Business Models

Why This Matters

A product that cannot pay for itself is a project. The business model is the argument for how value reaches you as well as your customer, and writing it down early reveals the assumptions you did not know you were making. For an AI product it also answers a question that traditional software rarely had to ask: does each additional user cost you more than they bring in?

The running example: QuizMe

This chapter continues the example from Going to Market: QuizMe, an app that turns a student’s lecture notes into a practice quiz, for $4 a month.

What a Business Model Is

The model: a business creates value for a specific customer, delivers it through some channel, and captures part of that value as revenue, at a cost lower than what it captures. The Business Model Canvas, below, breaks that sentence into ten blocks, and a choice in one block constrains the others.

The Business Model Canvas is a one-page tool for describing, designing, and questioning a business model, and for changing it when the evidence says a part is wrong. Alexander Osterwalder created it (Osterwalder and Pigneur 2010); Jeff Dyer refined it by splitting the central value proposition into two parts: the Jobs-To-Be-Done (what customers are hiring your product to do) and the Customer Value Proposition (the specific solution you provide). That gives the ten-block canvas this course uses.

A Business Model Canvas grid with ten blocks and guiding questions: Key Partners, Key Activities, Key Resources, Jobs-To-Be-Done, Solution Customer Value Proposition, Customer Relationships, Channels, Customer Segments, Cost Structure, and Revenue Streams. — The ten-block Business Model Canvas used in this course, with the center split into Jobs-To-Be-Done and the Customer Value Proposition.

Read the canvas as two halves joined in the middle:

Part	Blocks	Question it answers
The customer side (right)	Customer Segments, Channels, Customer Relationships, Revenue Streams	Who pays, how they find you, how you keep them, what they pay
The center	Jobs-To-Be-Done, Customer Value Proposition	What job they hire you for, and what you offer to do it
The operations side (left)	Key Activities, Key Resources, Key Partners, Cost Structure	What you must do and have to deliver it, and what that costs

How the blocks combine. Each choice forces others. Choose a self-serve channel (customers find you, sign up, and pay on their own) and your customer relationship must be automated, which means onboarding, the first steps a new user takes, has to work without you. Choose a subscription revenue stream and retention (how many customers keep using and paying) becomes what matters most, because revenue only continues while people stay. Choose a model call (a request your app sends to an AI model, which you pay for each time) as your core activity and every use of the product adds to your cost structure. A canvas where the blocks contradict each other is a model that cannot work, however good each block looks alone. Example: a $3-a-month price with a sales-led channel, where you get each customer through a call or meeting, costs more in your time per customer than the customer pays.

Every block is a hypothesis. Filling in the canvas does not make anything true. Mark each entry as evidence (an interview, a payment, your usage logs) or guess. The guesses that would make the whole model fail if wrong are the ones to test next.

Try it

Take one choice from your product (your channel, your price, or your core AI feature) and predict which two other blocks it forces. Then find a classmate’s canvas and look for one pair of blocks that contradict each other.

How Money Comes In: Revenue Models

The model: a revenue model is the rule that turns use into money. Each one only works if something specific is true about your customer and your costs.

Revenue model	How you get paid	Must be true	For an AI product
Subscription	A fixed price per month or year	People need it repeatedly	Heavy users can cost more than they pay; include a monthly usage limit
Usage-based	Per action, or per prepaid credit spent on actions	Use maps to value	Price tracks your model cost
Freemium	Free tier, paid upgrade	Free users are cheap and some convert	Free users still run up model cost; cap the free tier
One-time purchase	Pay once	The job is done once	Ongoing AI calls are not covered by a one-time price
Advertising	Advertisers pay for attention	Very large audience	Rarely fits a student product
Commission	A share of each transaction	You sit between buyer and seller	Cost scales with transactions, not with tokens (the units of text a model reads and writes, which set its price)

Pricing, the number itself, is covered in Going to Market: price from the value delivered, never from asking customers to invent a number, and check the floor set by your cost to serve.

