Free tool
Which business model fits your product? A six-question test
Six questions about how customers get value, what it costs you to serve them and who buys. The test ranks seven business models and explains the trade-offs.
What is a business model?
How the company captures a share of the value it creates: who pays, how much, how often and for what. The model shapes revenue predictability, margins and the metrics investors use to value you.
Subscription or usage-based?
Subscription suits ongoing value and predictable usage, and investors like its predictability. Usage-based suits metered value and developer products and grows with customers’ success, but is harder to forecast. Many companies combine a base subscription with usage overages.
When does freemium work?
When the cost to serve a free user is near zero, awareness is the bottleneck and teams upgrade for features individuals do not need. Below 2 percent conversion it rarely pays.
How the model affects valuation
Recurring revenue is valued on multiples of ARR, transactional revenue on margins and repeat rates, marketplaces on take rate and liquidity. Pick the model that fits the product, then learn its metrics.
Questions founders ask
Can I change the model later?
Yes, most companies do at least once. Changing early is cheap; changing with thousands of customers is not.
What about services?
Services fund the product early. Investors want the software share of revenue to rise each quarter.
Is this based on SeedScope data?
A heuristic from common patterns; validate with customers.
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Tested the idea? Now see how fundable it is.
A free Founder Starter account gives you SeedScope’s startup score, a risk assessment and a summary investors can find. Founder Pro adds the full dashboard: valuation, exit odds, returns and a written analysis, refreshed every week as you ship.