Quick Answer

To classify your startup, answer two questions:

1. Who is your customer? → B2B, B2C, or B2B2C
2. How do you deliver value and make money? → SaaS, Marketplace, or Transactional

Your startup’s business model is the combination of these two answers.

Examples:

• Slack = B2B SaaS
• Airbnb = B2C Marketplace
• Figma = Prosumer SaaS
• Affirm = B2B2C Platform

Most founders classify their startup incorrectly not because the concepts are difficult, but because they’re answering the wrong question.

If you’ve ever wondered whether your company is SaaS, B2B, or B2C, you’re comparing categories that belong to different dimensions. B2B and B2C describe who you sell to, while SaaS describes how you deliver your product and generate revenue. They aren’t alternatives they work together.

In this guide, you’ll learn a simple 2-minute framework to classify any startup, including B2B2C businesses, marketplaces, and prosumer products. By the end, you’ll know exactly how to position your company, choose the right pricing model, estimate your market size, and communicate your business clearly to customers and investors.

The 2-Minute Startup Classification Framework

Before diving into the details, here’s the framework you’ll use throughout this guide:

Step 1: Identify who pays (B2B, B2C, or B2B2C).

Step 2: Identify how your business delivers value and makes money (SaaS, Marketplace, or Transactional).

Step 3: Check whether your product spreads from individual users to teams. If so, you likely have a prosumer or product-led growth (PLG) motion.

That’s it. Everything else in this guide simply explains these three steps in more detail.

Why Founders Get This Wrong

Ask 10 founders to describe the type of company they’re building, and you’ll hear answers like “a B2B SaaS,” “a B2C marketplace,” or, more often than not, “it’s a SaaS.” Ask one or two follow-up questions, and the answers often start contradicting themselves.

That’s because asking “SaaS vs B2B vs B2C” is a trick question. These categories are not mutually exclusive and shouldn’t be treated as alternatives. Understanding where your startup fits has major implications for pricing, customer acquisition, market sizing, fundraising, and the metrics you should track.

The core idea is simple:

• B2B, B2C, and B2B2C describe who your customer is.
• SaaS describes how you deliver your product and generate recurring revenue.
• Marketplace describes how your business is structured you connect buyers and sellers who transact through your platform.

They’re different axes. You don’t choose SaaS or B2B or B2C. You classify your startup on both axes, and the combination tells you how to build, market, price, and grow your business.

What Is the Difference Between SaaS, B2B, and B2C?

The biggest misconception founders make is thinking that SaaS, B2B, and B2C are competing business models. They’re not.

Each term answers a different question about your startup:

Term	It Answers	Example
B2B	Who is your customer?	You sell to businesses or organizations.
B2C	Who is your customer?	You sell directly to individual consumers.
SaaS	How do you deliver your product and make money?	You provide software over the internet, typically through a recurring subscription.

Think of it this way:

• B2B and B2C describe your customer.
• SaaS describes your delivery and revenue model.
• Marketplace describes your business structure.

That’s why a startup can be B2B SaaS, B2C SaaS, B2B Marketplace, or even B2B2C SaaS. These aren’t contradictions—they’re combinations.

For example:

• Slack is a B2B SaaS company because it sells subscription software to businesses.
• Netflix is a B2C subscription business because it sells directly to consumers.
• Airbnb is a B2C marketplace because it connects hosts and travelers while earning a commission on each booking.
• Figma started as a prosumer SaaS product before expanding into enterprise B2B SaaS.

Once you separate who you serve from how your business operates, classifying any startup becomes straightforward. The rest of this guide will walk through each dimension one step at a time.

What Is the Difference Between SaaS, B2B, and B2C?

The difference between SaaS, B2B, and B2C is simple once you understand that they answer different questions about your startup.

• B2B (Business-to-Business) describes who you sell to—other businesses or organizations.
• B2C (Business-to-Consumer) describes who you sell to—individual consumers.
• SaaS (Software as a Service) describes how you deliver your product and generate revenue, usually through a recurring subscription.