Unit Economics and Break-Even

The model: look at one customer. If each customer brings in more than they cost to serve, you need enough customers to cover your fixed costs. If each customer costs more than they bring in, more customers make it worse.

The building blocks:

Fixed costs do not change with the number of users: hosting plan, domain, a database tier.
Variable costs grow with each user or each use: model API calls, payment processing fees, email sends.
Contribution margin per customer = price minus variable cost per customer. This is what each customer contributes toward fixed costs.
Break-even customers = fixed costs divided by contribution margin per customer.
Lifetime value (LTV) = contribution margin per month times the average months a customer stays. Using revenue instead of margin overstates it, and for AI products, where each user has a real cost, the overstatement is large.
Customer acquisition cost (CAC): what you spend, in money and time, to get one paying customer. If CAC is higher than LTV, every new customer loses money.

Worked example. QuizMe charges $4 a month. From Going to Market, a typical user costs $0.27 a month in model calls. Assume payment processing takes about $0.45 of each $4 charge (check your processor’s actual rate) and fixed costs are $45 a month.

	Calculation	Result
Contribution margin, typical user	$4.00 - $0.27 - $0.45	$3.28
Break-even, all typical users	$45 / $3.28	14 paying users
Average model cost if 1 in 10 is a heavy user ($5.40)	0.9 x $0.27 + 0.1 x $5.40	$0.78
Contribution margin with that mix	$4.00 - $0.78 - $0.45	$2.77
Break-even with that mix	$45 / $2.77	17 paying users
LTV if users stay 4 months	$2.77 x 4	$11.08

Two lessons. First, a few heavy users moved break-even by three customers, which is why you measure the distribution of usage and not only the average. Second, a revenue-based LTV ($4 x 4 = $16) would have told you that you could spend up to $16 to acquire a customer. The margin-based number says $11.

A chart in dollars per month, from 0 to 50, with a dashed line at 45 dollars marked fixed costs, 45 dollars a month. Two columns are built from stacked, numbered blocks, one block per paying user. The left column, all typical users, stacks blocks of 3 dollars 28 each, which is 4 dollars minus 27 cents of model calls minus 45 cents of payment fee. Thirteen blocks stay below the line; the fourteenth, highlighted, crosses it, so break-even is 14 paying users. The right column, 1 in 10 is a heavy user, stacks blocks of 2 dollars 77 each, which is 4 dollars minus an average of 78 cents of model calls minus 45 cents of fee. The seventeenth block, highlighted, crosses the line, so break-even is 17 paying users. A note at the bottom reads price minus model calls minus payment fee equals contribution margin per user. — Figure 21.1: Break-even for QuizMe, one block per paying user. Each user contributes their contribution margin toward the $45 of monthly fixed costs; break-even is the first user whose block crosses the line. When 1 in 10 users is a heavy user, each block is smaller, so it takes 17 users instead of 14. Numbers are the chapter’s worked example; the fee and fixed-cost figures are assumptions.

Try it

Build the same table for your product with your own numbers: price, model cost per typical and heavy user (from the cost arithmetic in Models in Your Product and your logs), payment fees, fixed costs. Before you compute, predict your break-even number of paying users. Then ask: what share of heavy users would make your contribution margin zero?

Drafting Your Canvas with Claude

What AI can and cannot do here. Claude can read your CLAUDE.md and codebase and draft every block in minutes, find the model calls in your code, check that the blocks agree with each other, and build a spreadsheet with working formulas. It cannot know your customers. Where your notes say nothing, it will fill the block with something plausible, and a plausible block reads exactly like a validated one. The prompts below therefore ask it to separate evidence from guesses and to price from what customers already spend. Read every block it writes and ask, “how do I know this?”

There are two ways to work: one prompt that drafts the whole canvas, or one prompt per block. Use the single prompt for a first draft if you already know the canvas. Use the step-by-step prompts if you are new to it, or when one block needs more thought than the others.

