well-thought-out business model is crucial for success. Business models help developing businesses attract investors, recruit talent, onboard new hires, and align employees. They help established businesses stay ahead of trends and anticipate challenges. A good business model can compel investors or partners to work with a company they’re interested in supporting.

The problem, though, is that a business model is a lot to digest. That’s why the business model canvas is such a useful tool.

The business model canvas is a snapshot of all the key components of a business model. It enables you to take those key components and organize them into a format that’s easily digestible. A business model canvas zooms in on a particular product or service to break down how exactly the company expects to derive value from it.

  • Business Model Canvas or Lean Canvas?

People often use “business model canvas” and “lean business model canvas” interchangeably, but there are a few differences. The business model canvas focuses on a specific product or service that generates revenue. A lean canvas focuses on a specific problem that the organization is looking to solve.

Lean canvases are popular with startups because they enable you to zoom in on a problem, iterate on potential solutions, and move quickly to the next challenge. Whereas the business model canvas defines the infrastructure, costs, and revenue streams that go into running a business, the lean canvas focuses on the channels that enable you to troubleshoot a specific problem. The broader business model canvas pays close attention to customer segments, channels, and relationships, while the lean canvas deemphasizes these elements.

  • What is Included in a Business Model Canvas?

Although you can adapt the business model canvas to your needs, they generally contain nine core components. Here are the building blocks of a business model canvas.

  • Key partners. Every business model canvas lists the partners and suppliers that your business leverages for success. The canvas includes any motivations for the partnerships — i.e. what exactly you get out of them.
  • Key activities. The canvas summarizes the activities that your business must undertake in order to support your value proposition. It lists the activities that are most important for distribution channels, customer relationships, and revenue streams.
  • Value proposition. The value proposition is the core value you aim to deliver to your customer. Think of it as two key components: the need you are serving for your customer, and how that’s different from what your competitors are doing.
  • Customer relationships. These include any relationships you have with customers, including how you interact with them, how interactions differ between customers, what needs your customers have, and how you integrate those needs into your business in terms of cost and format.
  • Customer segments. These are the ideal customer personas that your value proposition is designed to benefit. A basic business model canvas outlines the potential differences between segments and steps in the customer journey.
  • Distribution channels. The canvas details how you reach customers, provide services, and deliver your value proposition. This portion of the canvas answers crucial questions about your customers, such as: Which channels work best for reaching them? How much do they cost? How can you integrate these channels into your workflows and your customers’ routines?
  • Cost structures. A business model canvas identifies the primary costs that go into operating your business and providing services. It shows the relationship between those costs and other business functions, including which resources or activities are the most expensive.
  • Key resources. These are the resources that your business uses to operate distribution channels, provide services, maintain customer relationships, and build revenue streams.
  • Revenue streams. The canvas describes how your business generates revenue by delivering on your value proposition. How do your customers pay? How much does each revenue stream contribute to your overall revenues? And what are you customers willing or unwilling to pay for?
  • How to Create a Business Model Canvas

To create a business model canvas, start with your overall business model. At its core, a business model is simply:

  • The products and services you plan to sell,
  • the expenses you will incur in delivering those products and services, and
  • how you expect to make a profit.

Once you have those core components in place, you can break them down even further in your business model canvas. Spell out the partners, activities, resources, and propositions that define your business and allow you to offer your products or services. From there, articulate the relationships you have with your customers, including your customer segments and the channels you use to reach them. Finally, you can spell out the cost structure and revenue streams associated with your business.

  • Creating Your Own Business Model Canvas

Want to get started on your own business model canvas? Miro’s free template makes it easy to customize and share a business model canvas with your collaborators. Get started today!

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Check out our  business model canvas template, miro is your team's visual platform to connect, collaborate, and create — together..

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The Business Model Canvas

The Business Model Canvas is a strategic management and entrepreneurial tool. It allows you to describe, design, challenge, invent, and pivot your business model. This method from the bestselling management book Business Model Generation is applied in leading organizations and start-ups worldwide.

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The Business Model Canvas enables you to:

  • Visualize and communicate a simple story of your existing business model.
  • Use the canvas to design new business models, whether you are a start-up or an existing businessManage a portfolio of business models
  • You can use the canvas to easily juggle between "Explore" and "Exploit" business models.