This is why asking whether your startup is SaaS, B2B, or B2C is actually the wrong question. These categories don’t compete with each other they work together.

SaaS vs B2B vs B2C at a Glance

Category	What It Describes	Key Question	Example
B2B	Your customer	Who pays for your product?	Slack
B2C	Your customer	Who buys and uses your product?	Netflix
SaaS	Your business model	How do you deliver software and make money?	Slack, Figma

Think of startup classification as two separate dimensions:

• Axis 1: Who is your customer? (B2B, B2C, or B2B2C)
• Axis 2: How does your business operate? (SaaS, Marketplace, or Transactional)

Your startup’s classification is simply the combination of these two answers.

For example:

• Slack is B2B SaaS because businesses pay for subscription software.
• Airbnb is a B2C marketplace because it connects travelers with hosts and earns a commission on each booking.
• Figma started as a prosumer SaaS product, where individuals adopted the software before bringing it into their organizations.
• Affirm is a B2B2C platform because it works with merchants while serving their customers during checkout.

Once you separate who you serve from how your business makes money, classifying almost any startup becomes straightforward. The next sections break down each dimension in detail so you can identify exactly where your own startup fits.

Step 1: Identify Who Your Customer Is

The first step in classifying your startup is identifying who pays for your product. This determines whether your business is B2B, B2C, or B2B2C.

A simple rule to remember:

• If a company budget pays, you’re likely B2B.
• If an individual pays from their own wallet, you’re likely B2C.
• If a business enables or purchases the product while consumers use it, you’re likely B2B2C.

Notice that this step says nothing about whether you’re SaaS, a marketplace, or an e-commerce business. At this stage, you’re only identifying your customer.

B2B (Business-to-Business)

A B2B startup sells products or services to other businesses, organizations, or teams rather than individual consumers.

In many B2B companies, the buyer isn’t the primary user. For example, a manager may purchase software for an entire department, while employees use it every day. Because multiple stakeholders are involved, buying decisions usually take longer and require trust, demonstrations, or sales conversations.

Typical characteristics of B2B startups include:

• Higher average contract values (ACV)
• Longer sales cycles
• Multiple decision-makers
• Relationship-driven sales
• Founder-led sales in the early stages

Examples: Salesforce, Slack, HubSpot, Stripe.

If your customers pay using a company budget, your startup is most likely B2B, regardless of whether the product is software, a marketplace, or a physical product.

B2C (Business-to-Consumer)

A B2C startup sells products or services directly to individual consumers for personal use. The person who discovers, buys, and uses the product is usually the same person, making purchasing decisions much faster than in B2B.

Because consumers can sign up or purchase instantly, B2C companies typically focus on building a strong brand, creating a great user experience, and reaching customers through scalable marketing channels.

Common characteristics of B2C startups include:

• Large customer base
• Lower revenue per customer
• Short buying decisions
• Self-service purchasing
• Growth driven by marketing, referrals, content, SEO, social media, or app stores

Examples: Netflix, Spotify, Duolingo, Calm.

If individuals purchase your product using their own money for personal use, your startup is most likely B2C. Whether you sell software, subscriptions, physical products, or digital services doesn’t change this classification it only describes who your customer is.

B2B2C (Business-to-Business-to-Consumer)

A B2B2C startup reaches consumers through another business instead of selling to them directly. In this model, you serve two different customers: the business partner that enables or purchases your solution, and the end user who ultimately benefits from it.

Unlike a traditional B2B company, the end consumer interacts with your product. Unlike a pure B2C business, you rely on another company for distribution, integration, or customer access.

Common characteristics of B2B2C startups include:

• Two distinct customer groups to serve
• Businesses act as distribution partners or sales channels
• End users interact directly with the product
• Success depends on creating value for both businesses and consumers

Examples: Affirm, embedded payment providers, white-label banking apps, employee benefits platforms, and many healthcare or education technology solutions.

How to Know If You’re B2B2C

Ask yourself these questions:

• Does another business introduce customers to your product?
• Do consumers actively use your product or service?
• Do you need both the business partner and the end user to succeed?

