Business Model: What is it, Why do you Need it


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Once you have a business idea that is poised to take the UAE market by storm, the next step is to ensure that you have a solid business model in place. It is advisable to have this outline before your company formation in Dubai. In layman’s terms, a business model serves as the blueprint for your company, outlining how your company will create, deliver, and capture value. 

Your business model ultimately results in how your business generates income. The goal of any business is to create value, followed by the extraction of the compensation received from customers as a trade-off of what you put out into the market.

Business Model vs Business Strategy:

It is important to understand the difference between a business model and a business strategy. While the business model is about value creation and compensation for the same, the strategy outlines the methodology of bringing your business to market and thinks along the lines of execution.

Key Elements of a Business Model:


So you’ve identified a gap in the market and created a solution around it. This solution could be in the form of a service or a tangible product. Your product, whether tangible or not, must have a price. It is up to you to price the offering correctly. Price testing and elasticity will go a long way in ensuring that your product succeeds. You have a responsibility to ensure that your pricing makes sense to your business and your customers.


Your market is the group of customers that you seek to target with your product. Ask yourself questions along the lines of What’s their geographic location? Who are the people that you’re going after? The market is an important part of the business model because business owners need to know which target group will help them extract the value we mentioned earlier. A sound understanding of the market will pave the way for a scalable business model, ultimately attracting external investors. This is especially true for an Ecommerce businesses in dubai as you would be able to ensure your ads are targeted to the right audience.


Delivery is all about how you plan to bring the product to market. A few easy to do this are via organic distribution channels, partnerships, or through online ads across varying platforms. Delivery results in your product being visible to your target market. To recap, understand who your market is and then identify where that market exists to attract the attention of your potential customer segment.


Your business model comes at a cost. This includes the cost of the product or service and of course, the price you have to pay to ensure product visibility among the right people. The last thing you would want is for these costs to add up to more than how much people are willing to pay for your product. A company formation specialist would advise you to tighten up your costs as much as you can tol understand how much profit you’ll get to take home at the end of the day.

Examples of Business Models:


Let’s assume you offer advisory services to businesses on the subject of business setup in sharjah. If you charge your customers a fee on a recurring monthly basis in exchange for the insight you provide to them, you would be following a membership model


Ever downloaded and used an app for free, only to find yourself paying for certain added features? This is known as the freemium model. Customers can have an idea of what the service is for free, but they are required to pay a fee if they seek to use it to its full potential.

Traditional Retail:

This example needs no introduction. Ecommerce businesses in dubai and brick-and-mortar stores are a great example of this model. Your customers purchase products from you and you make a profit from the margin placed on each product offering.

In Conclusion:

A great business idea is just the beginning in the UAE market. You must back it up with a plan for how you’re going to reap the profits before your business setup in Dubai mainland. Your business model is your business blueprint which details how you’ll create value, deliver your goods or services, and collect the profits. Keep in mind that there is a difference between your business model and strategy. The model is about how you make money, while strategy is more about how you’ll make your business happen.

A sound business model includes what you’re selling, who you’re selling it to, how you’re getting it out there, and what it’s going to cost you. Pricing things right will ensure that you’re making money and not losing it. There are several ways to do business, like memberships, freemium models, or plain and simple retail. Set yourself up for success in the UAE market with a proper business model to attract investors and grow your business. If you are ready to take the next step, reach out to your trusted company formation specialist, SetHub. Our experts will put you on the path toward success!