Jim Muehlhausen

Designing or updating your business model becomes easier when you think through your offering, monetization, and sustainability. As you work on your business model, keep important tips in mind, ask questions to stay on track, and browse different pricing models to determine what's best for your business.

Competitive advantage enables a firm to perform at a higher level than others in the same industry or market — or with anyone competing for the customer’s limited budget. Competitive advantage can serve as a powerful catalyst for your business. Competitive advantage enables you to outsell, outprofit, and outperform others in the same industry or market.

A business model that says, essentially, "I used to work for a company that did the same thing," is not something investors want to hear. This plan has a good and a bad aspect — the bad part is a successful company is already using this business model. Without significant change to the model, why bother? The good part is a proven business model and management that understands the model.

The unique value proposition (UVP) extends the concept of the unique selling proposition (USP) to include the benefits derived by the customer. Customers ask themselves, “Are the unique features of this product worth the price?” Customers engage in this features–value weighing for all purchases. Augmenting your USP with a strong value proposition creates customers’ desires to trade their hard-earned dollars for your product.

Great business models command better margins than the competition. Sometimes, a business model can be improved simply by clever pricing strategies. The list below offers some methods to potentially raise prices and corresponding margins. Premium pricing: You can't help but think that expensive products are better.

If your current business model is no longer effective, it's time to make some changes. When you're designing or re-designing your business model, keep these questions in mind: Does the model generate margins superior to the competition? How easily can your idea be copied? What can you do to slow down the competition?

When designing a business model, you have a lot to remember. Refer to this handy list of business-model reminders to make sure you stay on track: Different is always better than better. The better mousetrap plan rarely works. No margin, no mission. Great business models have great margins. If it's not easy to sell, it's not worth doing.

When you're ready to create and analyze your own business model, jot down your ideas while using the business model wheel. This practical tool is also useful when you revisit the ideas you come up with during your annual planning process. The business model wheel focuses on the following areas: Offering Market attractiveness: The industry, niche, and customer segment you will sell to.

All business models erode and grow weaker over time. Your job is to assess the model and make changes before it’s too late. If your profit isn’t what it once was, consider raising your prices — without raising your prices. The following list includes ideas you may want to try: Revise the discount structure