Business Model Canvas (BMC) / Part 1

Introduction to the Business Model Canvas

In today’s fast-paced and competitive business environment, developing a clear and effective business model is essential for the success of any venture. However, traditional business planning methods can be time-consuming, rigid, and overwhelming, particularly for startups or evolving companies. 

This introduction will guide you through the core elements of the Business Model Canvas, demonstrating how it can serve as both a tool for new ventures and a dynamic framework for established companies seeking to innovate or optimize their operations. Whether you’re a startup founder, product manager, or strategic planner, the Business Model Canvas is a powerful tool that can drive clarity, creativity, and strategic decision-making.

What is the Business Model Canvas?

The Business Model Canvas (BMC) is a visual and flexible framework that helps entrepreneurs, innovators, and organizations map out the essential components of their business model in a structured yet simplified way.

Created by Alexander Osterwalder, the Business Model Canvas is a strategic management tool that breaks down a business into nine key building blocks, providing a clear snapshot of how a company creates, delivers, and captures value. By focusing on elements like customer segments, value propositions, channels, and revenue streams, the BMC helps businesses align their activities, identify potential gaps, and pivot when necessary.

The Business Model Canvas allows businesses to visually see how all parts of their operation are interconnected. It encourages clarity, creativity, and strategic thinking, making it easier to identify areas for improvement, innovation, or growth. The BMC is a flexible, collaborative tool that can be used by companies of all sizes, whether in the early stages of development or seeking to evolve their business model over time.

Purpose and Benefits of Using the BMC

The Business Model Canvas (BMC) serves as a visual framework that simplifies the process of designing, analyzing, and improving a business model. It is a powerful tool for both startups and established companies, offering clarity, focus, and strategic insights that help drive innovation and growth.

Purpose of the Business Model Canvas

• Simplifies Business Planning: The BMC allows entrepreneurs and organizations to break down their business model into clear, manageable components, offering a holistic view of the business on a single page. This simplification makes it easier to communicate the model to stakeholders, investors, and team members.

• Facilitates Alignment and Collaboration: The BMC fosters collaboration by bringing together key stakeholders (such as founders, employees, and partners) to discuss and align on the company’s vision, goals, and strategy. By using the same visual tool, teams can better understand each part of the business and identify synergies.

• Promotes Innovation and Flexibility: By highlighting the critical components of a business model, the BMC encourages creative thinking and rapid prototyping. It makes it easier to identify new opportunities, test assumptions, and pivot when necessary. The visual format also enables quick adjustments as the business evolves.

• Helps Identify Gaps and Weaknesses: Using the BMC allows businesses to see potential gaps or weaknesses in their model, such as an underdeveloped customer relationship strategy or unprofitable revenue streams. Addressing these areas early on can significantly improve the overall viability and sustainability of the business.

• Improves Decision-Making: By mapping out the entire business model in one place, entrepreneurs and managers can make more informed decisions about resource allocation, investments, and strategic direction. The BMC makes it easier to understand trade-offs and prioritize initiatives based on their impact on the business as a whole.

Benefits of the Business Model Canvas

• Clarity and Focus: The Business Model Canvas provides a clear, concise visual representation of the business, which makes it easier for stakeholders to understand its key components and overall structure. Instead of reading through lengthy business plans, teams can quickly see how everything fits together. This clarity fosters a more focused approach to execution and strategy.
  • Example: Airbnb used the BMC to refine its business model early on. By focusing on customer segments (travelers and hosts), value propositions (affordable, unique lodging experiences), and revenue streams (service fees from bookings), they were able to create a disruptive business that scaled rapidly.

• Encourages Iteration and Continuous Improvement: The BMC promotes a mindset of continuous learning and iteration. Its visual format makes it easy to test hypotheses, iterate, and pivot as new insights emerge. For startups, this is crucial in finding a product-market fit or adapting to changing market conditions.
  • Statistic: According to a survey by CB Insights, 42% of startups fail because there is no market need for their product. The BMC helps mitigate this risk by providing a structured approach to test assumptions early in the process.
  • Example: Spotify initially launched as a music-streaming service with the idea of reducing piracy. They quickly iterated their model based on feedback, refining their value proposition and exploring new revenue streams (e.g., freemium and premium subscriptions).

