The $1 vs. $1,000 T-Shirt Model

If you were a business owner and decided you wanted to open a store that sells t-shirts would you choose to sell t-shirts for $1 and have a high volume of sales with 1000 customers? Or would you decide to sell one t-shirt for $1,000 but have much fewer customers, for example only 1 customer equivalent to making the same amount?

Based on your answer this may have given you an idea of the type of business model you may want to follow. There are a variety of different ways to build and grow your business, some of these methods are to build up, build across or on an angle. Also known as a vertical business model, horizontal and diagonal. 

The Horizontal model is the one where there are $1 t-shirts x 1000 customers. This is a simpler, more basic type of model, such as with dollar stores that have a lot of customers, and require a lot of customers to make any profits. This is due to the low cost of the goods being sold, so many people will buy them because they are cheap and that is how the business runs, without a lot of customers they would not be able to turn enough profits on their goods to stay in business. 

The vertical business model is when a $1,000 t-shirt is being sold to 1 person. This model has much fewer customers but makes more money per customer. This type of model relies on having a few customers that account for all of the business. An example of this is with luxury goods, not a lot of people can afford $1000 for a t-shirt but if a few people can then the business will see a profit. 

The diagonal business model is a $1,000 t-shirt x 1000 customers. This model combines both vertical and horizontal models where you sell 1000 t-shirts to 1000 clients for $1,000. This is a more advanced model because it requires the customer care of the vertical model, and the velocity and systems of the horizontal model. Very few people understand and know how to build a Diagonal model in business, but those who can, are rich!

If you have a business, which model is it, and is this the model you want to operate? Check out Build and Grow Business to help you build, grow and scale your business skills.