3D printers have become must-have technology for many today. In the last 24 months, this specific industry has seen explosive growth, but there is still a long way to go before this product becomes stabilized. This means the 3D printer business model is essentially a startup business model that is being implemented over an extended period of time.
When a business is in a startup mode, selecting the right business model will either create a foundation for success or it will create a foundation for failure. The ultimate goal is to develop sustainability. Although virtually any business model can create this, there are three primary options that most startups wind up following.
1. The Casino Business Model
When you go to a casino, what happens if you sit down at a table to play some blackjack? Eventually you’ll be offered some free drinks. How are you encouraged to come to the casino in the first place? You’re offered free hotel rooms, a free meal, or free cash if you gamble enough money. Casinos can offer all of these “comps” because they’ll make more from each person’s gambling than the cost of the items that lure people in to play.
Many companies use this type of business model successfully. Gaming consoles are sold below cost because the video games for it are sold at higher profit margins. Restaurants will offer a free kid’s meal when a parent’s meal is purchased, bringing in customers who normally wouldn’t visit. A 3D printer startup could offer higher priced product cartridges that are needed to make the printer operate.
2. The Premium Business Model
Customers are often willing to pay more for a premium brand if they sense that the quality of the product is better than the rest of the competition. You’ll see this type of business model associated with Apple more than any other company today. You can purchase a Windows laptop with better technology and specs for $1,000 less than an Apple computer, yet customers flock to the Apple brand.
The same could be said of the iPhone. Although Apple doesn’t dominate the smartphone market now, they still own a good portion of it. The average price of an Android phone is around $250 without a data plan. If you want the latest iPhone without a data plan, you’re going to pay over $600 for it. In essence, because Apple is getting double the money, it takes twice as many phones from their competitors to make up the revenue difference.
For the 3D printer business model, this might just be the best option. With a premium product, consumers will pay more for the equipment or the brand because they believe it will provide a premium experience. All 3D printers tend to offer this premium experience today, but as the technology advances, the startups that focus on premium value may just drive in more revenues from fewer product sales just like Apple can do.
3. The Google Model
Google took a different approach when it came to using their Android platform. Instead of charging developers access to it, they decided to give the O/S away for free. Because of this, the companies that use the platform are able to develop technology around it for a cheaper price, but still provide a reasonable amount of premium features. In return, this makes the Android O/S the dominant software on mobile devices today. More than 8 out of 10 mobile devices run Android.
Google benefits from this because those using their O/S must access Google apps and downloads in order to receive full functionality out of the device. With over 31 billion downloads in the last 12 months, the revenues can quickly start piling in and help the operating system to pay for its development cost hundreds of times over.
For the 3D printer business model, this ultimately means that some component of the system would need to be given away for free. It could be the equipment, the software behind the equipment, or something else within the supply chain. The startup would then need to have another product that was infinitely affordable that could help to make up the costs.
All startups face unique challenges. 3D printer startups have an advantage in the fact that they are promoting an exciting technology, but that doesn’t guarantee success. By choosing one of these 3 likely business models, however, a 3D printer manufacturer could become the dominant force in the industry in the years to come.