Some B2B business models do well in targeting early stage customers (e.g., less than $5MM revenue) but have trouble scaling with customers as they grow. Other B2B models cannot hit a price point for early stage customers and must target customers at later business stages.
I recently saw a business model that concerned me on this point. The SaaS application in the model was not cost effective for early stage customers – there are market alternatives that are offered for free that do just about everything early stage companies need. The SaaS application was very efficient and effective for mid-stage, emerging businesses, but it was not as cost effective as other enterprise software licensing models after customers reached a certain size. As a result, the business model comes in too late in the customer’s life cycle and then cannot scale with the customer beyond a certain point. I think this will be a hard sell.
See also:
Entrepreneurial Law – Developing a Good Business Model – Part I
Entrepreneurial Law – Developing a Good Business Model – Part II
Entrepreneurial Law – Developing a Good Business Model – Part III
Entrepreneurial Law – Developing a Good Business Model – Part IV
Entrepreneurial Law – Developing a Good Business Model – Part V
I recently saw a business model that concerned me on this point. The SaaS application in the model was not cost effective for early stage customers – there are market alternatives that are offered for free that do just about everything early stage companies need. The SaaS application was very efficient and effective for mid-stage, emerging businesses, but it was not as cost effective as other enterprise software licensing models after customers reached a certain size. As a result, the business model comes in too late in the customer’s life cycle and then cannot scale with the customer beyond a certain point. I think this will be a hard sell.
See also:
Entrepreneurial Law – Developing a Good Business Model – Part I
Entrepreneurial Law – Developing a Good Business Model – Part II
Entrepreneurial Law – Developing a Good Business Model – Part III
Entrepreneurial Law – Developing a Good Business Model – Part IV
Entrepreneurial Law – Developing a Good Business Model – Part V
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