Business Model Archetypes
The Business Model Archetypes are seven fundamental business “personalities” upon which any business model can be developed. By providing the context of all available models, it becomes easier to see how businesses relate and directions in which businesses can pivot. In this article, I describe the model and the archetypes, that I first introduced in The Smarter Startup, as well as describe use patterns where the models might benefit entrepreneurs and product strategists who use the model.
Background & Context
I’ve noticed over time that business models often become confusing because fundamentally different ways of creating value are blended together. Teams will talk about products, services, platforms, and marketplaces interchangeably, even though these represent very different underlying business behaviors. While many companies exhibit characteristics of multiple models, one mode of value creation typically dominates.
Below are a few of the common business models…
The Business Model Archetypes framework was created to make these underlying patterns explicit. It is a conceptual model designed to describe how businesses create, deliver, and capture value at a structural level. The goal is not to force companies into rigid categories, but to provide a small set of recognizable templates that make strategic conversations clearer and more precise.
Like other archetype-based frameworks (eg Carl Jung), this model abstracts complex real-world behavior into simplified forms. Most businesses will combine elements of multiple archetypes, but understanding which archetype is primary helps teams reason about strategy, identify sources of advantage, and evaluate potential pivots or expansions. The value of the model lies in clarity rather than precision, enabling better alignment and decision-making across product, strategy, and leadership discussions.
By understanding the fundamental patterns, we can create a unified and radically simplified model that contextualizes the possibilities. There are 3 primitive archetypes, and 4 hybrids that come from combining the primitives.
Primary
Secondary
About the Archetypes
Here’s a brief description of each of the archetypes to demonstrate further:
i. Product
This primary archetype focuses on the development of a tangible artifact that can be bought and sold for a one-time cost. The product is usually consumed either because it provides personal entertainment, or because it offers some gain of efficiency and can be acquired for less cost than hiring a services company to perform an activity. When applied to the online world, the most common types of products are software in the form of plugins for major platforms such as WordPress, or content in the form of mobile apps of ebooks.
Indicative Attributes
- Key partners: Marketplaces
- Value proposition: Productivity or entertainment
- Key Activity: Product Development
- Monetization: Sale of product
ii. Subscription
This secondary archetype is a popular blend of a product and a service. The most common examples are software as a service (SaaS) and Content as a Service (CaaS). Rather than buying a tangible product one-time at a maximum cost, the subscription model provides continued access to the product or service for a lesser monthly cost, and continues to update, improve, and support the product over its lifetime. The benefit for the business is a reduction in up-front cost, reduced dependency upon a marketplace, and a continued relationship with the customer. For the customer, its also a way to reduce up-front cost, and often means having access to more and better resources than if they needed to purchase the tangible equivalent.
Indicative Attributes
- Key partners: Ecosystem platform owner
- Value proposition: Customization and support of platform
- Key Activities: Customization and maintenance
- Monetization: Time and materials
iii. Service
The third primary archetype provides intangible solutions for customers and clients, where commoditized products are not sufficient. Often this is in the form of integration, maintenance, or customization of a popular platform solution. Usually this type of organization is formed by an organization of skilled professionals who sell their services for an hourly rate.
Indicative Attributes
- Key partners: Ecosystem platform owner
- Value proposition: Customization and support of platform
- Key Activities: Customization and maintenance
- Monetization: Time and materials
iv. Brokerage
This is a secondary archetype which combines the activities of Trade and Service by trading on behalf of clients, as a service. These businesses typically service consumer-facing brands that focus on marketing and need assistance with more efficient sourcing. Prototype examples of this type of business include advertising networks which provide online traffic sourcing for brand retailers, and dropship programs which often have deeper sourcing relationships, and better fulfillment relationships than the brands they service.
Indicative Attributes
- Key partners: Wholesalers
- Value proposition: Efficient commodity procurement
- Key Activities: Recruiting Wholesalers
- Monetization: Base fee plus commission
v. Trade
The primary archetype of Trade focuses on connecting buyers and sellers. Money is earned by buying a product for less than it is sold for. The trader’s primary occupation is sourcing something of value “in the field”, packaging it, and making it readily available to those who desire it. Prototypical examples include the eCommerce retailer and lead generation. In both of these examples, the Trader sources something, qualifies and prepares it, then sells it to a customer. In the case of lead generation the behavior is the same as retail, except that the product is information about a customer prospect.
Indicative Attributes
- Key partners: Product sourcing and advertising
- Value proposition: Low price, convenience, and curation
- Key Activities: Sourcing and advertising
- Monetization: Product arbitrage
vi. Marketplace
The Marketplace is a secondary archetype that combines attributes of of the primary Trade and Product archetypes. It brings together buyers and sellers for trade, but it does so via self-service platform which itself is product. The product could be a physical shopping mall or an online technology platform that facilitates payment processing and statistical reporting. What is sold in a marketplace can either be tangible products or services. In both cases, the value and the efficacy of the marketplace is affected by Metcalfe’s law (aka Network Effects): the value of the network exponentially increases with every new node on the network. This can be a powerful dynamic that sustains a marketplace once critical mass is achieved, though it can also be rather difficult to reach critical mass to begin with.
Indicative Attributes
- Key partners: Merchants (sellers)
- Value proposition: Destination shopping
- Key Activities: Recruit vendors and advertise
- Monetization: Commission per sale
vii. Ecosystem
The Ecosystem is the only Tertiary archetype in this model, in that it combines all three primary archetypes – Product, Service, and Trade. This is the rarest and most difficult archetype to achieve but is the most desirable. Success with one primary or secondary archetype behavior typically opens up the opportunity to extend the brand into complimentary and synergistic offerings. A product creator for example, may start to offer services in support of their product. If that too is successful, they may begin looking at how to facilitate marketplace activities and a host of other supportive behaviors. All of the synergistic activity helps to entrench the brand as a market leader, and adds to the value chain and perceived value of the customer. Typical prototype examples of an ecosystem are the technology platform (Salesforce CRM, Microsoft, etc) and the media platform (NBC, Facebook, etc).
Indicative Attributes
- Key partners: PaaS providers
- Value proposition: Turnkey software and management
- Key Activities: Develop software and manage servers
- Monetization: Subscription fee