Description

“Be careful about business models where your costs grow with your revenue” - Tai Lopez

(click to tweet)

Everyone is looking for the ideal business model. They’re looking to discover the perfect model to bring ever increasing revenue. Today, I’m talking about two common business models, and which I prefer.

The two models: Netflix and Spotify. Netflix buys out agreements with content creators, whereas Spotify pays royalties dependent on number listens.

Therefore, as Spotify’s income increases, so too does their cost. But as Netflix’s income increases, their costs stay the same, or even decrease.

This is one of the most important factors to look at when analyzing a potential business. Will cost increase as revenue increases, or will cost stay the same or even decrease?

Look for business models where cost decreases as revenue increases.

“The ideal business is one where you sell ever increasing units at an ever decreasing cost” - Tai Lopez

(click to tweet)

Points to Keep In Mind

• Be careful about business models where your costs grow with your revenue
• Look for a way for cost to decrease as income increases
• The ideal business is one where you sell ever increasing units at an ever decreasing cost
• When you start a business, be careful about signing licensing and royalty agreements where your cost will increase with increased revenue