designing-business-models

name	designing-business-models
description	Designs and validates business models through Business Model Canvas, positioning analysis, willingness-to-pay research, and unit economics modeling. Use when launching a new product line, entering a new market, redesigning pricing, or when someone asks "how do we make money from X?"
version	1
tags	["business-model","pricing","unit-economics","canvas","monetization"]
triggers	["how do we make money from X?","design a business model for...","what should we charge for...","new product line pricing","entering a new market -- what's the model?","redesign our pricing","validate our revenue model"]

Skill: Designing Business Models

Design and validate business models for your company -- from mapping the full system to proving the unit economics work. Sequences five frameworks, each building on the previous one's output.

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When to Invoke This Skill

• Launching a new product line (e.g., adding [Product C] or [Product D])
• Entering a new market or geography (e.g., [PRIMARY_MARKET] expansion revenue model)
• Redesigning pricing architecture (e.g., shifting to tiered subscriptions)
• Validating whether a business idea can generate sustainable revenue
• Preparing revenue projections for fundraising or board materials
• A validated idea arrives from "validating-ideas" and needs a monetization plan

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Framework Stack (Sequenced)

Phase 1: BUSINESS MODEL CANVAS         (~2 hours)      -> "How does the whole system work?"
Phase 2: VALUE PROPOSITION CANVAS       (~1 hr/segment) -> "What do customers need per segment?"
Phase 3: POSITIONING (reference only)   (see note)      -> "How are we different?"
Phase 4: PRICING & WTP ANALYSIS         (~1-2 weeks)    -> "What will customers pay?"
Phase 5: UNIT ECONOMICS (reference only)(see note)      -> "Does the math work?"

Cross-references:

• Phase 3: REFERENCE to "building-brand" skill (owns full Dunford Positioning). Produce only a summary here.
• Phase 5: REFERENCE to "modeling-finances" skill (owns full Unit Economics model). Produce only a summary here.

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Phase 1: Business Model Canvas (~2 hours)

Map the full business system using Osterwalder's 9 building blocks. Adapt the canvas to your company's model (B2B API, B2B SaaS, marketplace, etc.). Optionally produce a B2C variant if evaluating a consumer offering.

Instructions

1. Read your company's current strategic plan, GTM strategy, and product documentation.
2. Fill in each of the 9 blocks below.
3. Identify the 2-3 riskiest assumptions in the canvas.
4. Flag any blocks that are empty or weak -- these become Phase 2-4 priorities.

Template: Business Model Canvas

# Business Model Canvas: [Product/Market Name]
# Date: YYYY-MM-DD

## 1. Customer Segments
- Tier 1 (Primary): _________________ | Characteristics: _________________ | Size: _____
- Tier 2: __________________________ | Characteristics: _________________
- Tier 3: __________________________ | Characteristics: _________________
- Tier 4: __________________________ | Characteristics: _________________

## 2. Value Propositions (one line per segment)
- Tier 1: _______________________________________________________________
- Tier 2: _______________________________________________________________
- Tier 3: _______________________________________________________________
- Tier 4: _______________________________________________________________

## 3. Channels
- Discovery: _________________ | Evaluation: _________________
- Purchase: __________________ | Integration: ________________
- Ongoing support: _______________________________________________

## 4. Customer Relationships
- Self-service: _________________ | Dedicated support: _________________
- Co-development: _______________ | Community: _______________________

## 5. Revenue Streams
- Stream 1: _________________ | Mechanism: ________________________
- Stream 2: _________________ | Mechanism: ________________________
- Stream 3: _________________ | Mechanism: ________________________

## 6. Key Resources
- Technology: _________________ | IP: _________________
- Partnerships: _______________ | Team: _______________

## 7. Key Activities
- Build: _________________ | Operate: _________________
- Sell: __________________ | Comply: __________________

## 8. Key Partnerships
- Provider 1: _________________ | Provides: ________________
- Provider 2: _________________ | Provides: ________________
- Provider 3: _________________ | Provides: ________________
- Infrastructure: _____________ | Regulatory: ______________

## 9. Cost Structure
- Fixed: _________________ | Variable: _________________
- Type: [ ] Cost-driven  [ ] Value-driven

## Riskiest Assumptions (top 3)
1. _______________________________________________________________
2. _______________________________________________________________
3. _______________________________________________________________

Pre-Fill Reference (Example)