Where the answers go. Paste each prompt into Claude Code, opened in your project folder. The last line of each prompt tells Claude to save its answer to a file called business-model-canvas.md in your project, adding each block under its own heading in order. You do not copy anything by hand. Open the file after each prompt and read what was added. By the end you have the whole canvas in one file, and prompts 12 and 13 read that file to build a spreadsheet and a slide.

Quick Start: single-prompt Business Model Canvas

# Generate Complete Business Model Canvas

Help me create a complete Business Model Canvas for my business in one comprehensive analysis.

**Instructions:** Review my CLAUDE.md file and codebase to understand my product/business.

**Output Requirements:** Maximum 1200 words total. Create a complete, concise business model canvas covering all 10 components.

Please analyze and provide:

**1. Customer Segments** (100 words max):
   - 2-4 primary segments with brief descriptions
   - Priority recommendation for initial focus

**2. Jobs-To-Be-Done** (150 words max):
   - Primary functional job per segment
   - Social/emotional dimensions
   - Key opportunities where current solutions fall short

**3. Customer Value Proposition** (150 words max):
   - Core solution addressing the primary job
   - Key differentiators from alternatives
   - Main benefits/gains for customers

**4. Channels** (100 words max):
   - 3-5 most important acquisition, delivery, and support channels
   - Why each channel fits our segments

**5. Customer Relationships** (80 words max):
   - Relationship type per segment
   - Primary acquisition and retention tactics

**6. Revenue Streams** (120 words max):
   - Primary revenue model
   - Pricing approach and rationale, starting from what customers spend on the problem today (use my interview notes if they exist; do not invent a willingness-to-pay figure)
   - Revenue per segment with approximate price points

**7. Key Resources** (100 words max):
   - 3-6 most critical resources (physical/tech, intellectual, human, financial)
   - Why each is critical

**8. Key Activities** (80 words max):
   - 3-5 most critical activities to deliver value
   - Execution approach (internal/outsourced/automated)

**9. Key Partnerships** (80 words max):
   - 2-4 most important partnerships
   - Value exchange for each

**10. Cost Structure** (120 words max):
   - Top 3-5 cost categories
   - Fixed vs. variable split
   - Model (AI API) cost per core action, and per typical and heavy user per month
   - Cost strategy (lean vs. premium)
   - Break-even estimate

**11. Coherence & Validation** (120 words max):
   - Overall assessment of model coherence
   - Biggest risk and key strength
   - Top 3 validation priorities

Mark every claim as **evidence** (from my notes, data, or code) or **guess**. Format each section with clear headers. Use bullet points for scannability. Focus on specifics over generics.

**After receiving the response, save it to `business-model-canvas.md` in your project directory.**

Step by step

The step-by-step prompts follow the logic of the canvas, the customer side first, then operations, then money, then a check of the whole. Each one reads what you have already saved, so later blocks build on earlier ones.

Phase 1: Customer focus. Who you serve and what you do for them. The segment and the job come first because every other block depends on them.

Customer Segments prompt

# Customer Segments Analysis

Help me identify and analyze the customer segments for my business.

**Business/Product Description:** Review my CLAUDE.md file and code base to understand my product.

**Output Requirements:** Keep this concise - maximum 150 words total. Focus on clarity over comprehensiveness.

Please provide:

1. **Primary Segments** (2-4 segments maximum):
   - Name each segment
   - 1-2 sentence description per segment (demographics, needs, pain points)

2. **Priority Recommendation**:
   - Which segment to focus on initially and why (2-3 sentences)

Format as a tight, scannable list. No lengthy explanations.

**After receiving the response, save it to `business-model-canvas.md` under the heading "# Customer Segments"**

Jobs-To-Be-Done prompt

# Jobs-To-Be-Done Analysis

Help me identify the jobs customers are hiring my product to do.

**Instructions:** First, read my existing `business-model-canvas.md` file to understand my customer segments.

**Output Requirements:** Maximum 200 words total. Be specific and concise.

For each primary customer segment, identify:

1. **Primary Functional Job** (1 sentence): What core task/problem are they solving?