If the answer is yes to most of these questions, your startup likely follows a B2B2C business model.

Step 2: Identify How Your Business Makes Money

Now that you’ve identified who your customer is, the next step is understanding how your business delivers value and generates revenue.

This is where many founders get confused. They correctly identify their customer as B2B or B2C, then mistakenly think SaaS is another customer category. In reality, SaaS answers a completely different question.

At this stage, you’re no longer asking who buys your product. Instead, you’re asking:

• How is the product delivered?
• How does the business earn revenue?
• Is revenue recurring, transactional, or commission-based?

Your answer will usually fall into one of these business models:

• SaaS – You sell software through a recurring subscription.
• Marketplace – You connect buyers and sellers and earn a commission or take rate.
• Transactional – You earn revenue from one-time purchases or per-transaction fees.
• Prosumer – Individuals adopt the product first, and it later expands into teams or organizations through product-led growth.

Remember, these models don’t replace B2B or B2C they combine with them.

For example:

• A company can be B2B SaaS.
• A startup can be a B2C Marketplace.
• A product can grow as Prosumer SaaS before becoming Enterprise SaaS.
• A platform can operate as B2B2C SaaS.

Once you understand this distinction, classifying your startup becomes much simpler because you’ve now answered both fundamental questions:

1. Who is your customer?
2. How does your business make money?

The following sections explain each business model in more detail.

SaaS (Software as a Service)

Software as a Service (SaaS) is a business model where customers access software over the internet and pay a recurring subscription or usage-based fee instead of purchasing the software outright.

Unlike B2B or B2C, SaaS doesn’t describe who your customer is it describes how your product is delivered and how your business generates revenue. That’s why the same SaaS product can serve businesses, consumers, or both.

Most SaaS companies host their applications in the cloud, handle maintenance and updates centrally, and provide customers with continuous access through a web browser or mobile app.

Common characteristics of a SaaS business include:

• Recurring monthly or annual revenue (MRR/ARR)
• Cloud-hosted software with automatic updates
• Subscription or usage-based pricing
• High customer retention is critical for long-term growth
• Revenue grows by acquiring new customers and expanding existing accounts

Because revenue is recurring, SaaS companies focus on metrics that measure customer retention and sustainable growth, including:

• Monthly Recurring Revenue (MRR)
• Annual Recurring Revenue (ARR)
• Customer Acquisition Cost (CAC)
• Customer Lifetime Value (LTV)
• Gross and Net Revenue Retention
• Churn Rate

Common Misconception

Many founders describe their startup as simply “a SaaS.” While that’s technically true, it’s only half the answer.

A more accurate description combines who you serve with how you deliver your product.

For example:

• Slack is B2B SaaS.
• Canva started as Prosumer SaaS before expanding into teams and enterprises.
• Notion followed a similar path from individual users to business adoption.
• Duolingo delivers software through subscriptions but is generally classified as a B2C subscription business because it serves individual consumers rather than workplace teams.

The key takeaway is simple:

SaaS is a delivery and revenue model not a customer category. To classify your startup correctly, always combine SaaS with the customer type you identified in Step 1.

Marketplace

A marketplace is a business model where you don’t primarily sell your own product. Instead, you create a platform that connects buyers and sellers, service providers and customers, or any two groups that want to transact. Your business earns revenue by facilitating these transactions rather than owning the inventory itself.

Unlike SaaS, a marketplace succeeds only when both sides of the platform are active. If there are no sellers, buyers have nothing to purchase. If there are no buyers, sellers have no reason to join. This challenge is commonly known as the chicken-and-egg problem.

Common characteristics of a marketplace include:

• Two-sided platform with buyers and sellers
• Revenue generated through commissions or take rates
• Strong network effects as more users join
• Success depends on balancing supply and demand
• Trust, reviews, and liquidity are essential for growth

Instead of recurring software metrics, marketplace businesses typically focus on:

• Gross Merchandise Value (GMV)
• Take Rate
• Number of Active Buyers and Sellers
• Liquidity (how quickly transactions happen)
• Repeat Purchase Rate

Examples

• Airbnb connects travelers with property owners.
• Uber connects riders with drivers.
• Etsy connects shoppers with independent creators.
• Faire connects retailers with wholesale brands.