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The Business Model Canvas

Mastering business models

A self-paced online course with 
Alex Osterwalder and Yves Pigneur.

Are you trying to improve your existing business model? Or trying to create a new one that can compete in today’s market?

Business Model Canvas Workshop

The Business Model Canvas (BMC) from Strategyzer is a simple, visual tool that maps out the nine key areas that are essential to any project, initiative, or business. This workshop guides a group through the BMC and provides space for ideation, reflection and feedback.

Created by SessionLab

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  • Time: 6 hours
  • Participants: 2 - 20
  • Difficulty: Medium
  • Facilitators: 1-2
  • Work through and complete the Business Model Canvas template from Strategyzer
  • Develop a strong understanding of the BMC, with space to discuss and explore each section as a group
  • Present ideas and get feedback from the group
  • Have a concrete idea of next steps for your completed business model

When should this session be delivered?

By thinking through and completing the nine sections of a BMC, early stage change-makers, like entrepreneurs and intrepreneurs, not only design their business model but also answer the fundamental questions any business must solve.

The BMC enables people to temporarily separate themselves from their idea and adopt a bird’s eye view of how things will work, in practice.

While BMCs are extremely helpful to flesh out ideas at the earliest stages of development, they can also bring much value even when the project or business already exists.

By thinking through the nine essential areas of the BMC, aspiring entrepreneurs and intrapreneurs gain the traction to experiment and take progressive steps toward bringing their ideas to life.

Based upon Strategyzer’s Business Model Canvas. Utilized under Creative Commons Attribution-ShareAlike 3.0

Download the Business Model Canvas here: https://www.strategyzer.com/canvas/business-model-canvas

Who can facilitate it?

Facilitators and team leads are ideally positioned to run this Business Model Canvas workshop. If you have experience starting a business, developing a go to market strategy or are otherwise experienced in running or developing businesses, that can be a massive help! 

You can run this workshop offline or online by using on online whiteboard and a virtual meeting space such as Zoom. We recommend bringing a co-facilitator or tech support to get the most from your session. 

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Business Model Canvas – Virtual through Zoom

November 12, 2020 @ 11:30 am - 12:45 pm.

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PLEASE NOTE, this workshop will be delivered virtually through Zoom video, as part of the Hillsborough Community College InLab@HCC.

Due to security concerns we will send a Zoom link 24 hours prior and again one hour prior to the workshop start date and time. Please login to Zoom five minutes prior to the event start time. You will be placed into a virtual “Waiting Room” until the event begins.

This program is for those who are interested in learning more about the business model canvas. Beginners and experts are welcome!

Your facilitators are Professor Beth Kerly and Dr. Andrew Gold.

Beth  is a full-time tenured business faculty member at Hillsborough Community College, and adjunct faculty at the University of Tampa. In addition to her teaching activities, Kerly serves as the co-founder of the HCC Entrepreneurship and Innovation program.She actively works in promoting and building community and business relationships for HCC and its students. Professor Kerly is also co-founder of e2Venture and Operation Startup.

Andy  is a longtime social entrepreneur, educator and cofounder of Operation Start Up and e2Venture. Dr. Gold is a full-time business faculty member at Hillsborough Community College, and teaches in the graduate school at the University of Tampa, and the University of South Florida.Gold is a co-founder of the HCC Innovation and Entrepreneurship Program, serving as an internal entrepreneurial evangelist at HCC.

In this program, you will learn about the business modeling process and how to use the Business Model Canvas tool to validate business model assumptions.

All Operation Start-up Workshops align with The Business Model Canvas, a tool used by entrepreneurs and business owners to validate their ideas. If you are not that familiar with the business model canvas, and/or the business modeling process, here are a few resources that may be of interest.

a) How to use the business model canvas, an introduction: http://www.spikelab.org/blog/correctly-use-business-model-canvas.html  b) Additional resources related to the business model canvas (books, videos, free courses, websites etc.):  http://www.spikelab.org/resources.html

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Business Model Canvas

What is the business model canvas.