• Streamlines Communication with Investors and Partners: The BMC makes it easy to communicate a business’s strategy and potential to investors, partners, or stakeholders in a format that is clear and to the point. Investors can see the entire business model at a glance, which helps streamline the due diligence process.
  • Statistic: In a Harvard Business Review study, 80% of investors prefer business plans to be concise and structured. The BMC’s one-page format is ideal for conveying the essential elements of a business without overwhelming potential investors with unnecessary details.
  • Example: When Dropbox initially raised funds, they used the BMC to clarify their key customer segments (individual users, small businesses), value proposition (easy cloud storage and sharing), and revenue streams (subscription fees). This clear communication helped them secure funding from investors.

• Provides a Roadmap for Scaling: For established businesses looking to scale, the BMC helps identify areas for expansion and innovation. It provides a framework for analyzing the current business model and exploring new opportunities for growth, whether through new customer segments, markets, or products.
  • Example: Amazon used a variant of the BMC to transition from an online bookstore to a global e-commerce platform. The company redefined its customer segments, value propositions, and revenue streams over time to expand into new product categories and services, including cloud computing (AWS) and streaming (Prime Video).

• Cost-Effective Business Planning Tool: The BMC requires minimal resources to implement. Unlike lengthy business plans, which can take weeks or months to complete, the BMC can be created in a matter of hours or days. This makes it an accessible tool for startups and small businesses that may not have large budgets for extensive planning processes.
  • Statistic: A 2019 survey by PWC revealed that 70% of startups with a well-defined business model have a higher chance of attracting investors and achieving long-term success. Using the BMC helps startups quickly define that model without incurring significant costs.

The Business Model Canvas is a highly effective tool for simplifying business planning, improving decision-making, and driving innovation. Whether you are a startup looking to clarify your vision or an established business seeking to optimize or scale your model, the BMC offers a flexible, user-friendly framework to help you navigate the complexities of modern business.

By providing clarity, fostering collaboration, and enabling rapid iteration, the BMC empowers businesses to stay agile, align resources effectively, and unlock new opportunities for growth.

Why the BMC is Effective for Sales and Marketing Strategy Development

The Business Model Canvas (BMC) is a versatile framework that helps businesses conceptualize, refine, and execute their overall business strategy. When it comes to sales and marketing, the BMC is especially effective because it provides a clear, visual understanding of key business components that directly influence how a company engages with customers, delivers value, and drives revenue. By mapping out critical elements like customer segments, value propositions, and channels, businesses can better tailor their sales and marketing strategies to meet the needs of their target market.

Here’s why the Business Model Canvas is so effective in developing sales and marketing strategies:

• Clear Understanding of Target Customers (Customer Segments): One of the most essential aspects of any sales and marketing strategy is understanding who the business is targeting. The BMC’s Customer Segments block helps businesses define and categorize their ideal customers. By clearly identifying different customer groups (e.g., demographics, psychographics, industries, or buyer personas), sales and marketing teams can tailor campaigns and messaging to better resonate with each segment.
  • Example: Spotify uses customer segmentation to drive its marketing campaigns. Their free tier targets casual users (like students or low-income users), while the premium tier targets more committed users willing to pay for additional features like offline access and no ads. By segmenting their customers, Spotify can target distinct audiences with tailored advertising and pricing strategies.
  • Statistic: According to HubSpot’s 2020 Marketing Statistics Report, companies with clearly defined buyer personas are 2.2 times more likely to report positive marketing ROI than those who don’t. The BMC’s segmentation ensures that sales and marketing teams can focus on the most lucrative and promising customer groups.

• Crafting a Compelling Value Proposition: The Value Proposition block in the BMC helps businesses articulate why customers should choose their product or service over competitors. It answers the core question of “What problem does your product solve?” or “What unique benefit does your product provide?” Having a clear value proposition is crucial for both sales and marketing, as it forms the foundation for all messaging, campaigns, and customer engagement strategies.
  • Example: Apple uses its value proposition to differentiate itself in a highly competitive market. Their value proposition centers around simplicity, premium design, and user experience. For Apple, their marketing campaigns highlight these differentiators, positioning the brand as an aspirational product while also emphasizing the high-quality experience users will enjoy.
  • Statistic: A study by MarketingProfs showed that 64% of consumers make purchase decisions based on a strong and clear value proposition, emphasizing its importance in both marketing and sales success.