2. **Social/Emotional Dimension** (1 sentence): How do they want to feel or be perceived?

3. **Key Opportunity** (1 sentence): Where do current solutions fall short?

Format as a tight bullet list per segment. Focus on the 1-2 most important jobs per segment, not exhaustive lists.

**After receiving the response, save it to `business-model-canvas.md` under the heading "# Jobs-To-Be-Done"**

Customer Value Proposition prompt

# Customer Value Proposition (CVP) Development

Help me define the specific value propositions that address the jobs customers need done.

**Instructions:** First, read my existing `business-model-canvas.md` file to understand my customer segments and their jobs-to-be-done.

**Output Requirements:** Maximum 200 words total. Focus on unique value, not feature lists.

For each primary segment, provide:

1. **Core Solution** (1 sentence): What we offer and how it addresses the primary job

2. **Key Differentiator** (1 sentence): What makes our solution uniquely better than alternatives

3. **Main Benefit** (1 sentence): The primary gain or pain relief customers experience

Format as concise bullets per segment. Emphasize outcomes over features.

**After receiving the response, append it to `business-model-canvas.md` under the heading "# Customer Value Proposition"**

Channels prompt

# Channels Strategy

Help me design the channels through which we will reach and serve our customers.

**Instructions:** First, read my existing `business-model-canvas.md` file to understand my customer segments, jobs-to-be-done, and customer value propositions.

**Output Requirements:** Maximum 150 words total. List key channels only.

Identify the 3-5 most important channels across:

1. **Acquisition** (1-2 channels): How will customers discover and purchase?

2. **Delivery** (1-2 channels): How will we deliver the product/service?

3. **Support** (1 channel): Primary post-purchase support method?

For each channel, provide 1 sentence explaining why it's appropriate for our segments.

Keep it tactical and specific. No generic channel descriptions.

**After receiving the response, append it to `business-model-canvas.md` under the heading "# Channels"**

Customer Relationships prompt

# Customer Relationships Strategy

Help me design the type of relationships we will establish with each customer segment.

**Instructions:** First, read my existing `business-model-canvas.md` file to understand my customer segments, jobs-to-be-done, value propositions, and channels.

**Output Requirements:** Maximum 100 words total. Focus on relationship type and key tactics.

For each primary segment, specify:

1. **Relationship Type** (choose one): Personal assistance, self-service, automated, community, or co-creation

2. **Acquisition Tactic** (1 sentence): Primary method to get customers

3. **Retention Tactic** (1 sentence): Primary method to keep customers

Format as tight bullets. Be specific about tactics, not generic strategies.

**After receiving the response, append it to `business-model-canvas.md` under the heading "# Customer Relationships"**

Revenue Streams prompt

# Revenue Streams Analysis

Help me identify and optimize the revenue streams for my business model.

**Instructions:** First, read my existing `business-model-canvas.md` file to understand my customer segments, value propositions, channels, and customer relationships.

**Output Requirements:** Maximum 150 words total. Focus on primary revenue model and pricing.

Provide:

1. **Primary Revenue Model** (choose one): Asset sale, subscription, usage fee, freemium, licensing, advertising, etc.

2. **Pricing Approach** (1 sentence): How we price and why it fits our segments, starting from what customers spend on the problem today (from my interview notes if they exist). Do not invent a willingness-to-pay number

3. **Revenue per Segment** (1 sentence per segment): What each segment pays for and approximate price point

4. **AI Cost Check** (1 sentence): The price compared with model cost for a typical and a heavy user per month

Keep it focused on the core revenue mechanics. Skip lengthy projections.

**After receiving the response, append it to `business-model-canvas.md` under the heading "# Revenue Streams"**

Phase 2: Infrastructure. What you must have and do to deliver the value proposition. For most of you the key resource is your code and your model access, and the key activity includes the model calls, which is why they reappear in the cost structure.

Key Resources prompt

# Key Resources Identification

Help me identify the key resources required to make our business model work.

**Instructions:** First, read my existing `business-model-canvas.md` file to understand my complete customer-focused business model.

