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Cash Machine 6#
In the Cash Machine concept, the customer pays upfront for the products sold to the customer before the company is able to cover the associated expenses. This results in increased liquidity which can be used to amortise debt or to fund investments in other areas.
Examples: Iconic Cases
How they do it: Computer manufacturer Dell was one of the pioneers in employing a build-to-order strategy in the 1980s. Computers were first customized and paid for by the customers, with invoices for the computer parts from the suppliers having lenghier payment deadlines. This allowed it to achieve a highly negative cash conversion cycle. In its early years the Cash Machine pattern presented an important means for Dell to finance its growth. At its founding in 1984, Michael Dell’s seed capital consisted of a mere US $1,000.
Learn more about Dell →
How they do it: Amazon Web Services offers pricing for it’s computing pricing on an annual, pre-paid schedule. These so-called ”Reserved Instances” provide customers with a significant discount (up to 75%) compared to On-Demand instance pricing.
Learn more about Amazon Web Services →
How they do it: American Express developed the traveller’s cheque in 1891. It is a business model innovation based on the Cash Machine pattern. It emerged from the problem faced by American Express’ own employees who travelled abroad and had difficulty obtaining cash in a foreign country.
Learn more about American Express →
How they do it: Blacksock’s subscribers purchase and pay their sock subscription in advance, allowing the company to use the increased liquidity to finance other areas such as growth.
Learn more about Blacksocks →
How they do it: McFit customer’s pay their monthly subscription fee upfront which gives the company a fixed income stream. This can be used to finance the fitness center infrastructure.
Learn more about McFit →
Below, the top industries for the pattern "Cash Machine" are displayed, in order to get insights into how this pattern is applied across different industries. We've collected data from 10 firms using this pattern.
Top Industries
E-Commerce
27% of firms using pattern
27% of firms using pattern
Services
16% of firms using pattern
16% of firms using pattern
Information Technology
12% of firms using pattern
12% of firms using pattern
All Industries
Below, the pattern "Cash Machine" is analyzed based on co-occurrence, in order to get insights into how this business model pattern is applied in combination with other patterns within the firms we studied.
Top Co-Occurrences
Leverage Customer Data
3 pattern co-occurrences
3 pattern co-occurrences
Two-sided Market
3 pattern co-occurrences
3 pattern co-occurrences
E-commerce
3 pattern co-occurrences
3 pattern co-occurrences