• Defining the Right Channels for Customer Reach: The Channels section of the BMC focuses on how a business reaches its customers and delivers its value proposition. Whether it’s through direct sales, digital marketing, distribution partners, or physical stores, selecting the right channels is critical to sales success. By mapping out the most effective ways to reach each customer segment, businesses can optimize their marketing efforts and streamline their sales processes.
  • Example: Warby Parker, the eyewear brand, used an innovative mix of online and offline channels to reach its customers. They started with a direct-to-consumer (D2C) model through their website, leveraging content marketing and social media. Then, they expanded into physical stores and virtual try-ons, blending the online experience with real-world engagement.
  • Statistic: According to McKinsey & Company, companies that employ a multichannel approach in their sales and marketing are 50% more likely to see a higher conversion rate than those using a single-channel approach.

• Building Strong Customer Relationships: The Customer Relationships block helps businesses determine the type of relationship they want to establish with each customer segment, whether it’s personal assistance, self-service, automated service, or community engagement. The way you engage with your customers affects both customer retention and sales performance. Sales teams can use this information to tailor their outreach methods, while marketing teams can design campaigns that foster trust and long-term loyalty.
  • Example: Salesforce focuses heavily on building strong customer relationships through personalized service and continuous engagement. Their marketing campaigns often highlight how their CRM tools help customers enhance relationships with their own customers, showing the power of Salesforce’s value proposition in action.
  • Statistic: A study by Accenture found that 91% of consumers are more likely to shop with brands that offer relevant offers and recommendations, making it crucial for sales and marketing to build personalized relationships.

• Understanding Revenue Streams: The Revenue Streams block in the BMC defines how the business makes money from each customer segment. By identifying the most profitable revenue sources, businesses can develop targeted pricing strategies, promotions, and sales tactics to maximize profitability. Sales teams can also focus their efforts on the most lucrative revenue streams, while marketing can tailor campaigns to attract the right paying customers.
  • Example: Netflix has multiple revenue streams, including subscription fees for basic, standard, and premium memberships. Their marketing strategy emphasizes the different benefits of each subscription tier, appealing to various customer segments, from casual viewers to binge-watchers. They also create promotions around specific genres or exclusive content to attract new subscribers.
  • Statistic: According to McKinsey, companies that focus on creating multiple revenue streams are 3 times more likely to experience revenue growth than those that rely on a single stream.

• Identifying Key Activities for Sales Enablement: The Key Activities block helps businesses define the actions that are necessary to execute the sales and marketing strategies successfully. For example, key activities could include content creation, digital advertising, sales outreach, or customer service. By aligning the company’s core activities with the sales and marketing strategy, teams can ensure that they are working efficiently and effectively toward common goals.
  • Example: HubSpot is a great example of a company that aligns its key activities (content creation, SEO, inbound marketing, etc.) with its overall sales strategy. They use a combination of educational content, free resources, and targeted email campaigns to guide prospects through the sales funnel.
  • Statistic: According to Salesforce, companies that align sales and marketing efforts see 36% higher customer retention rates and 38% higher sales win rates.

The Business Model Canvas (BMC) is highly effective for developing robust sales and marketing strategies because it ensures that the entire organization is aligned around a single, unified vision of how to engage with customers, deliver value, and generate revenue. By offering a holistic view of the business and its key components, the BMC helps sales and marketing teams focus on the most impactful strategies and tactics, ensuring resources are allocated efficiently.

Using the BMC to develop your sales and marketing strategy can lead to greater customer targeting, more compelling value propositions, effective channel strategies, and stronger customer relationships, all of which drive higher revenue and sustainable growth.

Comparison of BMC with Traditional Business Plans

The Business Model Canvas (BMC) and traditional business plans are both tools used for developing, describing, and analyzing a business model. However, they differ significantly in format, purpose, and ease of use. The BMC, introduced by Alexander Osterwalder and Yves Pigneur, is a more streamlined, visual approach to understanding a business, while traditional business plans tend to be more detailed and narrative-based. Below, we’ll compare the two, highlighting the pros and cons, supported by statistics and real-world examples.

