The main types of online business models are ecommerce, subscription, freemium, advertising-supported, marketplace and affiliate, and they can be sorted by who sells to whom (B2B, B2C, C2C, C2B) and by how the money arrives. The right one for you depends on your customer, your margins and how much you can invest before revenue starts. This guide explains each model in plain terms, shows how it earns money, and helps you choose and combine them.
A business idea is a concept: “sell handmade candles” or “offer accounting software for tradespeople”. A business model is the machinery behind it. One academic text on entrepreneurship describes a business model as the way an organisation creates, delivers and captures value. In practice that means answering four questions:
The idea tells you what you intend to make. The model turns that opportunity into an economic system, with customers, revenue and operations defined, which is why a business idea and a business model are treated as different things by people who advise start-ups.
The same idea can sit inside several models. A fitness coach could sell one-off video courses, a monthly membership or a free app funded by adverts. The product barely changes. The economics change completely.
Most guides mix two different questions, which is why the lists look so inconsistent. Separate them and the whole subject becomes easier.
Question one: who is on each side of the transaction? This gives you B2B, B2C, C2C and C2B.
Question two: how does the money come in? This gives you ecommerce, subscription, freemium, advertising, marketplace, affiliate and so on.
You pick one answer to each question. A project management tool might be B2B (who) and subscription (how). A neighbourhood resale app might be C2C (who) and marketplace with commission (how).
You sell to other organisations. Orders tend to be larger and less frequent, buying decisions involve more people, and customers often expect custom pricing, invoices and longer contracts. Software for companies, wholesale supply, professional services and industrial parts all fit here. Sales cycles are longer, but customers who stay tend to be worth a lot over time.
You sell to individuals for personal use. This covers physical goods, digital downloads and subscriptions bought through a website or app. Volumes are higher and order values lower, so marketing efficiency, delivery experience and repeat purchases decide whether it pays.
Individuals sell to each other and a platform sits in the middle, handling listings, payments and often communication. Second-hand fashion, classified listings and peer-to-peer rental all work this way. The platform earns by taking a fee or commission, which makes it a marketplace in revenue terms.
The flow reverses. Individuals offer something to companies: freelance skills, user-generated content, reviews, photography or influencer promotion. A stock-image library paying contributors and a freelance talent site are typical examples.
One academic overview of digital business models lists e-commerce, subscription, freemium, affiliate, marketplace and advertising as the common ones. Here is how each works in practice.
The classic model. You list products, take payment online and deliver. Revenue may be one-off purchases, subscriptions, usage fees, commissions or licensing. The big strategic choices are what you hold in stock, how you fulfil orders and whether you sell direct to the public, to retailers or both.
A business can sell direct to consumers through its own site while also supplying wholesale to shops. If you are weighing platforms for a store, our guides to the best ecommerce solutions for business and the top ecommerce solutions go through the options.
Customers pay weekly, monthly or yearly for ongoing access to goods or services. According to the OECD, subscription models give users a continuous, recurring stream of goods and services. The appeal is predictable income. The challenge is churn: customers who cancel must be replaced before you can grow.
Boxes of coffee, software tools, online courses with ongoing access and premium content memberships all use this model.
Users get a basic version free and pay for extras, more capacity or removal of limits. It lowers the barrier to trying your product, but every free user still costs you something to serve, in hosting, support or both. The model works when a meaningful share of free users find enough value to upgrade.
Content or a service is free to the audience, and revenue comes from selling targeted ad space to businesses. In the language of one entrepreneurship textbook, this is a multisided model: the people using the product are not the ones paying for it. News sites, free apps and video platforms are typical. It needs large, engaged audiences, so it rewards patient investment in content and traffic.
You do not own the stock. You bring two groups together, buyers and sellers, and earn a commission or listing fee for intermediating. The OECD notes that platforms act as intermediaries and may earn commissions, and that prices on them can be set by sellers or move dynamically with market conditions.
The hard part is the start: buyers want sellers, and sellers want buyers. Marketplaces that focus on a narrow niche usually solve this faster than broad ones. Specialist B2B platforms show how it can work in a single sector, such as this B2B wholesale platform for brand growth, which matches brands with retail buyers by category and market.
