B2B = Business to Business

What is B2B?

Business-to-business (B2B) is a sales term describing transactions between businesses — like when a wholesaler buys from a manufacturer or a retailer buys from a wholesaler.

Does B2B mean business-to-business?

Why, yes it does.


Why is B2B an attractive market for SaaS startups?

B2B (business-to-business) is an attractive market for SaaS (software as a service) startups for several reasons:

  • Higher revenue potential: B2B customers are often willing to pay more for software solutions than individual consumers, which can result in higher revenue per customer and overall revenue for the company.
  • Long-term contracts: B2B customers typically sign long-term contracts with SaaS startups, which provides more predictable revenue streams and reduces customer churn.
  • Niche markets: B2B markets often have specialized needs that can be addressed by niche software solutions, allowing SaaS startups to focus on specific verticals and differentiate themselves from competitors.
  • Lower marketing costs: SaaS startups targeting B2B customers can often rely on targeted marketing and sales efforts to reach decision-makers, reducing marketing costs compared to broad-based consumer marketing campaigns.
  • Customization and integration: B2B customers often require customization and integration with other software systems, creating opportunities for SaaS startups to provide additional services and revenue streams.

What are the 4 types of B2B?
  • Producers: These companies purchase goods and services and turn them into a different end-product. This category includes manufacturers and service providers like General Motors, McDonald’s, and Apple. Whether it’s GM buying steel, Apple sourcing microchips, or McDonald’s purchasing beef, they need those materials to make their products.
  • Resellers: These are companies that sell products and services made by other companies. Retailers, wholesalers, and brokers make up this category like Target and Costco.
  • Government: The world's largest purchaser of goods and services is the U.S. government. Whenever they need parts for a NASA shuttle or printers for the FBI, a B2B transaction takes place. Local and state government entities apply here as well.
  • Insitutitions: This category includes nonprofit organizations like churches, hospitals, charitable organizations, universities, civic clubs, etc. Much like government entities, these organizations also have to buy goods and services from other businesses to provide their services to the public.

What is an example of a B2B business?

Many companies that are well-known for serving consumers also do a lot of B2B business. Examples include:

  • Amazon through Amazon Web Services (AWS)
  • Apple through partnerships with companies like Intel and Panasonic
  • Any auto manufacturer

However there are also more strictly B2B companies like:

  • Quill: A Staples ecommerce subsidiary that sells office supplies to small and medium sized businesses.
  • Upwork: A job search platform that connects freelancers with employers.

What is meant by B2B model?

In most B2B business models, each organization benefits in some way from the transaction and typically has similar negotiating powers.

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