B2B Definition | Business-to-Business Model (2 Minutes!) | Finance Strategists

Hi! I'm Ranie, finance strategist.

In this lesson, we're going to cover

understanding the B2B business model.

A business-to-consumer, or B2C business model,

is one in which a company sells a service or product directly to a consumer.

It is the alternative to the business-to-business model, or B2B,

in which a company sells their products first to another business,

which will then often sell the product at a retail store at a marked up price.

Companies can either be a B2B, a B2C or a hybrid of both.

B2B, as a business model, is generally higher revenue per customer but lower volume;

whereas B2C is generally a higher volume but lower revenue model.

Examples of the hybrid model are SaaS companies,

which often has several different tiers of service,

tailored to companies or individuals depending on the service.

In general, businesses are more price sensitive and care less about the presentation,

whereas customers are less price sensitive and care more about the presentation.

Selling chocolate to a business who's going to create something with the chocolate,

they don't care as much about the packaging the chocolate arrives in,

whereas if you look at the presentation of chocolates in a grocery store,

by companies like Godiva,

there's a huge emphasis placed on presentation.

Generally businesses are more elastic,

and generally customers are less elastic.

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