A business model canvas provides a high-level, comprehensive view of the various strategic details required to successfully bring a product to market. The typical use case for this tool is to outline the fundamental building blocks of a business, but it can be used effectively for individual products as well. The exact ingredients may vary, but these are some of the typical components included:

  • Customer segments —Who is going to use this product?
  • Product value propositions —What is this going to do for the customer to make their life/job better?
  • Revenue streams —How will the company make money from this product?
  • Channels —How will the product be sold or distributed?
  • Customer relationships —What is the success and support strategy for new customers?
  • Key partners —What other companies or individuals are part of the development and go-to-market strategy?
  • Key activities —What must happen internally to release this product?
  • Key resources —What people, materials and budget are required to pull this off?
  • Cost structure —How much will it cost to develop, manufacture, distribute, and support the product?

Asking and answering these questions should be de rigueur for any new product, but this particular framework is useful for distilling the supporting business case down into something easily digestible. By forcing everything to be on a single page, each question must be answered succinctly, which often cuts through any grandstanding to illustrate whether each area is truly addressed and viable.

How do product managers use the business model canvas?

The business model canvas serves two primary purposes for product managers : focusing their thinking during its creation along with expediting and framing the conversation when communicating with others.

Because the business model canvas is a comprehensive summary of what the product will do, who will use it, why they’ll use it, how it will happen, and how the money works, it requires a lot of thinking and homework to put it together. This exercise is very helpful for product managers to fully understand the market opportunity and refine their story while uncovering potential problem areas and fully vetting their impact. Plus the process of boiling everything down to a single page ensures that what is included is as truthful and well supported as possible.

The business model canvas can serve as a continually referenceable touchstone for the product development process and beyond, essentially serving as a mission statement for the product. As conditions on the ground change and more is learned about the product’s market reception and usage, the canvas can be updated to accurately reflect the latest information; reviewing the canvas periodically is a worthy activity in and of itself.

As a communication tool, the business model canvas is an ideal document for our short attention span world and is as useful with the executive team as it is with a junior developer. Since it only contains the most salient and relevant information, the audience won’t be drowning in details or distracted by supporting evidence or non-sequiturs. The canvas can also create a universal vocabulary for the product and get everyone using the same language and concepts going forward.

[Free report] 2021 State of Product Management ➜

Tips for using the business model canvas

Here is how to make the most of the business model canvas and the process of creating and maintaining it:

  • Note assumptions and challenge them —Since a business model canvas is developed while a product is still “theoretical” there is often a lack of actual facts to rely on. Instead, educated guesses, informed opinions and assumptions are utilized to build it out. While there’s often no escaping these, anything in the canvas that is an assumption versus a proven fact should be called out, with every effort made to both challenge the assumption and anticipate the impact if the assumption turns out to be incorrect.
  • Bounce it off a virgin audience —Fellow employees and even board members will approach a business model canvas with a trunkload of inherent biases. To truly test the veracity and completeness of a canvas, allow some outside parties to validate it independently. It should be a self-explanatory document, so allowing them to review it and provide feedback without any dialogue or explanations is a great test of its worthiness and thoroughness.
  • It’s easy to update, so keep it current —Unlike longer, weightier documents, the single-page nature of the business model canvas means there’s no excuse for it to languish and fall behind the business’s current line of thinking or newly gathered information. Reviewing it on a regular basis and maintaining its accuracy enhances its usefulness and is a helpful process to note when assumptions or plans have changed.
  • An ever-present reminder —Thoughts, plans, goals, and assumptions were laid out succinctly in the canvas with great care and deliberation. Going forward the canvas can be continually referred to for guidance, inspiration, and level setting as folks become swept up in the momentum of product development, sales, and marketing.
  • Present it in pieces —Sure, the entire business model canvas fits on one piece of paper, but there is a lot of things on that 8 ½ x 11 inch page. When presenting it, discuss each piece individually, gradually revealing the entire contents. This will prevent information overload and allow the team to convey things narratively instead of an information dump.
  • Reference all the evidence —Any hard data should be clearly referenced (if not included) in the canvas to give the arguments and statements as much legitimacy as possible. Reviewers will be trying to poke holes (as they should), so firm things up whenever there’s a chance.
  • Be specific —No one needs a business model canvas to understand fundamental business case elements; it is intended to tell the story and rationale for this particular product. Cut out anything generic and make it as relevant to this exact opportunity as possible. In particular, link individual customer segments with their respective value propositions, since a product won’t be all things to all people.
  • Create multiple canvases —During the early phases, generating more than one business model canvas based on divergent assumptions, target markets, or value propositions can be a useful tool for exploring different directions the product could head. After the plans are firmed up, multiple canvases can still be employed, this time to see how different scenarios pan out when key factors change… it can be used as a wargaming tool to prepare for different potential outcomes.
  • Who, what, and why first. How and how much second —Although a business model canvas includes everything from a value proposition and personas to implementation costs and resources, everything should be driven from the market opportunity and rationale for bringing a product to market. If those aren’t solid, spending cycles on technology and costs is a waste of time.