Block	Your Current State
Customer Segments	Tier 1: [Primary segment]. Tier 2: [Secondary]. Tier 3: [Tertiary]. Tier 4: [Quaternary].
Value Propositions	[Key value prop -- e.g., single integration, faster time-to-market, broader product access]
Channels	[How you reach customers -- e.g., founder-led sales, partnerships, developer docs, conferences]
Customer Relationships	[Relationship model -- e.g., design partner program, dedicated support, self-service sandbox]
Revenue Streams	[Revenue model -- e.g., transaction fees, subscription, usage-based. Target $[X]K avg ARR/client.]
Key Resources	[Core assets -- e.g., API platform, provider integrations, regulatory licenses, team]
Key Activities	[Core activities -- e.g., platform development, compliance, client onboarding, operations]
Key Partnerships	[Key partners -- e.g., Provider A (product X), Provider B (product Y), Provider C (product Z)]
Cost Structure	[Cost drivers -- e.g., engineering team, provider fees, infrastructure, legal/compliance. Target [X]% gross margin.]

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Phase 2: Value Proposition Canvas (~1 hour per segment)

Deep-dive on each customer segment. Map jobs, pains, and gains, then validate your offering matches.

Instructions

1. Complete one canvas per customer tier (Tier 1-4).
2. Interview or research at least 3 prospects per tier (reference Mom Test from "validating-ideas" skill).
3. Score each pain and gain by intensity (1-5) and frequency (1-5).
4. Highlight mismatches -- pains you do not address, gains you do not create.

Template: Value Proposition Canvas

# Value Proposition Canvas: [Segment Name]
# Date: YYYY-MM-DD

## CUSTOMER PROFILE
### Customer Jobs
- Functional: 1. _____________ 2. _____________ 3. _____________
- Social: 4. _____________
- Emotional: 5. _____________

### Pains
| # | Pain | Intensity (1-5) | Frequency (1-5) | Score |
|---|------|-----------------|-----------------|-------|
| 1 |      |                 |                 |       |
| 2 |      |                 |                 |       |
| 3 |      |                 |                 |       |

### Gains
| # | Gain | Importance (1-5) | Satisfaction Today (1-5) | Gap |
|---|------|------------------|-------------------------|-----|
| 1 |      |                  |                         |     |
| 2 |      |                  |                         |     |
| 3 |      |                  |                         |     |

## VALUE MAP
### Products & Services
1. _________________ 2. _________________ 3. _________________

### Pain Relievers
| Pain # | Our Reliever | Fit (Strong/Weak/None) |
|--------|-------------|------------------------|
| 1      |             |                        |
| 2      |             |                        |
| 3      |             |                        |

### Gain Creators
| Gain # | Our Creator | Fit (Strong/Weak/None) |
|--------|------------|------------------------|
| 1      |            |                        |
| 2      |            |                        |
| 3      |            |                        |

## FIT ASSESSMENT
- Overall fit (1-10): ___ | Strongest fit: _______________
- Biggest gap: _______________ | Action: _______________

Segment Starter Prompts (Example)

Segment	Key Job	Primary Pain	Primary Gain
Tier 1: [Primary segment]	[Core functional job]	[Biggest pain point]	[Primary value delivered]
Tier 2: [Secondary segment]	[Core functional job]	[Biggest pain point]	[Primary value delivered]
Tier 3: [Tertiary segment]	[Core functional job]	[Biggest pain point]	[Primary value delivered]
Tier 4: [Quaternary segment]	[Core functional job]	[Biggest pain point]	[Primary value delivered]

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Phase 3: Positioning Summary (REFERENCE ONLY)

Full April Dunford Positioning framework lives in "building-brand" skill. Produce only a summary here to inform pricing decisions.

Instructions

1. If "building-brand" has already been run, read its Positioning Canvas output.
2. If not, complete this lightweight summary to unblock Phase 4. Flag full Dunford as pending.

Template: Positioning Summary

# Positioning Summary: [Product/Market]
# Date: YYYY-MM-DD
# Status: [ ] Full Dunford complete  [ ] Lightweight (pending full exercise)

## Competitive Alternatives (what would they use without us?)
1. _________________ 2. _________________ 3. _________________

## Unique Attributes (what do we have that alternatives lack?)
1. _________________ 2. _________________ 3. _________________

## Value (what do attributes enable for the customer?)
1. _________________ 2. _________________

## Best-Fit Customer
- Segment: _________________ | Characteristics: _________________

## Market Category
- Category: _________________ | Framing: _________________

Positioning Reference (Example)

Component	Your Current State
Alternatives	[Competitor A] (category X), [Competitor B] (category Y), build in-house (multiple integrations)
Unique attributes	[Key differentiators -- e.g., single API for multiple products, faster settlement, broader coverage, faster go-live]
Value	[Customer outcomes -- e.g., eliminate months of integration, reduce build cost, more products faster]
Best-fit customer	[Ideal customer profile -- e.g., segment X in market Y wanting capability Z without building infrastructure]
Market category	[How you frame the market -- e.g., "[Category] infrastructure for [industry]"]

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Phase 4: Pricing & WTP Analysis (~1-2 weeks)

Validate pricing through willingness-to-pay research using Simon-Kucher Monetizing Innovation methodology. Most time-intensive phase -- requires customer conversations.

