Ferrari’s Real Business Model

Enzo Ferrari started off racing for Alfa Romero in the 1920s, he was an avid racing enthusiast. 

After a few successes he retired himself from racing in 1932 and switched to focusing on the production and management of Alfa Romero automobiles.

Around this same time he formed his own his own racing team under the Ferrari name.

Later on in 1947, Enzo Ferrari created Ferrari as we know it today.

The primary purpose was to fund his own racing ventures rather than really building an automobile business (that was mostly secondary to racing).

And more so?

Ferrari was never really a well engineered car.

It was engineered to go fast, sure.

Not to be reliable.

Actually after speaking to a few Ferrari owners, the common theme is Ferrari is actually a really bad car.

The business model of Ferrari relied on the fact they were shit cars.

The real money came from maintenance.

Only Ferrari, or Ferrari partners had the know how and capability to fix them.

In fact, in modern times, they essentially build in “computer” mechanics that require you to go in to fix something not even really wrong with the car itself.

The point here?

Continuity.

If you own a Ferrari, you will always have to go back to Ferrari to get it fixed (which happens… a lot).

They will have income forever, rather than one off.

It’s really an arguably great business model.

Continuity in business is important.

Rather than having a one off payment, as long as you keep the consumer happy, you’ll have predictable income.

In my business right now I’m working on adding in a monthly offer, in fact.

Continuity can be applied in all types of busineses, monthly “mystery” boxes (ecom), membership sites, news letters, retainers (services), and beyond.

Continuity will be a reliable source of money, whereas one off products it’s much less predictable.

It gives you certainty in unsteady waters, plus over the lifetime of those customers often you can make more than you would a high ticket one time offer (that is… if your product isn’t shit).

Something to think about.

– Colton