I've been thinking about market models lately, and recalled an illustration I came up with about eight years ago which I used to describe the dynamics of how business software was sold differently to discrete categories of business size.
So, I redrew it below. The theory went along the lines of:
Small businesses have low complexity but high price sensitivity / low purchasing power, large businesses have very high complexity and comparatively low price sensitivity / high purchasing power. Mid-sized businesses are the problem children with high complexity and but still high price sensitivity. Business complexity is also a pretty good proxy for cost of sale.
Small and Large category customers tended to have direct relationships with software vendors (for different reasons) but mid-sized businesses were forced to deal with intermediaries like resellers, specialists or niche vendors / integrators. It also explains why small business software vendors never grow upstream, and vice versa - the cultural and go-to-market model differences are too profound.
I've not yet re-worked this model for cloud apps, but it will be interesting to see what (if any) changes emerge.
Click for big.