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Few Most Profitable Business Models Ever Made [01]

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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.


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