B2B (Business to Business) Definition
Written by True Tamplin, BSc, CEPF®
Updated on July 10, 2021
Understanding the B2B Model
A business-to-business, or B2B, business model is one in which a company sells their products first to another business, which will then often sell the product at a retail store at a marked up price.
It is the alternative to the business-to-consumer model (B2C) in which a company sells a service or product directly to a consumer.
B2B vs B2C vs Hybrid Models
Companies can either be B2B, B2C, or a hybrid of both.
B2B as a business model is generally higher revenue per customer, but lower volume, whereas B2C is generally a higher volume, but lower revenue model.
An example of the hybrid model are SaaS companies, which often have many different tiers of service (tailored to companies or individuals, depending on the service).
In general, businesses are more price sensitive, and care less about the presentation, whereas customers are less price sensitive and care more about the presentation.
Selling chocolate to a business who is going to create something with the chocolate, they don’t care as much about the packaging the chocolate arrives in; whereas if you look at the presentation of chocolates in a grocery store by companies like Godiva, there is a huge emphasis placed on presentation.
Generally, businesses are more elastic, and generally customers are less elastic.
Subscribe to the Finance Strategists YouTube Channel ↗