Instructions

1. Draft initial pricing hypotheses (Step 4.1).
2. Conduct 8-15 WTP interviews using Van Westendorp (Step 4.2).
3. Analyze results and produce the Pricing Architecture (Step 4.3).

Step 4.1: Pricing Hypotheses

# Pricing Hypotheses: [Product/Market]
# Date: YYYY-MM-DD

## Revenue Model: [ ] Transaction  [ ] Subscription  [ ] Hybrid  [ ] Usage-based

## Tier Structure
| Tier | Target Segment | Included | Monthly Fee | Transaction Fee |
|------|---------------|----------|-------------|-----------------|
|      |               |          |             |                 |
|      |               |          |             |                 |
|      |               |          |             |                 |

## Per-Product Rate Card
| Product | Take Rate Range | Floor | Ceiling | Notes |
|---------|----------------|-------|---------|-------|
|         |                |       |         |       |

## Volume Discounts
| Monthly Volume | Discount | Effective Rate |
|---------------|----------|----------------|
|               |          |                |

## Enterprise: Trigger: _________ | Levers: _________ | Min commitment: _________

Pricing Reference (Example)

Dimension	Your Current State
Model	[Revenue model -- e.g., hybrid: transaction fees + platform subscription (enterprise)]
Transaction fees	[Take rate range -- e.g., X-Y% on volume]
Platform tiers	[Tier names -- e.g., Starter (self-service), Growth (dedicated support), Enterprise (custom)]
Target ARR/client	[$XK average]
Gross margin target	[X-Y%]
Provider costs	[Cost structure -- e.g., varies by provider, each has different fee structures]

Step 4.2: WTP Interviews (Van Westendorp)

For each product/tier, ask 4 core questions plus 6 supplementary:

Core (Van Westendorp Price Sensitivity Meter):

1. At what price is it too cheap (you'd question quality)? $___/[unit]
2. At what price is it a bargain (buy without hesitation)? $___/[unit]
3. At what price is it getting expensive (you'd think about it)? $___/[unit]
4. At what price is it too expensive (never consider it)? $___/[unit]

Supplementary: (5) Current spend on closest alternative. (6) Allocated budget. (7) How they evaluate ROI for infrastructure. (8) Preference: lower monthly + higher per-txn, or vice versa. (9) What triggers an upgrade. (10) Volume level where they expect discounts.

Setup: 8-15 interviews, 20-30 min each, across Tier 1-4 segments.

Step 4.3: Pricing Architecture Document

# Pricing Architecture: [Product/Market]
# Date: YYYY-MM-DD | Based on: ___ interviews across ___ segments

## Model: _________________ | Rationale: _________________

## Tier Definitions
| Tier | Name | Target | Monthly Fee | Transaction Fee | Included |
|------|------|--------|-------------|-----------------|----------|
| 1    |      |        |             |                 |          |
| 2    |      |        |             |                 |          |
| 3    |      |        |             |                 |          |

## Per-Product Rate Card
| Product | Starter | Growth | Enterprise | Provider Cost | Gross Margin |
|---------|---------|--------|-----------|--------------|-------------|
| [Product A] |     |        |           |              |             |
| [Product B] |     |        |           |              |             |
| [Product C] |     |        |           |              |             |
| [Product D] |     |        |           |              |             |

## Volume Discounts
| Monthly Volume | Discount | Blended Rate |
|---------------|----------|-------------|
| $0 - $___     | 0%       |             |
| $___ - $___   | ___%     |             |
| $___+         | Custom   |             |

## Enterprise: Trigger: _______ | Custom elements: _______
## Min commitment: _______ | Payment terms: _______

## WTP Summary
- Optimal price (Van Westendorp): _______ | Range: _______
- Key insight: _______________________________________________________

## Pricing Risks
| Risk | Likelihood | Impact | Mitigation |
|------|-----------|--------|------------|
|      |           |        |            |

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Phase 5: Unit Economics Summary (REFERENCE ONLY)

Full Unit Economics model lives in "modeling-finances" skill. Produce a summary here to validate the business model works.

