There are not infinitely many ways to make money. Research has mapped a limited set of recurring patterns, and most companies already run two or three without knowing it. The value of knowing them is that each pattern has documented ways of failing that you can avoid.
Every company has a business model. Very few have decided which one.
You sell something to someone for something. But how you do it, meaning how many customer segments you serve, who pays, when and for what, that is the business model. And it can change without the product changing.
An industrial equipment manufacturer can move from selling machines to selling operating hours. A record label can move from selling albums to selling access. Same core, new revenue model.
Where the patterns come from
Researchers at the University of St. Gallen systematically mapped how companies make money, and found the variation is far smaller than you would expect. The work is collected in The Business Model Navigator by Oliver Gassmann, Karolin Frankenberger and Michaela Csik, and their original catalogue holds 55 patterns.
We have since extended the catalogue with eleven further patterns, mostly from platform and circular-economy work, which is how we arrive at 66. Those eleven are our own addition and are not part of the research cited above.
Either way the number matters less than the point: the St. Gallen patterns were not invented, they were observed. Many times, across many industries.
Which means you can learn from other people's mistakes without making them.
The main categories
Subscription and membership. You sell access rather than a product. That covers both Netflix and the local gym.
For a manufacturer: could you offer an annual service agreement instead of invoicing individual repairs? The customer pays a fixed amount, you get predictable revenue and can plan staffing instead of reacting to calls.
Platforms and two-sided markets. You do not own the goods, you own the meeting place.
For a B2B manufacturer: a marketplace where customers trade spare parts with each other. You take a share and carry no inventory risk. The warning is below.
Product as a service. You keep ownership, the customer buys the use.
A pump manufacturer does not sell the pump, it sells guaranteed water flow. The customer pays per cubic metre. Now you have your own interest in the pump being reliable, because downtime costs you rather than the customer. The incentives point the same way, and that is the whole point of the pattern.
Freemium and free trial. Free base version, payment for the advanced one.
Be realistic about the numbers here. Conversion from free to paying typically sits in the low single-digit percentages. Which means freemium needs a large number of users to make sense, and is why the pattern rarely suits a B2B company with a hundred customers.
Razor and blade. Cheap to acquire, ongoing consumption. A cleaning equipment manufacturer can sell the machine cheaply and earn on the chemicals. Only works if the customer cannot easily buy the consumable elsewhere.
Licensing and franchising. You sell the right to use the model rather than the product. A design studio can license its system to partners in other countries for an annual fee, and scale without opening offices.
Bundling. Several services sold as one price. A consultancy can sell a two-year engagement covering strategy, implementation and follow-up for a fixed sum, where the conversation is about the whole rather than about the hourly rate on each part.
Data monetisation. Data is the product. With sensors on customers' machines you know when something fails and where energy is lost. Those insights can have a buyer. Note that the customer's data is the customer's by default, so this pattern starts in the contract, not in the technology.
The six shifts underneath the patterns
The patterns are not arbitrary. They move along six deeper shifts: in who you serve, in what you sell, in how you get paid, in how you reach the customer, in who you work with, and in how costs behave.
Ask yourself which of the six would make the most difference to you. That narrows 66 options down to a handful. The six are covered in six fundamental shifts.
An example: a furniture manufacturer
A maker of ergonomic office furniture sells B2B to domestic companies. Around 60 employees, revenue near 16 million euro, squeezed margins and hard competition from large international producers.
The classic reaction is to want to be cheaper or better looking. Both are a fight against people with more resources.
Pattern thinking offers four other routes:
Product as a service. Do not sell chairs, sell ergonomics per employee per year. That moves the conversation from furniture purchasing to working environment, and the decision from procurement to HR.
Community. Build something around workplace design that customers want to be part of, and let the furniture follow the relationship rather than the other way round.
Data. Sensors in the furniture show how rooms are actually used. That is valuable to whoever plans offices. Requires agreeing it with the customer first.
Licensing. Sell the process and design system to manufacturers in other countries for a royalty. You assemble not one extra piece, but the model keeps working.
Same factory. Four possible directions. None of them requires being cheaper.
The pitfalls are the real prize
What is valuable about a pattern catalogue is not the ideas. Most people can think of those. What is valuable is that each pattern has known ways of failing.
- Build subscription without giving the customer a reason to stay, and they cancel after three months, having traded a good one-off revenue for a bad recurring one.
- Build a platform without a plan for the cold start, and you have neither sellers nor buyers, and the market is dead before it opens.
- Build licensing without being clear on what is actually being licensed, and you give the method away, discovering it only when the partner no longer needs you.
That is what the patterns give you: not inspiration, but a warning list from the people who went first.
How to use it
- Map what you do today. Most people discover they already mix two or three patterns without having decided to.
- Pick three to five you are curious about. Read what others did, and what went wrong.
- Do the arithmetic on one. What does the shift cost, what does it bring in, and what is the worst outcome?
- Test the smallest possible version. To try subscription, offer it to twenty of your best customers and measure. Not to everyone.
How to work out which box in the model actually carries the risk is covered in stress-test your business model, and to run it as a full process, the phases are in Rethink NOW.
Why the patterns sit inside the model on our side
A catalogue in a book requires somebody to translate the pattern into your reality, every time.
In 360° Sprint the business model is a node on the board, and an alternative can be played through as a complete model rather than as an idea. Because the nodes are connected, the analyses downstream inherit the change instead of sitting there with the old assumption, and the version history makes it possible to roll back field by field if the alternative does not hold up.
You do not need to transform the whole business. You need to be able to see two models side by side and choose.
The overview of the whole subject is in business model: what it is and how to change yours.