**Output Requirements:** Maximum 120 words total. List only critical resources.

Identify the 3-6 most critical resources needed:

1. **Physical/Tech** (if applicable): Key infrastructure, equipment, or technology

2. **Intellectual** (if applicable): Proprietary IP, data, or expertise

3. **Human** (if applicable): Critical roles or skills needed

4. **Financial** (if applicable): Funding requirements

For each resource, provide 1 sentence on why it's critical. Focus only on must-haves, not nice-to-haves.

**After receiving the response, append it to `business-model-canvas.md` under the heading "# Key Resources"**

Key Activities prompt

# Key Activities Analysis

Help me identify the key activities required to execute our business model successfully.

**Instructions:** First, read my existing `business-model-canvas.md` file to understand my business model and key resources.

**Output Requirements:** Maximum 100 words total. List only the most critical activities.

Identify the 3-5 most critical activities to deliver value:

1. **Core Activities** (2-3 activities): The essential things we must do to deliver our value proposition

2. **Execution Approach** (1 sentence per activity): Will this be done internally, outsourced, or automated?

Keep it focused on must-do activities only. Skip extensive categorization.

**After receiving the response, append it to `business-model-canvas.md` under the heading "# Key Activities"**

Key Partnerships prompt

# Key Partnerships Strategy

Help me identify strategic partnerships that will strengthen our business model.

**Instructions:** First, read my existing `business-model-canvas.md` file to understand my key resources and activities.

**Output Requirements:** Maximum 100 words total. List only critical partnerships.

Identify the 2-4 most important partnerships (if any):

1. **Partner Type & Purpose** (1 sentence per partnership): Who/what type of partner and why we need them

2. **Value Exchange** (1 phrase per partnership): What they provide + what we provide

If no critical partnerships are needed, state "None - will build all capabilities in-house" and explain briefly why.

Keep it tight. Only list partnerships that are truly necessary.

**After receiving the response, append it to `business-model-canvas.md` under the heading "# Key Partnerships"**

Phase 3: Financial viability. The unit economics above, applied to your product. Check the cost per user against your logs, not only Claude’s estimate.

Cost Structure prompt

# Cost Structure Analysis

Help me understand and optimize the cost structure for our business model.

**Instructions:** First, read my existing `business-model-canvas.md` file to understand my key resources, activities, and partnerships.

**Output Requirements:** Maximum 150 words total. Focus on major cost categories and break-even.

Provide:

1. **Top 3-5 Cost Categories** (1 phrase each): List the biggest costs (e.g., "Engineering salaries", "Cloud infrastructure", "Customer acquisition", "Model API calls")

2. **Fixed vs. Variable Split** (1 sentence): Approximate ratio and what drives variable costs

3. **Cost Strategy** (1 sentence): Are we cost-driven (lean) or value-driven (premium)?

4. **Cost per User** (1-2 sentences): Model cost per core action x actions per month, for a typical and a heavy user, plus payment fees. Read my code to find the model calls

5. **Break-Even Estimate** (1-2 sentences): Rough estimate of units/customers needed to break even and monthly burn rate

Keep it high-level. Skip detailed optimization recommendations.

**After receiving the response, append it to `business-model-canvas.md` under the heading "# Cost Structure"**

Phase 4: Synthesis and validation. A check of the whole: do the blocks agree, and which guess would make the model fail if it were wrong?

Complete Business Model Review prompt

# Complete Business Model Canvas Review

Help me review and optimize my complete business model canvas.

**Instructions:** Read my complete `business-model-canvas.md` file which contains all ten components of my business model canvas.

**Output Requirements:** Maximum 250 words total. Focus on critical gaps and next steps.

Provide:

1. **Coherence Assessment** (2-3 sentences): Does the model hang together? Any major gaps or contradictions? Do solutions address the jobs-to-be-done?

2. **Biggest Risk** (1-2 sentences): What's the most critical assumption or weakness?

3. **Key Strength** (1 sentence): What's the most defensible part of this model?