Creating a business model canvas puts new product ideas under the microscope and pulls together disparate sources of intelligence, opinions, hunches and research into a single piece of paper. It forces critical thinking and analysis of assumptions and guesses and provides an excellent reference point for the entire organization.

Once the canvas is approved and productization begins, the canvas can also serve as a straw man for the product roadmap, lining up future features and functionality based on the priorities laid out in the document to achieve market success.

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IMAGES

  1. Zoom Business Model

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  2. Zoom

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  3. Modelo de negócio da Zoom.us

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  4. Quick guide to design a business model

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  5. Business Model Canvas: A 9-Step Guide to Analzye Any Business

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  6. How to use a Business Model Canvas

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VIDEO

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  4. BUSINESS MODEL CANVAS ENT300

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COMMENTS

  1. Zoom Business Model

    Zoom Business: With each license of $199.90 a year (starting at 10 licenses for $1,999/year) this plan has all the features of the Pro, for up to 300 simultaneous participants. Aimed at medium-sized businesses, it includes features such as telephone support, personalized emails, logins, URLs, and an administrator panel, among others;

  2. Zoom: Business Model, SWOT Analysis, and Competitors 2023

    In this blog article, we will delve into an in-depth analysis of Zoom's business model, conduct a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis to highlight its internal and external factors, and explore its key competitors as we look ahead to 2023.

  3. How Does Zoom Work: Business and Revenue Model Explained

    Zoom Business Model Type: Freemium The Inspiring Success Story Behind Zoom Before we answer How Does Zoom Work - let's put some spotlight on how the app came into existence. While getting extensive popularity and coming to run profitably enough over the last few years, Zoom actually entered the space of famous apps during the coronavirus pandemic.

  4. Zoom Video Communications: Business Model, SWOT Analysis, and

    Zoom Video Communications Business Model Canvas Explained Value Proposition: Zoom's value proposition is simple yet effective - it offers a reliable and user-friendly platform for video conferencing, webinars, and virtual events.

  5. How Does Zoom Make Money? Analyzing Its Business Model

    Analyzing Its Business Model How Does Zoom Make Money? Analyzing Its Business Model by Viktor Hendelmann Executive Summary: Zoom is a cloud-based conferencing tool that allows users to virtually interact with each other through audio, video, and chat.

  6. Zoom Business Model: How Zoom Makes Money

    April 9, 2022 16596 Zoom Business Model: How Zoom Makes Money When Eric Yuan, Zoom's CEO, decided to go after the video conferencing market in 2011, the market was already flooded with incumbents like Microsoft-owned Skype, Google Hangouts & the then market leader Webex, owned by Cisco.

  7. Zoom Business Model and How it Makes Money

    Business Model Zoom has recently become a well-known app in the technology industry. The app's popularity has come due to the recent COVID-19 pandemic. Due to the limits put on physical contact, most businesses and individuals needed a solution that allowed them to collaborate and meet online.

  8. What is a business model canvas? Overview with template

    The business model canvas is a template introduced by Alexander Osterwalder in 2005 as part of his Ph.D. studies under the supervision of Yves Pigneur. The business model canvas outlines nine crucial elements of a business model in an easy-to-understand visual template: customer segments, value proposition, channels, customer relationships ...

  9. Business Model Canvas Explained: Examples And Structure

    Business canvas, also known as a lean business plan, is a time-saving approach to business planning, opposed to traditional planning methods. Rather than describing the detailed vision, mission, operations, it answers key questions - and the team derives the conclusion from this answer. Business model canvas is more attainable than a business ...

