| name | business-model |
| description | Guide business model selection from 55 proven patterns, then build pricing strategy and unit economics—LTV, CAC, payback period calculators and April Dunford's competitive positioning methodology. Use when choosing how to make money, pricing a product, or positioning against alternatives. |
Business Model Design
Core Principle
A business model isn't a revenue line on a spreadsheet. It's a system that creates, delivers, and captures value. Get the system wrong and no amount of growth fixes it.
Business Model Pattern Selection
The 55 Patterns (St. Gallen Framework) — Key Categories
| Category | Patterns | When to Use |
|---|
| Revenue | Freemium, Subscription, Pay-per-use, Razor/blade, Licensing | You need recurring or scalable income |
| Pricing | Auction, Dynamic, Reverse, Name-your-price | Price discovery is unclear or market-driven |
| Platform | Marketplace, Two-sided, Ecosystem, Open source + commercial | You connect supply and demand |
| Unbundling | White label, Franchise, Layer player | You do one thing extremely well |
| Long tail | Aggregator, Mass customization, Self-service | Many customers, each with small value |
Selection Decision Tree
Is your value digital or physical?
├── Digital
│ ├── Can users try before buying? → Freemium / Free trial
│ ├── Is value consumed over time? → Subscription
│ └── Is value per-transaction? → Pay-per-use / Commission
└── Physical
├── High upfront cost? → Razor/blade / Lease
├── Commodity product? → Subscription box / Membership
└── Custom product? → Configuration / Mass customization
Pricing Strategy
Three Pricing Levers
1. COST-PLUS: Your cost + margin. Simple, but leaves money on the table.
2. COMPETITOR-BASED: Price relative to alternatives. Safe, but commoditizing.
3. VALUE-BASED: Price relative to customer's outcome. Hard, but highest margin.
Pricing Framework
| Factor | Question | Action |
|---|
| Willingness to pay | "What would you pay to solve this?" | Run Van Westendorp price sensitivity |
| Value metric | "What unit do customers value?" | Charge per seat, transaction, GB, etc. |
| Price anchoring | "What do they pay for alternatives?" | Position relative to reference price |
| Expansion path | "How do they grow into you?" | Design tiers that scale with usage |
Unit Economics Calculators
Lifetime Value (LTV)
LTV = ARPU × Gross Margin × Average Lifespan (months)
Example:
ARPU = $99/mo
Gross Margin = 80%
Avg Lifespan = 24 months
LTV = $99 × 0.80 × 24 = $1,901
Customer Acquisition Cost (CAC)
CAC = (Sales + Marketing spend) / New customers acquired
Example:
Monthly S&M = $50,000
New customers = 100
CAC = $500
LTV:CAC Ratio
Target: LTV:CAC ≥ 3:1
$1,901 / $500 = 3.8:1 ✅ Healthy
Below 3:1 → Acquisition is too expensive or retention is too low.
Above 5:1 → You're probably under-investing in growth.
CAC Payback Period
Payback = CAC / (ARPU × Gross Margin)
$500 / ($99 × 0.80) = 6.3 months ✅
Target: Under 12 months for SaaS, under 18 for enterprise.
Competitive Positioning (April Dunford)
Obviously Awesome — 5-Step Process
Step 1: Competitive alternatives — What would customers use if you didn't exist?
Step 2: Unique capabilities — What do you have that alternatives don't?
Step 3: Value — What capability maps to a customer outcome?
Step 4: Best-fit customers — Who cares most about that value?
Step 5: Market category — What context makes your value obvious?
Positioning Canvas
| Element | Question | Your Answer |
|---|
| Competitive alternatives | "If we didn't exist, what would they do?" | |
| Unique capabilities | "What can we do that they literally cannot?" | |
| Value themes | "So what? Why does that capability matter?" | |
| Best-fit customer | "Who cares the most about this value?" | |
| Market category | "What market frame makes our value obvious?" | |
Anti-Patterns
| Model Theater | Real Model Thinking |
|---|
| "We'll figure out monetization later" | Define value capture before building |
| "Our TAM is $50B" | "50 customers would pay $X/mo — I asked them" |
| Pricing based on cost | Pricing based on customer outcome |
| One price for everyone | Tiered pricing matching customer segments |
| Ignoring unit economics until Series A | Knowing LTV:CAC ratio from first 10 customers |
Power Move
"Analyze my product for competitive positioning using April Dunford's framework. Identify my real competitive alternatives, unique capabilities, and the best-fit customer segment. Then calculate target unit economics I should hit at 100 customers."
The agent becomes your business strategist — connecting product value to a viable economic engine.