4. **Financial Viability** (1-2 sentences): Can we make money? What are the unit economics?

5. **Top 3 Validation Priorities** (3 bullets, 1 sentence each): What experiments or tests should we run first to validate/invalidate key assumptions?

Keep it actionable and specific. Skip theoretical analysis.

**After receiving the response, append it to `business-model-canvas.md` under the heading "# Business Model Review & Validation Plan"**

Turn the canvas into a model and a slide

The financial model makes break-even and its sensitivity explicit: change the price, the share of heavy users, or the model cost, and watch break-even move. The slide is for presenting the canvas.

Prompts 12 and 13 name the xlsx and pptx skills, Anthropic’s built-in skills for making Excel and PowerPoint files. When you sign in to Claude Code with a claude.ai account, xlsx is always available. If Claude says it cannot find pptx, turn it on in your skills settings on claude.ai.

Financial model for break-even analysis prompt

Once you’ve completed your business model canvas, use this prompt to create a financial model in Excel:

# Create Financial Model for Break-Even & Sensitivity Analysis

I need you to create an Excel financial model based on my business model canvas using the xlsx skill.

**Instructions:** First, read my complete `business-model-canvas.md` file to understand my revenue streams, cost structure, and business model.

**Your Task:**

Create an Excel file named `financial-model.xlsx` with the following sheets:

**Sheet 1: Assumptions**
- Revenue assumptions from the canvas:
  - Price per unit/customer by segment
  - Expected conversion rates
  - Growth assumptions (monthly/quarterly)
  - Customer acquisition cost by segment
  - Customer lifetime value estimates

- Cost assumptions from the canvas:
  - Fixed costs (monthly): salaries, rent, software, etc.
  - Variable costs (per unit/customer): model API cost per user (cost per core action x actions per month), payment processing fees, other COGS
  - Separate assumptions for a typical user and a heavy user
  - Semi-variable costs: marketing, support scaling

- Make all assumptions clearly labeled and in BLUE cells so they're easy to identify and modify

**Sheet 2: Monthly Projections (12-24 months)**
- Columns: Month, New Customers by Segment, Total Customers, Revenue by Stream, Total Revenue
- Fixed Costs, Variable Costs, Total Costs
- Gross Margin, Operating Margin, Net Profit/Loss
- Cumulative Cash Flow
- Break-Even Analysis (highlight when crossed)

**Sheet 3: Break-Even Analysis**
- Calculate break-even in units/customers
- Calculate break-even in revenue
- Calculate time to break-even (months)
- Show contribution margin by segment
- Create a break-even chart (Revenue vs. Costs over time)

**Sheet 4: Sensitivity Analysis**
- Create a data table showing how break-even changes with:
  - Price variations (+/- 20% in 5% increments)
  - Cost variations (+/- 20% in 5% increments)
  - Customer acquisition cost variations
  - Conversion rate variations

- Use conditional formatting to highlight break-even points
- Create a tornado chart or sensitivity chart showing which variables have the biggest impact

**Formatting Requirements:**
- Use clear headers and formatting
- Color-code: Assumptions (BLUE), Revenue (GREEN), Costs (RED), Profit (GREEN/RED)
- Include formulas (not hard-coded values)
- Add data validation where appropriate
- Include clear instructions/notes for updating assumptions
- Make it easy to scenario-plan by changing blue assumption cells

**Output:** Create `financial-model.xlsx` with all four sheets, formulas, and charts.

Please read my `business-model-canvas.md` file now and create the financial model.

After receiving the Excel file, save it to your project directory for break-even and sensitivity analysis.

Business Model Canvas presentation prompt

Once your business-model-canvas.md file is complete, use this prompt to create a Business Model Canvas presentation slide:

# Create Business Model Canvas Presentation Slide

I need you to create a professional Business Model Canvas presentation slide using the pptx skill.

**Context:** I have completed a comprehensive business model analysis with detailed information in the file `business-model-canvas.md`.

