Calling All Student Entrepreneurs: Tell Us About Your Startup

Few Most Profitable Business Models Ever Made [01]

Dec 31, 2015

This question originally appeared on Quora: What is the most profitable business model ever made? Answer by Cory A. Martin, SaaS Sales Development, HRM Aficionado and Technology Enthusiast.

My personal favorite is the hub and spoke model.

In this model what you do is a have core product (lets say pizza) where you have a low or even negative profit margin. This cheaper but quality product allows you to be able to gain business and sales more easily even when competitors have similar or better products.

Although you don't make much money (or any sometimes) off the hub, what happens is that you offer several 'spokes' which are high profit margin services/products. So lets call this (wings, molten chocolate cakes, 2 liter of Dr. Pepper). So they buy the pizza and then add on the extras so they have a complete product (all in one to place which makes integration and ease of use higher) and you're making high profit margins off the spokes but brought them in for the hub (cheesy delicious hub).

This model allow allows for multiple options for different types of company. Some will be allergic to wings or hate Dr. Pepper, well great, you can still sell the hub and one spoke (because who doesn't love molten chocolate cakes) and still make a profit and have a satisfied customer.

Some of the fastest growing Saas companies and 'Unicorns' have unleashed this model recently and are having extreme success, such as:

  • Zenefits
  • Gusto
  • Tinder (free dating app, spokes include Passport mode, unlimited swipes)
  • Evernote (I know dying, but still, great idea had they developed better spokes)

So in 2016 I would say that if you're looking to innovate, find areas where the hub and spoke model isn't being used and then USE it to your advantage.

Register to read this article in full and more insight articles!

By registering, you will be signed-up for an account which gives you access to our premium stories published a few times a week and archives of all our premium stories. You will also receive a daily newsletter sent to your inbox. To unsubscribe, please visit the profile section in your account. We have a strong privacy policy. We will never share or sell your data to anyone.

What you get
In-depth actionable analysis

In-depth analysis on startup, business and technology scene in Bangladesh that you would not find anywhere else.
Daily and weekly newsletter
Get our daily and weekly newsletter with our most important stories directly to your inbox.
Join the conversion on this article and more on our public Telegram Group

In-depth business & tech coverage from Dhaka

Stories exclusively available at FS

About FS

Contact Us