  10. Business Model Canvas: A 9-Step Guide to Analzye Any Business

    Created by Swiss entrepreneur and Strategyzer co-founder, Alexander Osterwalder, the Business Model Canvas is a visual representation of the 9 key building blocks that form the foundations of every successful business. It's a blueprint to help entrepreneurs invent, design, and build models with a more systematic approach.

  11. Zoom Video Communications

    Zoom's business model entails designing/developing its software and maintaining/updating its software-as-a-service platform for customers. Key Partners . Zoom maintains the following types of partnerships: Integration Partners - The company works with firms that integrate their offerings into its product for an enhanced solution. Integration ...

  12. Business Model Canvas: Explained with Examples

    The Business Model Canvas is a strategic management tool that lets you visualize and assess your business idea or concept. It's a one-page document containing nine boxes that represent different fundamental elements of a business.

  13. Quick Guide to the Business Model Canvas

    The main goal of using the Business Model Canvas is to validate your business model. By laying out all the components, you can find simple, small-scale ways to test each aspect of your business model in a cycle of improvement. 1. Fill out the canvas. Filling out the canvas is quick and painless, and it should give you a lot of clarity.

  14. Make a Business Model Canvas (How-tos, Examples, Tips)

    Online Whiteboard Business Model Canvas 18 minutes•By Canva Team Making a business model canvas: How-tos, templates, and tips Discover how to make your business idea more competitive and viable with a solid business model. Explore free templates, best practices, and tips to create a business model canvas online from Canva.

  15. How to make a great Business Model Canvas

    How to Create a Business Model Canvas. To create a business model canvas, start with your overall business model. At its core, a business model is simply: The products and services you plan to sell, the expenses you will incur in delivering those products and services, and. how you expect to make a profit.

  16. Business Model Canvas: The Definitive Guide and Examples

    Download a PDF Business Model Canvas template, and take several colored markers, sticky notes, and anything else you may need. For example, if you are brainstorming in a big team, a board is a must for enhanced convenience. Online. Choose the platform where you will work with a template. It can be Google Docs, Omnigraffle, or the Stratygizer ...

  17. Business Model Canvas

    1 min read topics Business Model Canvas Business Models The Business Model Canvas is a strategic management and entrepreneurial tool. It allows you to describe, design, challenge, invent, and pivot your business model.

  18. Business Model Canvas Workshop

    The Business Model Canvas (BMC) from Strategyzer is a simple, visual tool that maps out the nine key areas that are essential to any project, initiative, or business. ... You can run this workshop offline or online by using on online whiteboard and a virtual meeting space such as Zoom.

  19. What is a business canvas model? (Definition and examples)

    This is an example of a business canvas model for a simple business that a child may run in their local village. Related: 9 essential business analyst skills. Business model canvas example 2: Zoom. Customer segments: Individuals or businesses who want to make free video calls online. Individuals or businesses who want to pay for online ...

  20. Business Model Canvas

    Business Model Canvas - Virtual through Zoom | Synapse Resources « All Events This event has passed. Business Model Canvas - Virtual through Zoom November 12, 2020 @ 11:30 am - 12:45 pm You will learn about the business modeling process and how to use the Business Model Canvas tool to validate business model assumptions.

  21. What is the Business Model Canvas?

    A business model canvas provides a high-level, comprehensive view of the various strategic details required to successfully bring a product to market. The typical use case for this tool is to outline the fundamental building blocks of a business, but it can be used effectively for individual products as well. The exact ingredients may vary, but ...

  22. Zoom Business Model Canvas

    Zoom Business Model Canvas Free Download Now Category: Canvas Examples Related products New Year's Sale Canvas Examples 170+ Business Model Canvas Examples 1 review $ 79 $ 39 170+ Business Mode Canvas Examples (Amazon, Netflix, Tesla, Amazon...) PDF File Format Instant Download Add to cart Canvas Examples Skype Business Model Canvas Free Download

  23. Create a Business Model Canvas Online

    Open Canva and search for "Business Model Canvas" to start your design project. Choose a business model canvas template Pick a template from our collection of business model canvas examples. You can easily find what you need when you filter by color, style, or theme. Each template is customizable, so you can always personalize it.