The #1 Notion Startup system, StartOS is $369 $279! [Get Notion]

Logo

Built in Framer.Use the code partner25proyearly to get 3 months free off Framer Pro. [Get Framer]

The #1 Notion Startup system, StartOS is $369 $279! [Get Notion]

Logo

Built in Framer.Use the code partner25proyearly to get 3 months free off Framer Pro. [Get Framer]

The #1 Notion Startup system, StartOS is $369 $279! [Get Notion]

Built in Framer.

Use the code partner25proyearly to get 3 months free off Framer Pro. [Get Framer]

Hard Tech Startup Business Models

Hard Tech Startup Business Models

And how to pick one

Hard Tech Startup Blog

Hard Tech Startup Blog

January 1, 2024

Playstation works on a loss leader business model with the console sold at a loss. Sony makes money over the lifetime of the use of the console by taking a cut of the games on the store.
Playstation works on a loss leader business model with the console sold at a loss. Sony makes money over the lifetime of the use of the console by taking a cut of the games on the store.

In the dynamic world of hard tech startups, where the marriage of physical products and digital add-ons takes center stage, crafting effective business models is crucial.

Beyond the allure of software-as-a-service, these startups traverse tangible realities, seeking sustainable growth and profitability.


Device and Accessories: Direct Product Sales

At the heart of this model lies the straightforward act of selling the physical device, generating immediate revenue. Think Peloton's exercise bikes, Tesla's electric cars, or the simplicity of everyday kitchen gadgets.

The success of this approach hinges on a delicate balance of product quality, compelling features, and competitive pricing.

Accessories in this case can be a second revenue stream that can be recurring if the accessories are consumable.

Example: Nest, the smart thermostat, not only disrupted the market with its sleek design but also achieved profitability solely through the sale of its initial product.

Lock-In: The Razor Blade Model

This model entices customers with an affordable device, subsequently reaping profits from recurring consumable purchases. From ink cartridges for printers to blades for razors, the lock-in model creates a continuous revenue stream.

The first sale- the razor blade or printer can often be sold at a loss (commonly called "loss leader") and the subsequent sales, like blades or cartridges can have significant margins, sometimes over 100%.

Example: Nespresso's proprietary, single-use coffee pods are a prime illustration, creating an enduring revenue source for the company.

Ecosystem Model: Interconnected Devices

The ecosystem model, masterfully executed by Apple, seamlessly integrates devices and software. Each device enhances the functionality of others, fostering customer loyalty and encouraging repeated purchases.

Example: Fitbit's bracelets, seamlessly integrated with smartphones and offering personalized fitness plans, create a health-centric ecosystem that retains users within the Fitbit ecosystem.

Device Plus Digital Content or Subscriptions: Beyond Hardware

This model marries hardware with exclusive digital content or recurring subscriptions. Often the hardware is sold at break even or a loss, similar to the razor blade model, whereas the customer lifetime value (LTV) is recovered through subscription services.

Gaming consoles like PlayStation entice users with exclusive titles and online multiplayer access, ensuring revenue extends beyond the initial hardware purchase.

Example: GoPro, a leader in action cameras, pairs its hardware with subscription services offering cloud storage and video editing tools, expanding its value proposition beyond the physical device.

Selling Data: Monetizing the Bits and Bytes

Devices like fitness trackers and smartwatches amass vast amounts of user data. While ethical considerations are paramount, anonymized data insights can be sold to research firms or leveraged for targeted advertising, creating a valuable revenue stream.

Example: Strava, a popular fitness app, aggregates user data to analyze cycling trends and offers premium features based on these insights, attracting both individual users and corporate partners.

Open Source Hardware

Embracing transparency, the open-source hardware model releases designs freely, fostering collaboration and innovation. Revenue can be generated through sales of pre-built kits, official add-ons, or by providing technical support and services.

Example: Arduino, a leading single-board microcontroller platform, fuels innovation through open-source hardware, monetizing through component sales and educational workshops.

Hardware as a Service and Leasing

This model shifts focus from ownership to leasing or renting devices, creating predictable revenue streams and fostering ongoing customer relationships. From medical equipment to industrial robots, the hardware-as-a-service model offers flexibility and reduced upfront costs.

Example: GE Aviation's offering of jet engines as a service revolutionizes the aviation industry, charging airlines based on operating hours rather than a hefty upfront purchase, providing both financial flexibility and a continuous income stream.


In the dynamic world of hard tech startups, where the marriage of physical products and digital add-ons takes center stage, crafting effective business models is crucial.

Beyond the allure of software-as-a-service, these startups traverse tangible realities, seeking sustainable growth and profitability.


Device and Accessories: Direct Product Sales

At the heart of this model lies the straightforward act of selling the physical device, generating immediate revenue. Think Peloton's exercise bikes, Tesla's electric cars, or the simplicity of everyday kitchen gadgets.

The success of this approach hinges on a delicate balance of product quality, compelling features, and competitive pricing.

Accessories in this case can be a second revenue stream that can be recurring if the accessories are consumable.

Example: Nest, the smart thermostat, not only disrupted the market with its sleek design but also achieved profitability solely through the sale of its initial product.

Lock-In: The Razor Blade Model

This model entices customers with an affordable device, subsequently reaping profits from recurring consumable purchases. From ink cartridges for printers to blades for razors, the lock-in model creates a continuous revenue stream.

The first sale- the razor blade or printer can often be sold at a loss (commonly called "loss leader") and the subsequent sales, like blades or cartridges can have significant margins, sometimes over 100%.