Common Misconception

Many founders call their startup a marketplace simply because it has multiple users. That’s not enough.

If you’re selling your own software or service, you’re not a marketplace.

You’re a marketplace only if your core value comes from helping two independent parties find each other and complete transactions while your platform earns a fee from those interactions.

For example:

• A company selling project management software is B2B SaaS, not a marketplace.
• A platform connecting freelancers with clients is a marketplace.
• A SaaS product can later add a marketplace, but that doesn’t change its core business model unless the marketplace becomes the primary source of value and revenue.

Transactional / E-commerce

Not every startup is a SaaS business or a marketplace. Many companies generate revenue through one-time purchases or per-transaction fees. This is known as a transactional business model.

In a transactional model, customers pay each time they purchase a product or service. Revenue isn’t tied to a recurring subscription, so growth depends on acquiring new customers, increasing purchase frequency, or raising the average order value.

Common characteristics of transactional businesses include:

• One-time or pay-per-purchase pricing
• Revenue generated from individual transactions
• No recurring subscription required
• Customer retention is driven by repeat purchases rather than contract renewals
• Profitability depends on margins, order value, and customer lifetime value

The most important metrics for transactional businesses include:

• Revenue per Order
• Average Order Value (AOV)
• Gross Margin
• Repeat Purchase Rate
• Customer Acquisition Cost (CAC)
• Customer Lifetime Value (LTV)

Examples

• An online clothing store selling physical products.
• A design agency charging per project.
• An online course sold as a one-time purchase.
• A software product with a lifetime license instead of a monthly subscription.

Common Misconception

Many founders assume that every digital product is a SaaS business. That’s not true.

If customers pay once to buy your product or service, your business follows a transactional model, even if the product itself is delivered online.

For example:

• Selling an ebook for a one-time fee is transactional, not SaaS.
• Selling downloadable design templates is transactional.
• Charging a monthly subscription for access to software is SaaS.
• Taking a commission whenever two users complete a transaction is a marketplace.

The key difference is simple:

• SaaS earns recurring revenue.
• Marketplace earns commissions or take rates.
• Transactional businesses earn revenue one purchase at a time.

Prosumer (The Business Model Most Founders Overlook)

A prosumer business targets individual professionals rather than companies from day one. These users discover, adopt, and pay for the product themselves, but eventually introduce it to their teams or organizations.

In other words, a prosumer startup markets like B2C but gradually monetizes like B2B.

Instead of relying on sales teams or enterprise contracts, prosumer companies focus on creating products that are easy to try, easy to love, and easy to share. As more individuals adopt the product, entire teams begin using it, creating a natural path into larger business accounts.

This bottom-up adoption strategy is commonly known as Product-Led Growth (PLG).

Common characteristics of a prosumer business include:

• Anyone can sign up without talking to sales.
• Free plans or affordable entry-level pricing encourage adoption.
• Individual users become internal champions within their companies.
• Teams upgrade to paid workspaces, admin controls, and collaboration features.
• Revenue grows from both individual subscriptions and business accounts.

Examples

Some of today’s most successful software companies followed a prosumer strategy:

• Figma gained traction with individual designers before expanding into enterprise design teams.
• Notion was adopted by students, freelancers, and creators before companies standardized on it.
• Canva started with individual creators before launching team and enterprise plans.
• Loom, Cursor, and Framer have all used similar bottom-up growth strategies.

How to Know If You’re Building a Prosumer Startup

Ask yourself these questions:

• Can someone start using your product without speaking to sales?
• Does one user naturally invite teammates or colleagues?
• Do companies adopt your product after employees already love it?
• Do you offer both individual and team pricing?

If you answered yes to most of these questions, you’re likely building a prosumer SaaS business.

Common Misconception

Many founders think a prosumer product is simply another form of B2C. In reality, it’s a bridge between B2C adoption and B2B monetization.