An affiliate earns a commission for sending traffic or sales to a merchant. The same academic overview describes it as a pay-for-performance system. For the merchant, you pay only when something happens. For the affiliate, income depends on trust and traffic, so it suits publishers, reviewers and comparison sites.
Yes, and many do. MIT Sloan Management Review describes organisations increasingly running two or more business models at once, forming a portfolio. Its researchers explain that this can diversify access to resources and capabilities, and that complementary models can help a firm learn faster.
Sensible combinations tend to share customers or assets:
The warning is focus. Every extra model adds operations, reporting and customer questions. Add the second one when the first is stable and the link between them is obvious.
Work through these criteria in order.
These are the factors one ecommerce guide recommends weighing when picking a model: fulfilment, margin profile, data ownership, start-up cost, daily operations and risk exposure.
Then test before you commit. A minimum viable product, a deliberately basic first version, helps confirm the model solves a real problem for a targeted group of early adopters. A landing page, a pre-order or a small paid pilot tells you more than a spreadsheet.
Many founders plan for revenue growth but not for the rising costs of software, taxes, insurance and customer support, which can erode profits unnoticed. Delivery and service costs deserve the same attention. This walk-through of ecommerce outsourcing costs shows how to estimate total cost of ownership rather than just the headline price.
Imagine a small UK business selling specialist tea.
Each layer uses the same product knowledge and customer base. None was added until the previous step ran reliably. That sequence matters more than the number of models.
Most businesses we meet do not have a model problem. They have a shop-window problem. The model is sound, but the website, the brand and the traffic behind it do not let the model work. We see a model as a system with three parts: the offer, the route customers take to reach it, and the experience once they arrive. A subscription needs a sign-up journey with no friction. A marketplace needs trust signals on both sides. A B2B service needs clear proof and an easy way to start a conversation. Design, development and marketing are how the model becomes real. Our advice is to start narrow, measure, then widen. Build the site around the first model, get search and social working for it, and use the data to decide what to add next. Because our teams cover web development, branding, SEO, paid media and ongoing support under one roof, that growth can happen without handing the project between suppliers. Do not fear a first version that is imperfect. A model that is live and learning beats one that is perfect on paper. Rob
Most businesses we meet do not have a model problem. They have a shop-window problem. The model is sound, but the website, the brand and the traffic behind it do not let the model work.
We see a model as a system with three parts: the offer, the route customers take to reach it, and the experience once they arrive. A subscription needs a sign-up journey with no friction. A marketplace needs trust signals on both sides. A B2B service needs clear proof and an easy way to start a conversation. Design, development and marketing are how the model becomes real.
Our advice is to start narrow, measure, then widen. Build the site around the first model, get search and social working for it, and use the data to decide what to add next. Because our teams cover web development, branding, SEO, paid media and ongoing support under one roof, that growth can happen without handing the project between suppliers.
Do not fear a first version that is imperfect. A model that is live and learning beats one that is perfect on paper.
Rob
Once you have chosen a model, the website has to carry it. A shop needs a store that converts. A subscription business needs a smooth sign-up and billing flow. A marketplace needs listings, search and trust features. Our team builds custom, WordPress and ecommerce websites and supports them after launch. You can see everything we offer on our services page.
If you are launching and need to be found, our published packages include a Logo Design Package at £250 and Cheap SEO Packages at £255, both one-off. Brand Design Experts starts from £1,749.30 and UI/UX Designers from £2,519.30, one-off. Ecommerce website packages are priced to the project, so talk to us about your plans and we will advise on the right starting point.
For growth once you are live, these guides may help: proven strategies to get more website traffic and how digital agencies help brands drive online growth.
The most common are ecommerce, subscription, freemium, advertising-supported, marketplace and affiliate. They can be combined with a transaction type such as B2B or B2C. Most beginners start with ecommerce or a service because the customer journey is easy to understand.
B2B sells to other organisations, usually with larger orders, longer contracts and sometimes custom pricing. B2C sells to individuals for personal use, usually in smaller, more frequent purchases. Marketing, pricing and website design differ accordingly.
Yes. Researchers at MIT Sloan Management Review describe firms that run two or more models as a business-model portfolio. Combine models only when they share customers or assets, and add each one once the previous one is stable.
It depends on what you sell. Service and digital product models generally need less stock than physical retail, but all models carry running costs such as software, taxes, insurance and support. Test with a minimum viable product before you invest heavily.
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