B2B (Business-to-Business) Definition

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.

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B2B Model (Business-to-Business) FAQs

B2B stands for the business-to-business model.
A B2B model is one in which a company sells their products to another business, which then uses the product or sells it to consumers or a retail store at a higher price.
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.
Generally, businesses are more elastic, and generally customers are less elastic.
An example of the hybrid model are SaaS (Software as a Service) companies, which often have different tiers of service tailored to companies or individuals, depending on the service.
True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True contributes to his own finance dictionary, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, his interview on CBS, or check out his speaker profile on the CFA Institute website.