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Which business type are you?

There are many different categories of business, but they can all be separated into either skill-based, solution-based, or hybrid businesses. The general operations are similar, but how things are marketed, priced, and valued by the customer are not.

Skill Based

Skill-based businesses, as the name states, rely on specific skills to create a product or service. Usually, the skill is hard to master, and/or the product/service you create takes a long time to complete. This causes these businesses to not be scalable and since they are entirely credibility and skill-based, it is very hard to get started and break even. If you can master the skill enough and build enough credibility to make it past break even, there is an amazing inflection point where your demand starts to outpace your supply. After this inflection point, you can start exponentially increasing your prices.

The potential for the price of these types of products and services can be seen by looking at well-known entertainers, athletes, designers, and artists.

If you are this type of business, your time should be spent honing your skill and building awareness of your skills in your niche markets. Your marketing focus should be on your current strong points as you hone your skill, and how your take or version of the product or service makes you different. Your control on price will become stronger as your demand increases, and your customers will value your product and service the harder it is to satisfy their demand.

Solution Based

Solution-based businesses are focused on saving people time and resources around solving a specific problem and are typically a product, not a service. Because you are focused on creating a solution for many people to use, the product is typically repeatable and thus scalable. With solution-based businesses, you don’t have an inflection point with supply and demand where you can exponentially increase pricing since your product will eventually have competitors that will keep your pricing in check. What you do have, is the ability to distribute to your entire market easily.

The potential for these types of businesses can be seen with large software companies, automobile companies, and other typical large businesses you encounter.

If you are this type of business, your time should be spent honing your solution and making it as good as possible, while reducing costs to create the solution. Your marketing focus should be on the value you bring to your customers from the outcome of solving their problems. Again you don't have as much control over pricing as a skill-based business, but you have significantly more growth potential that you can take advantage of and at a faster pace than skill-based businesses.


There are businesses that sit in the middle, where there is some scalability and you can price based on your credibility and skill. These businesses are typically balancing on a tightrope of growth vs profitability. Business in general is hard, but these are exceptionally hard as the lack of easy scalability tends to cap growth, and adding supply can hurt pricing.

Some common examples are lawyers, restaurants, and consultants.

Your focus for these businesses should be honing your skills and building your credibility. Your marketing focus is dependent on your business in these cases. Since a lawyer would want to focus on the value they bring from their service, while a restaurant might focus on how their take or version of their product makes them different.


Understanding the type of business you are is extremely important. Your business type will set your expectations around growth and pricing, and dramatically impact your business strategy.

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