A prosumer company often starts by winning individual users but eventually generates a significant portion of its revenue from teams and enterprises.

That’s why companies like Figma, Notion, and Canva are commonly described as Prosumer SaaS businesses rather than purely B2C or purely B2B.

Putting the Two Steps Together

By now, you’ve answered the two questions that define almost every startup:

1. Who is your customer?
2. How does your business deliver value and make money?

Your startup’s classification is simply the combination of those two answers.

Instead of describing your company as just “a SaaS” or “a B2B startup,” combine both dimensions to create a complete business model.

Here’s how that works:

Step 1: Who Is Your Customer?	Step 2: How Do You Make Money?	Startup Classification	Example Companies
B2B	SaaS	B2B SaaS	Salesforce, Slack
B2C	Subscription Software	B2C Subscription	Netflix, Duolingo
B2B	Marketplace	B2B Marketplace	Faire, Ankorstore
B2C	Marketplace	B2C Marketplace	Airbnb, Etsy, Uber
B2B2C	SaaS / Platform	B2B2C Platform	Affirm, White-label Apps
Prosumer	SaaS	Prosumer SaaS	Figma, Notion, Canva

Notice something interesting:

SaaS appears multiple times.

That’s because SaaS isn’t a customer type it’s a delivery and revenue model. The same SaaS business can target businesses, consumers, or professional individuals depending on who pays and how the product spreads.

For example:

• If businesses pay a recurring subscription, you’re building B2B SaaS.
• If consumers subscribe to your software, you’re running a B2C subscription business.
• If individuals adopt your product first and later expand it into their organizations, you’re following a Prosumer SaaS model.
• If your software is distributed through another business to reach end users, you’re operating a B2B2C platform.

Once you combine these two dimensions, classifying your startup becomes straightforward and more importantly, it helps you make better decisions about pricing, go-to-market strategy, customer acquisition, fundraising, and the metrics you should prioritize.

In the next section, you’ll use a simple decision tree to classify almost any startup in less than two minutes.

The 2-Minute Startup Classification Decision Tree

If you’re still unsure how to classify your startup, use this simple decision tree. In most cases, you can identify your business model in less than two minutes by answering a few straightforward questions.

Step 1: Who Pays for Your Product?

Start with the person or organization that ultimately pays.

• A company or organization pays → Your startup is likely B2B.
• An individual pays using their own money → Your startup is likely B2C.
• A business enables or purchases the product while consumers use it → Your startup is likely B2B2C.

Tip: Focus on who controls the budget not just who uses the product.

Step 2: Do You Sell Your Own Product or Connect Other People?

Next, identify how your business creates value.

• You sell your own software, service, or product → Continue to Step 3.
• You connect buyers and sellers (or any two parties) and earn a commission → You’re building a Marketplace.

Step 3: How Do You Charge Customers?

Now look at your revenue model.

• Recurring monthly or annual subscription → Add the SaaS layer.
• One-time purchase or pay-per-use → You’re following a Transactional business model.

Step 4: How Do Customers Discover and Adopt Your Product?

Finally, think about how your product spreads.

• Individuals sign up first and later invite teammates or expand into their company → You have a Prosumer SaaS or Product-Led Growth (PLG) motion.
• Companies evaluate and purchase the product through sales or procurement → You’re following a traditional B2B sales motion.

Example Outcomes

By combining your answers, you can classify almost any startup:

Your Answers	Final Classification
Business pays + Subscription software	B2B SaaS
Individual pays + Subscription software	B2C Subscription Business
Business pays + Consumers use it + Subscription software	B2B2C Platform
Buyers and sellers transact through your platform	Marketplace
Individual adopts first → Team upgrades	Prosumer SaaS
Individual pays + One-time purchase	Transactional Business

One Final Rule to Remember

Whenever you’re unsure, ask yourself these two questions:

1. Who is my customer?
2. How does my business make money?

Your startup’s classification is simply the combination of those two answers.

Once you’ve identified both, you’ll have a much clearer understanding of your pricing strategy, go-to-market approach, key metrics, fundraising narrative, and long-term growth model.

