MGMT8015 Chap.9 Business Model Patterns, Canvases and Market Size
Business Model Patterns, Canvases and Market Size
Patterns worth knowing
Razor and blade, subscription, freemium, pay-per-use and peer-to-peer models each answer the what, how and value questions differently and carry their own trade-offs.
Two canvases
The Business Model Canvas maps nine blocks around the value proposition and suits known markets; the Lean Canvas adds problem, solution, key metrics and unfair advantage for start-ups facing uncertain markets.
Sizing the opportunity
Total, serviceable and obtainable market estimates turn a market claim into three linked figures an investor can check.
Beyond the five patterns
The lecture also lists self-service, add-ons, auctions, cross-selling, direct selling, flat rates, franchising, ingredient branding, shop-in-shop and open source, each with a familiar example.
The Week 7 lecture reads a car maker’s paid connectivity and driving-assistance subscriptions as razor and blade.
What this chapter covers
- 01
Razor and blade, subscription and freemium
- 02
Pay-per-use and peer-to-peer models
- 03
The nine blocks of the Business Model Canvas
- 04
What the Lean Canvas changes
- 05
Filling a canvas in six steps
- 06
TAM, SAM and SOM
- 07
Ten further patterns and their examples
Worked example · free
Size the market for a campus bike-repair service
- 1TAM is the whole market: $40 million a year.
- 2SAM = 30% of TAM = 0.30 × $40m = $12 million.
- 2SOM = 5% of SAM = 0.05 × $12m = $0.6 million a year.
- 1Each cut needs evidence: why 30% is serviceable and why a 5% share is reachable.
Key terms
- Razor and Blade
- A pattern that sells a base product cheaply or at a loss and earns high margins on repeat purchases.
- Freemium
- A pattern that offers a free basic version and charges for premium features, described as an online razor and blade.
- Lean Canvas
- Maurya’s adaptation of the Business Model Canvas that adds problem, solution, key metrics and unfair advantage.
- Serviceable Obtainable Market
- The portion of the serviceable market that a venture can realistically reach and win.
- Total Addressable Market
- The full size of the target market for an offer, before narrowing to the serviceable and obtainable parts.
Business Model Patterns, Canvases and Market Size FAQ
When should I use the Lean Canvas instead of the Business Model Canvas?
The lecture matches the Lean Canvas to start-ups operating in uncertain or new markets where customers and competitors are unknown, and the Business Model Canvas to established businesses and start-ups in well-known markets. The Lean Canvas focuses on problem-solution and product-market fit; the original focuses on the value proposition and business logic.
What are the drawbacks of a subscription model?
It needs strong operations and must deliver value consistently, because customers judge each billing period. Its advantages are predictable revenue, loyalty helped by inertia when customers forget to cancel, and data that supports better decisions. Compare those against your venture before choosing it.
How do TAM, SAM and SOM fit together?
They are nested. The total addressable market is the size of the whole target market, the serviceable addressable market is the part your offer fits, and the serviceable obtainable market is the part you can realistically reach. In the lecture’s charging example, about 5% of the serviceable market is the obtainable share.
What are the nine blocks of the Business Model Canvas?
Key partnerships, key activities, key resources, value propositions, customer relationships, channels, customer segments, cost structure and revenue streams. The value proposition sits in the centre, customers and channels on one side, the activities, resources and partners that deliver it on the other, and costs and revenues along the bottom.
What is an unfair advantage on the Lean Canvas?
It is something that cannot easily be bought or copied by competitors. The Lean Canvas template asks for it alongside the problem, solution, key metrics and a single, clear value proposition, because a start-up in an uncertain market needs a reason it will not simply be imitated.
Exam move
Pick one pattern for your venture and write its main advantage and the drawback you are most exposed to. Fill a canvas in the six workshop steps, then size your market three ways and write the assumption behind each cut in a single line. Ask a classmate to challenge each block and each cut of the market size, as the stakeholders hearing your business model will. Keep every figure traceable to a stated assumption or source.
Working through Business Model Patterns, Canvases and Market Size in MGMT8015? Sia is AskSia’s AI Management tutor — ask any MGMT8015 Business Model Patterns, Canvases and Market Size question and get a clear, step-by-step explanation grounded in how MGMT8015 is taught and assessed. Read this chapter free, then take your hardest questions to Sia.