Template: Unit Economics Summary

# Unit Economics Summary: [Product/Market]
# Date: YYYY-MM-DD
# Status: [ ] Full model complete (from modeling-finances)  [ ] Lightweight estimate

## Per-Segment Economics
| Metric | Tier 1 | Tier 2 | Tier 3 | Tier 4 |
|--------|--------|--------|--------|--------|
| ARPA (monthly) |         |                    |                     |                  |
| CAC |                     |                    |                     |                  |
| LTV (36-mo) |             |                    |                     |                  |
| LTV:CAC |                 |                    |                     |                  |
| Payback (months) |        |                    |                     |                  |
| Gross margin |            |                    |                     |                  |
| NRR (annual) |            |                    |                     |                  |

## Revenue Projection (12-month)
| Month | New Clients | Cumulative | Monthly Revenue | Cumulative ARR |
|-------|------------|------------|-----------------|----------------|
| 1     |            |            |                 |                |
| 3     |            |            |                 |                |
| 6     |            |            |                 |                |
| 12    |            |            |                 |                |

## Revenue Projection (36-month)
| Year | Clients | ARR | Monthly Volume | Gross Margin |
|------|---------|-----|---------------|-------------|
| Y1   | [target] | $[X]M | $[X]M | ___% |
| Y2   | [target] | $[X]M | $[X]M | ___% |
| Y3   | [target] | $[X]M | $[X]M | ___% |

## Viability Checklist
- [ ] LTV:CAC > 3x for primary segment
- [ ] Payback < 18 months
- [ ] Gross margin > 70%
- [ ] NRR > 120% (B2B SaaS/API target)

## If Economics Fail: 1. _____________ 2. _____________ 3. _____________

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Supplementary: 7 Powers Quick Scan (Quarterly)

Reference "gathering-competitive-intelligence" skill for full analysis. Run quarterly.

# 7 Powers Quick Scan: [Date]
| Power | Relevant? | Status | Action |
|-------|-----------|--------|--------|
| Scale Economies | | | |
| Network Effects | | | |
| Counter-Positioning | | | |
| Switching Costs | | | |
| Branding | | | |
| Cornered Resource | | | |
| Process Power | | | |

Strongest power: _________________ | Invest in next: _________________

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Deliverables Checklist

#	Deliverable	Phase	Status
1	Business Model Canvas (primary model; optional secondary)	1	[ ]
2	Value Proposition Canvas per segment (Tiers 1-4)	2	[ ]
3	Positioning Summary (or ref to building-brand output)	3	[ ]
4	Pricing Architecture (tiers, rate card, volume, enterprise)	4	[ ]
5	Unit Economics Summary per segment (or ref to modeling-finances)	5	[ ]
6	Revenue Projection (12-month and 36-month, by cohort)	5	[ ]

Output location: Store in your company's finance/business-model folder or relevant project workspace.

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Cross-References

Skill	Relationship
validating-ideas	UPSTREAM -- feeds validated ideas into this skill
building-brand	OWNS Dunford Positioning. Phase 3 is a reference only.
modeling-finances	OWNS Unit Economics deep model. Phase 5 is a summary only.
gathering-competitive-intelligence	OWNS 7 Powers. Quarterly scan references that skill.
go-to-market	DOWNSTREAM -- consumes pricing and segment prioritization
fundraising	DOWNSTREAM -- consumes revenue projections and unit economics

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Company-Specific Context

Fill this section with your company's specifics when adopting this skill.

Products and Provider Economics

Product	Provider(s)	Fee Structure	Notes
[Product A]	[Provider A]	[Fee type]	[Details]
[Product B]	[Provider B]	[Fee type]	[Details]
[Product C]	[Provider C]	[Fee type]	[Details]
[Product D]	TBD	[Fee type]

Financial Targets

• Y1: [X] clients, $[X]M ARR, $[X]M monthly volume
• Y2: [X] clients, $[X]M ARR, $[X]M monthly volume
• Y3: [X] clients, $[X]M ARR, $[X]M monthly volume
• Gross margin: [X-Y]% | Avg ARR/client: $[X]K

Geography Considerations

[PRIMARY_MARKET] (primary) -> [MARKET_2] -> [MARKET_3] -> [MARKET_4]. Adjust pricing for:

• Local fee expectations and payment preferences
• Regulatory cost differences (licensing fees vary significantly across jurisdictions)
• FX conversion costs and hedging requirements
• Competitive pricing pressure (local alternatives in each market)

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Decision Log

Decisions from framework synthesis:

Decision	Resolution	Rationale
Dunford Positioning primary home	building-brand skill (ref only here)	Positioning is about messaging/perception
St. Gallen 55 Business Model Patterns	CUT	Too complex for early-stage; revisit at Series A
Aggregation Theory	Referenced in strategic-planning skill	Macro lens, not business-model specific
7 Powers primary home	gathering-competitive-intelligence skill	Defensibility is competitive analysis
Unit Economics primary home	modeling-finances skill	Deep math belongs with financial modeling