• Format and Length
  • BMC: Visual, Concise, One-Page Framework
    • Structure: The BMC is a single-page visual tool that uses a grid to capture nine key elements of a business model: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure.
    • Length: One page (easily editable and adaptable).
  • Example: Startups like Airbnb and Uber used the BMC to quickly iterate on their business models and refine their value propositions without needing to invest extensive time in writing lengthy plans.
  • Statistic: According to a study by Harvard Business Review, 73% of successful startups report using simplified tools (like the BMC) to clarify their business model early on, as they enable quick iteration and feedback.
• Traditional Business Plans: Detailed, Narrative Document
  • Structure: Traditional business plans typically consist of several sections, including an executive summary, market analysis, organization and management, product/service description, marketing and sales strategies, financial projections, and funding request.
  • Length: Typically 20-50 pages, with significant detail on each section.
  • Example: Tesla‘s early business plan focused on detailed market analysis, a high-level financial forecast, and a roadmap for development. This helped them raise capital in the early stages, but their BMC would have enabled faster testing of assumptions and strategic pivots.
  • Statistic: According to the Small Business Administration (SBA), the average traditional business plan takes 20-30 hours to write and can be too complex and rigid, making it harder for entrepreneurs to adjust quickly.

• Purpose and Flexibility
  • BMC: Focused on Iteration and Innovation
    • Purpose: The BMC is primarily designed to be a living document that can be continuously updated as the business evolves. It’s particularly effective for entrepreneurs, startups, and teams working in uncertain environments or industries that require rapid adaptation.
    • Flexibility: The BMC’s visual and concise nature allows it to be adjusted quickly based on new data, customer feedback, or market shifts.
  • Example: Dropbox originally started as a simple cloud storage solution, but after testing and customer feedback, they pivoted to focus more on file-sharing and collaboration tools. The BMC allowed them to make this pivot easily by adjusting key components like value propositions and customer segments.
  • Statistic: According to a report by CB Insights, 42% of startups fail because there is no market need for their product. The BMC’s flexibility allows businesses to pivot early in the process based on customer feedback, reducing the risk of failure.
• Traditional Business Plans: Comprehensive and Rigid
  • Purpose: Traditional business plans are typically more formal and are used to outline long-term strategies, secure investments, or meet regulatory requirements. They are often seen as static documents that provide an in-depth roadmap for the business over the next 3-5 years.
  • Flexibility: Once written, business plans are harder to change, as they often require approval from investors or board members. They can be difficult to adjust when the market or business model needs to pivot.
  • Example: Zynga, the social gaming company, famously stuck to their original business plan of focusing on Facebook games for far too long. A more flexible framework like the BMC could have helped them quickly adapt to changing market conditions and mobile gaming growth.
  • Statistic: According to the Kauffman Foundation, about 60% of businesses fail within the first 5 years due to market misalignment or a lack of innovation, which could be mitigated with a flexible approach like the BMC.

• Ease of Use and Time Investment
  • BMC: Quick, Simple, and Collaborative
  • Ease of Use: The BMC is easy to understand and can be filled out by a team within a few hours or days. Its visual nature encourages collaboration, allowing different stakeholders (e.g., marketers, product managers, investors) to work together in real time.
  • Time Investment: Typically takes less time to develop, with updates being quick and easy to implement. The simplicity of the tool makes it ideal for ongoing business model refinement.
  • Example: Warby Parker used the BMC to streamline decision-making, quickly focusing on their customer segment (young, fashion-conscious individuals looking for affordable eyeglasses) and refining their online-to-offline sales strategy.
  • Statistic: A study from PwC showed that 70% of startups reported using tools like the BMC to launch their businesses quickly. This was particularly beneficial for startups that needed to reduce the time spent on lengthy documentation and get their product to market faster.
• Traditional Business Plans: Time-Consuming and Detailed
  • Ease of Use: Traditional business plans are complex and often require significant research, financial modeling, and analysis, making them more difficult for teams to create without outside expertise.
  • Time Investment: Preparing a traditional business plan can take weeks or even months, especially for new businesses with limited resources. Adjusting the plan as market conditions change can also be a slow and cumbersome process.
  • Example: Early on, Google wrote a traditional business plan to secure investment but quickly moved away from the rigid structure to adopt a more flexible approach as the market rapidly evolved, aligning more with agile development methods than traditional planning.
  • Statistic: According to a 2018 survey by Inc. Magazine, 47% of entrepreneurs stated that writing a traditional business plan took more than 6 months and was seen as a barrier to innovation.