**Your Task:**

1. Read the entire `business-model-canvas.md` file to understand my complete business model
2. Extract and synthesize the KEY insights from each of the ten business model components:
   - Customer Segments
   - Jobs-To-Be-Done
   - Customer Value Proposition (CVP)
   - Channels
   - Customer Relationships
   - Revenue Streams
   - Key Resources
   - Key Activities
   - Key Partnerships
   - Cost Structure

3. Create a single PowerPoint slide using the pptx skill that presents a complete Business Model Canvas with:
   - A clear title indicating the business/product name
   - All ten building blocks arranged in the refined Business Model Canvas layout (with JTBD and CVP in the center)
   - Concise, bullet-point summaries for each block (3-5 bullets max per block)
   - Professional formatting with clear visual hierarchy
   - Appropriate use of color to distinguish different sections
   - Readable font sizes suitable for presentation

4. For each block, uplevel the detailed analysis from the markdown file into:
   - High-level strategic insights (not detailed explanations)
   - Concrete, specific points (not generic statements)
   - Action-oriented language where appropriate
   - Maximum clarity and brevity

**Design Guidelines:**
- Use the Business Model Canvas layout shown in images/business-model-canvas.png which splits the center into Jobs-To-Be-Done and Customer Value Proposition sections. If you can't access this file, use the Jeff Dyer refined BMC layout with 10 blocks.
- The center section should show JTBD (top) and CVP/Solution (bottom) as separate but connected blocks
- Ensure all text is legible and not overcrowded
- Use visual hierarchy to make the canvas easy to scan
- Consider using different background colors for the ten blocks to improve readability
- Include a footer with your company name or project name

**Output:** Create a professional PPTX file named `business-model-canvas.pptx` with one comprehensive 10-component Business Model Canvas slide.

Please read my `business-model-canvas.md` file now and create the presentation.

Tips:

Be specific. Generic inputs give a generic canvas. Put your interview notes and real usage numbers in the repo where Claude can read them.
Iterate. Your first canvas will be wrong. Revise it when the evidence changes.
Check coherence. After each block, ask how it affects the others.
Test the riskiest guess. The review prompt names it; your next sprint can test it.

Key Concepts

Business model: how you create value for a specific customer, deliver it through some channel, and capture part of it as revenue, at a cost lower than what you capture.
Business Model Canvas: a one-page tool with ten blocks (Osterwalder’s nine, with the value proposition split by Jeff Dyer into Jobs-To-Be-Done and Customer Value Proposition). The customer side asks who pays and how; the operations side asks what you must do and have, and what it costs.
Jobs-To-Be-Done and Customer Value Proposition: the job customers are hiring your product to do, and the specific solution you offer to do it.
Blocks constrain each other: each choice forces others. A self-serve channel needs onboarding that works without you; a subscription makes retention matter most; a model call as the core activity adds cost with every use. A canvas whose blocks contradict each other cannot work.
Every block is a hypothesis: mark each entry as evidence (an interview, a payment, usage logs) or a guess, and test next the guesses that would make the model fail if wrong.
Revenue model: the rule that turns use into money (subscription, usage-based, freemium, one-time, advertising, commission). Each works only if something specific is true about your customer and your costs.
Fixed and variable costs: costs that stay the same as you grow, and costs that grow with each user or use, including model calls and payment fees.
Contribution margin: price minus variable cost per customer; what each customer contributes toward fixed costs.
Unit economics: look at one customer. If each brings in more than they cost to serve, you need enough of them to cover fixed costs; if each costs more, more customers make it worse.
Break-even: fixed costs divided by contribution margin per customer. A few heavy users can move it, so measure the distribution of usage as well as the average.
Margin-based LTV: contribution margin per month times the average months a customer stays. Using revenue instead of margin overstates it, by a lot for an AI product.
Customer acquisition cost (CAC): what you spend, in money and time, to get one paying customer. If CAC is higher than LTV, every new customer loses money.
Drafting the canvas with AI: a model can draft every block and check that they agree, but where your notes say nothing it fills the block with something plausible. Ask of every block, “how do I know this?”