Once you have determined your product strategy and understood which market problems you plan to solve, you must then determine how you will earn revenue from selling your product. This involves creating a business model.
Business models enable you to describe how you translate your product’s value into revenue for your company. This includes understanding:
During the product management process, companies spend significant effort on delivering the actual product. However, without the basis of a solid business model, there is no business.
Product managers have a unique view into what prospective customers are willing to pay and how they will buy a product. This positions the project manager perfectly to define the business model.
To create a business model, answer the following questions:
For more information about developing a business model, download the MaRS workbook, Business model design.
The information and exercises will help you design a business model by working through the key variables in executing a market strategy—competition, partnership, distribution, pricing and positioning.
IBM Global Services. (2006). Business model innovation—the new route to competitive advantage. White paper.
IBM Global Services. (2008). The Enterprise of the Future. Whitepaper.
Kurtzman, J., and Rifkin, G. (2005). Startups That Work. London: Penguin Group.
Shenoy, G. (2010). Is product management needed in a software startup? Pragmatic Marketing.