• Risk of Over-Planning and Over-Researching
  • BMC: Focus on Key Assumptions and Testing
    • Purpose: The BMC focuses on key assumptions and allows businesses to test those assumptions early on through feedback and experimentation. It is particularly useful for validating product-market fit, customer needs, and revenue models before committing to large investments.
    • Risk: Less likely to lead to over-planning, as its simplicity encourages quick action and testing.
  • Example: Lean Startup methodology, popularized by Eric Ries, aligns closely with the BMC, encouraging businesses to “build, measure, learn” quickly. Companies like Instagram and Snapchat used BMC-style approaches to test core assumptions, leading to rapid pivots and eventual success.
  • Statistic: A study from The Lean Startup methodology found that 75% of startups that used rapid prototyping and customer feedback during their early stages succeeded, compared to only 33% of those that relied on traditional business plans.
• Traditional Business Plans: Risk of Over-Planning and Inflexibility
  • Purpose: Traditional business plans often lead to over-researching and over-planning, which can result in a product or service that is not aligned with actual market demand. Businesses that focus too heavily on detailed plans can lose sight of customer needs or market trends.
  • Risk: Over-reliance on traditional business plans can lead to analysis paralysis, where entrepreneurs are too focused on perfecting the plan rather than testing ideas in the market.
  • Example: Kodak, once a leader in photography, failed to adapt quickly to digital photography because its traditional business plans were focused too heavily on maintaining its legacy film business model. A more flexible tool like the BMC could have helped them spot digital photography trends sooner.
  • Statistic: Harvard Business Review found that 60% of entrepreneurs that rely on lengthy traditional business plans often spend more time creating documents than actually testing products in the market, which can hinder early-stage innovation.

The Business Model Canvas (BMC) and traditional business plans serve different purposes and have distinct strengths, but they also come with trade-offs. The BMC is ideal for startups, innovators, and businesses in dynamic, rapidly-changing environments, offering a quick, flexible, and iterative approach to business strategy. Traditional business plans, while still useful for securing investments or for more established businesses seeking detailed long-term plans, tend to be more rigid, time-consuming, and less adaptable.

In today’s fast-paced business world, the BMC is often the preferred tool for those who need to test ideas quickly, pivot easily, and keep strategy flexible. However, for businesses seeking investment or requiring formal documentation for regulatory purposes, a traditional business plan might still be necessary. Many companies now blend the two approaches by using the BMC for agile strategy development and refining their plans over time, incorporating more detail when needed.

Overview of the Nine Building Blocks

At the heart of the BMC are nine essential building blocks that collectively offer a holistic view of how a business creates, delivers, and captures value. These building blocks serve as the key components that every organization needs to consider to successfully establish its operations, market fit, and long-term sustainability.

Each of the nine blocks represents a critical aspect of the business, from identifying who the customers are, to understanding the channels used to reach them, to determining how the business will generate revenue. The beauty of the BMC lies in its simplicity and clarity — all nine elements are visualized on a single page, making it easy for stakeholders to get on the same page, identify gaps, and quickly iterate or pivot when necessary.

In this overview, we will dive into each of the nine building blocks of the BMC, exploring their purpose, how they interconnect, and their role in helping businesses develop a clear, actionable strategy. Whether you’re a startup, a small business, or an established company, understanding and effectively utilizing these building blocks is crucial for achieving business success.

Brief overview of each building block

The BMC is made up of nine building blocks, each representing a key area of a business. Here is a detailed overview of each building block.

1. Customer Segments

Description: This building block defines the different groups of people or organizations a company serves. These segments are often categorized by demographic, psychographic, or behavioral characteristics.

Key Questions:

• Who are our most important customers?
• What are the needs of each customer segment?
• Which segment is the most profitable or strategically valuable?

Examples:

• Mass Market: Aimed at a broad customer base (e.g., consumer electronics).
• Niche Market: Focuses on a specific, well-defined segment (e.g., luxury watches for a specific affluent group).
• Segmented: A company may serve different customer groups with slightly different needs (e.g., banks offering services for both retail and corporate clients).
• Diversified: Serving two unrelated customer segments (e.g., Amazon providing e-commerce for consumers and cloud services for businesses).
  • Multi-Sided: Serving two or more interdependent customer segments (e.g., a platform like eBay serving both buyers and sellers).

2. Value Propositions

Description: The value proposition defines the bundle of products and services that create value for a specific customer segment. It explains why customers should choose your product or service over competitors and what problem it solves or needs it fulfills.