Why Your Startup Classification Changes Everything

Correctly classifying your startup isn’t just about using the right label. It influences nearly every important business decision you’ll make from pricing and customer acquisition to fundraising and long-term growth.

Once you know who your customer is and how your business makes money, you can make smarter decisions based on proven business models instead of guesswork.

1. Market Size (TAM)

Your startup classification determines how you calculate your Total Addressable Market (TAM).

For example:

• B2B startups typically estimate TAM by multiplying the number of target businesses by the average annual contract value (ACV).
• B2C businesses estimate TAM using the number of potential customers multiplied by the average revenue per user (ARPU) or subscription price.
• Marketplaces often measure opportunity using Gross Merchandise Value (GMV) and the percentage of transactions they can realistically capture.

Using the wrong approach can dramatically overestimate or underestimate your market opportunity.

2. Go-to-Market Strategy

Different business models require different customer acquisition strategies.

• B2B: Founder-led sales, outbound prospecting, partnerships, and account-based marketing.
• B2C: SEO, content marketing, paid advertising, influencer marketing, referrals, and app store optimization.
• Prosumer: Self-serve onboarding, freemium plans, and Product-Led Growth (PLG).
• Marketplace: Building supply and demand simultaneously while solving the chicken-and-egg problem.

Your classification helps you focus on the channels most likely to generate early traction.

3. Pricing Strategy

The way you charge customers should align with your business model.

Common pricing models include:

• Per-seat subscriptions
• Usage-based pricing
• Tiered plans
• Freemium
• Commission or take-rate pricing
• One-time purchases

Choosing the wrong pricing model can slow adoption and reduce long-term revenue.

4. The Metrics That Matter

Every startup is measured differently.

B2B SaaS investors often look at:

• Annual Recurring Revenue (ARR)
• Monthly Recurring Revenue (MRR)
• Net Revenue Retention (NRR)
• Customer Acquisition Cost (CAC)
• Customer Lifetime Value (LTV)

B2C companies usually focus on:

• Daily and Monthly Active Users (DAU/MAU)
• User retention
• Customer acquisition efficiency
• Average Revenue Per User (ARPU)

Marketplace businesses care about:

• Gross Merchandise Value (GMV)
• Take Rate
• Liquidity
• Active buyers and sellers
• Repeat transaction rate

Tracking the right metrics helps you understand whether your business is actually improving.

5. Your Fundraising Story

Investors compare your startup against others with similar business models.

If you describe yourself as a B2B SaaS company, they’ll expect SaaS metrics such as recurring revenue, retention, and efficient customer acquisition.

If you’re building a marketplace, they’ll want evidence of strong supply, demand, liquidity, and network effects.

Presenting the wrong metrics for your business model can create confusion and reduce investor confidence.

The Bottom Line

Startup classification isn’t just a label it’s a strategic framework.

When you understand who your customer is and how your business creates revenue, you’ll make better decisions about:

• Market sizing
• Customer acquisition
• Pricing
• Product strategy
• Performance metrics
• Fundraising

The right classification gives you a clearer roadmap for building, measuring, and scaling your startup.

Can You Classify These Startups?

Now it’s time to put the framework into practice.

Try classifying each company before looking at the answer. If you can identify who the customer is and how the business makes money, you’ve understood the framework.

Company	Classification
Slack	B2B SaaS
Stripe	B2B SaaS (Infrastructure)
Airbnb	B2C Marketplace
Shopify	B2B SaaS (with a Marketplace Ecosystem)
Notion	Prosumer → B2B SaaS
Figma	Prosumer → B2B SaaS
Duolingo	B2C Subscription Business
Etsy	B2C Marketplace
Affirm	B2B2C Platform
Uber	B2C Marketplace

What You’ll Notice

A few interesting patterns emerge from these examples:

• SaaS isn’t limited to B2B. It can also support B2C and prosumer businesses.
• Marketplaces aren’t defined by software. They’re defined by connecting two or more parties and facilitating transactions.
• Prosumer companies often evolve into enterprise software businesses as adoption spreads from individuals to teams.
• Some companies combine multiple business models. For example, Shopify is primarily a B2B SaaS company but also operates a marketplace ecosystem through its App Store and partner network.