Example: Nespresso's proprietary, single-use coffee pods are a prime illustration, creating an enduring revenue source for the company.

Ecosystem Model: Interconnected Devices

The ecosystem model, masterfully executed by Apple, seamlessly integrates devices and software. Each device enhances the functionality of others, fostering customer loyalty and encouraging repeated purchases.

Example: Fitbit's bracelets, seamlessly integrated with smartphones and offering personalized fitness plans, create a health-centric ecosystem that retains users within the Fitbit ecosystem.

Device Plus Digital Content or Subscriptions: Beyond Hardware

This model marries hardware with exclusive digital content or recurring subscriptions. Often the hardware is sold at break even or a loss, similar to the razor blade model, whereas the customer lifetime value (LTV) is recovered through subscription services.

Gaming consoles like PlayStation entice users with exclusive titles and online multiplayer access, ensuring revenue extends beyond the initial hardware purchase.

Example: GoPro, a leader in action cameras, pairs its hardware with subscription services offering cloud storage and video editing tools, expanding its value proposition beyond the physical device.

Selling Data: Monetizing the Bits and Bytes

Devices like fitness trackers and smartwatches amass vast amounts of user data. While ethical considerations are paramount, anonymized data insights can be sold to research firms or leveraged for targeted advertising, creating a valuable revenue stream.

Example: Strava, a popular fitness app, aggregates user data to analyze cycling trends and offers premium features based on these insights, attracting both individual users and corporate partners.

Open Source Hardware

Embracing transparency, the open-source hardware model releases designs freely, fostering collaboration and innovation. Revenue can be generated through sales of pre-built kits, official add-ons, or by providing technical support and services.

Example: Arduino, a leading single-board microcontroller platform, fuels innovation through open-source hardware, monetizing through component sales and educational workshops.

Hardware as a Service and Leasing

This model shifts focus from ownership to leasing or renting devices, creating predictable revenue streams and fostering ongoing customer relationships. From medical equipment to industrial robots, the hardware-as-a-service model offers flexibility and reduced upfront costs.

Example: GE Aviation's offering of jet engines as a service revolutionizes the aviation industry, charging airlines based on operating hours rather than a hefty upfront purchase, providing both financial flexibility and a continuous income stream.


In the dynamic world of hard tech startups, where the marriage of physical products and digital add-ons takes center stage, crafting effective business models is crucial.

Beyond the allure of software-as-a-service, these startups traverse tangible realities, seeking sustainable growth and profitability.


Device and Accessories: Direct Product Sales

At the heart of this model lies the straightforward act of selling the physical device, generating immediate revenue. Think Peloton's exercise bikes, Tesla's electric cars, or the simplicity of everyday kitchen gadgets.

The success of this approach hinges on a delicate balance of product quality, compelling features, and competitive pricing.

Accessories in this case can be a second revenue stream that can be recurring if the accessories are consumable.

Example: Nest, the smart thermostat, not only disrupted the market with its sleek design but also achieved profitability solely through the sale of its initial product.

Lock-In: The Razor Blade Model

This model entices customers with an affordable device, subsequently reaping profits from recurring consumable purchases. From ink cartridges for printers to blades for razors, the lock-in model creates a continuous revenue stream.

The first sale- the razor blade or printer can often be sold at a loss (commonly called "loss leader") and the subsequent sales, like blades or cartridges can have significant margins, sometimes over 100%.

Example: Nespresso's proprietary, single-use coffee pods are a prime illustration, creating an enduring revenue source for the company.

Ecosystem Model: Interconnected Devices

The ecosystem model, masterfully executed by Apple, seamlessly integrates devices and software. Each device enhances the functionality of others, fostering customer loyalty and encouraging repeated purchases.

Example: Fitbit's bracelets, seamlessly integrated with smartphones and offering personalized fitness plans, create a health-centric ecosystem that retains users within the Fitbit ecosystem.

Device Plus Digital Content or Subscriptions: Beyond Hardware

This model marries hardware with exclusive digital content or recurring subscriptions. Often the hardware is sold at break even or a loss, similar to the razor blade model, whereas the customer lifetime value (LTV) is recovered through subscription services.

Gaming consoles like PlayStation entice users with exclusive titles and online multiplayer access, ensuring revenue extends beyond the initial hardware purchase.

Example: GoPro, a leader in action cameras, pairs its hardware with subscription services offering cloud storage and video editing tools, expanding its value proposition beyond the physical device.

Selling Data: Monetizing the Bits and Bytes

Devices like fitness trackers and smartwatches amass vast amounts of user data. While ethical considerations are paramount, anonymized data insights can be sold to research firms or leveraged for targeted advertising, creating a valuable revenue stream.

Example: Strava, a popular fitness app, aggregates user data to analyze cycling trends and offers premium features based on these insights, attracting both individual users and corporate partners.

Open Source Hardware

Embracing transparency, the open-source hardware model releases designs freely, fostering collaboration and innovation. Revenue can be generated through sales of pre-built kits, official add-ons, or by providing technical support and services.

Example: Arduino, a leading single-board microcontroller platform, fuels innovation through open-source hardware, monetizing through component sales and educational workshops.

Hardware as a Service and Leasing

This model shifts focus from ownership to leasing or renting devices, creating predictable revenue streams and fostering ongoing customer relationships. From medical equipment to industrial robots, the hardware-as-a-service model offers flexibility and reduced upfront costs.

Example: GE Aviation's offering of jet engines as a service revolutionizes the aviation industry, charging airlines based on operating hours rather than a hefty upfront purchase, providing both financial flexibility and a continuous income stream.