Key Questions:

• What customer problem are we solving?
• What is unique or different about our offering?
• What value are we providing (e.g., convenience, quality, price)?

Examples:

• A subscription box offering personalized goods that save time for busy professionals.
• A software solution that simplifies complex business processes.
• An eco-friendly brand that appeals to environmentally conscious consumers.

3. Channels

Description: Channels describe how a company communicates with and delivers its value proposition to its customer segments. These channels are the touchpoints that connect customers to the company’s products or services.

Key Questions:

• How are we reaching our customers?
• What channels are the most cost-effective and efficient?
• Which channels do our customers prefer to use?

Examples:

• Direct channels: Physical stores, websites, sales representatives.
• Indirect channels: Distributors, wholesalers, partner networks.
• Digital channels: E-commerce platforms, social media, mobile apps.
• Hybrid models: A combination of online and offline channels.

4. Customer Relationships

Description: This building block focuses on how a company interacts with its customer segments. It defines the type of relationship the company establishes with its customers (personal, automated, etc.), and how it aims to acquire, retain, and grow its customer base.

Key Questions:

• What type of relationship does each customer segment expect?
• How do we acquire customers?
• How do we retain customers?
• How can we upsell or cross-sell to existing customers?

Examples:

• Personalized customer service (e.g., one-on-one consultations).
• Self-service options (e.g., FAQs, automated chatbots).
• Loyalty programs (e.g., reward points for repeat purchases).
• Co-creation (e.g., allowing customers to participate in the development of products).

5. Revenue Streams

Description: This block defines how a company generates income from each customer segment. Revenue streams are the sources of revenue that flow into the business and may include various monetization strategies.

Key Questions:

• What are customers willing to pay for?
• How do we charge (e.g., subscription, one-time payment, licensing)?
• What is the pricing strategy (e.g., premium pricing, freemium, discount pricing)?

Examples:

• Transaction-based: Charging customers per transaction (e.g., Amazon charges per sale).
• Subscription-based: Recurring payments (e.g., Netflix’s monthly subscription).
• Licensing: Charging for the use of intellectual property (e.g., software licenses).
• Freemium: Offering a basic service for free, with premium features for a fee (e.g., LinkedIn).
• Advertising: Earning revenue through ads (e.g., Facebook or Google).

6. Key Resources

Description: Key resources are the assets and capabilities that a company needs to create and deliver its value propositions, reach markets, maintain customer relationships, and generate revenue.

Key Questions:

• What resources are essential for our business model to function?
• What assets are necessary to create value for customers?

Examples:

• Physical resources: Buildings, machinery, or delivery fleets.
• Intellectual resources: Patents, proprietary software, or brand reputation.
• Human resources: Key employees, technical expertise, or management teams.
• Financial resources: Cash flow, lines of credit, or investors.

7. Key Activities

Description: Key activities describe the most important actions a company must take to make its business model work. These activities are essential to creating and delivering the value proposition, reaching customers, and maintaining relationships.

Key Questions:

• What key activities are crucial for delivering the value proposition?
• What must the company do to maintain its competitive advantage?

Examples:

• Product development: Continuous research and innovation (e.g., technology companies).
• Marketing and sales: Advertising, social media, and customer outreach.
• Operations: Production, distribution, or customer support.
• Partnership management: Managing relationships with suppliers or distributors.

8. Key Partnerships

Description: This block identifies the external companies, organizations, or entities that the business partners with to leverage resources, optimize processes, reduce risk, or access new markets.

Key Questions:

• Who are our key partners and suppliers?
• What are the strategic alliances that will help us achieve our goals?
• What resources or activities do we outsource or share with others?

Examples:

• Strategic alliances with other companies (e.g., co-branding partnerships).
• Supplier relationships to provide key inputs.
• Joint ventures to access new markets or technologies.
• Outsourcing non-core activities (e.g., using third-party logistics for shipping).

9. Cost Structure

Description: The cost structure outlines the major costs and expenses incurred while operating the business model. This includes both fixed and variable costs associated with key resources, activities, and partnerships.

Key Questions:

• What are the most significant costs in our business model?
• What resources and activities are the most expensive?
• How can we optimize costs while maintaining value?

Examples:

• Fixed costs: Salaries, rent, insurance.
• Variable costs: Raw materials, marketing expenses, commissions.
• Economies of scale: Reducing costs by increasing production.
• Economies of scope: Reducing costs by expanding the range of products.