Once you start looking at startups through these two dimensions who the customer is and how the business generates revenue classifying almost any company becomes much easier.

The same framework can also help you analyze competitors, validate new startup ideas, and communicate your business model more clearly to customers, partners, and investors.

Frequently Asked Questions

Is SaaS always B2B?

No. SaaS (Software as a Service) describes how a product is delivered and monetized, not who it’s sold to. A SaaS business can serve businesses (B2B), consumers (B2C), or even follow a prosumer model where individuals adopt the product before teams.

What’s the difference between SaaS and B2B?

B2B defines who your customer is businesses or organizations.

SaaS defines how your product is delivered and how your business generates revenue, typically through recurring subscriptions.

For example, Slack is B2B SaaS because businesses pay for subscription software.

Can a startup be both B2B and B2C?

Yes.

Many startups serve both businesses and consumers. Some follow a B2B2C model, where businesses distribute or enable the product while consumers are the end users. Others operate hybrid models with separate products for businesses and individuals.

The key is identifying who pays, who uses the product, and how revenue is generated.

Is every subscription business a SaaS business?

No.

A subscription is simply a pricing model.

For example:

• Netflix is generally considered a B2C subscription business.
• Spotify follows a similar model.
• A cloud-based project management tool sold on a monthly plan is SaaS because customers subscribe to hosted software.

In short, all SaaS businesses can use subscriptions, but not all subscription businesses are SaaS.

Is Shopify a marketplace or a SaaS company?

Shopify is primarily a B2B SaaS company because it provides subscription software that helps businesses create and manage online stores.

However, Shopify also operates a marketplace ecosystem through its App Store, themes, and partner network. Its core business model remains B2B SaaS.

What is a Prosumer SaaS company?

A Prosumer SaaS company targets individual professionals first and expands into teams over time.

Users usually discover and adopt the product on their own, then invite coworkers as collaboration becomes valuable. This bottom-up growth strategy is commonly known as Product-Led Growth (PLG).

Examples include Figma, Notion, and Canva.

What is the easiest way to classify a startup?

Ask yourself two simple questions:

1. Who is the customer? (B2B, B2C, or B2B2C)
2. How does the business make money? (SaaS, Marketplace, or Transactional)

Combine those answers to describe your startup.

For example:

• Company + Subscription Software = B2B SaaS
• Consumer + Marketplace = B2C Marketplace
• Business + Consumer + Platform = B2B2C Platform
• Individual + Team Expansion = Prosumer SaaS

This two-step framework works for almost every modern startup.

Final Thoughts

Most founders don’t struggle because startup classifications are complicated they struggle because they’re trying to answer the wrong question.

Instead of asking whether your startup is SaaS, B2B, or B2C, ask these two questions:

1. Who is your customer?
2. How does your business deliver value and generate revenue?

Once you separate these two dimensions, classifying your startup becomes much easier.

Whether you’re building B2B SaaS, a B2C subscription app, a marketplace, a B2B2C platform, or a prosumer SaaS product, understanding your business model helps you make better decisions about pricing, customer acquisition, market sizing, fundraising, and long-term growth.

Remember, startup classification isn’t just a label it’s the foundation for how you build and scale your company.

What’s Next?

Once you’ve classified your startup, the next challenge is validating whether people actually need what you’re building.

That’s where PurelySaaS can help.

Simply describe your startup idea, and PurelySaaS helps you understand your business model, research competitors, estimate market size, and identify where potential customers are already discussing the problems you’re solving. Instead of relying on assumptions, you can make decisions using real market insights before investing months into building your product.

Whether you’re refining your first idea or preparing to launch your next startup, having a clear understanding of who your customer is and how your business creates value is one of the best investments you can make.

If you’re still unsure how to classify your startup, revisit the 2-Minute Startup Classification Framework in this guide and work through each step again. In most cases, you’ll arrive at the correct business model in just a few minutes.