A business model hypothesis is a specific, testable assumption about a key component of a [[business model]]. It is used to validate the viability and potential success of a business idea by identifying and testing assumptions related to various aspects of the business, such as customer needs, value propositions, revenue streams, cost structures, distribution channels, and key partnerships. The purpose of formulating a business hypothesis is to reduce uncertainty and risk by systematically testing these assumptions through experiments or market research. By validating or invalidating these hypotheses early in the development process, entrepreneurs can make informed decisions about how to refine their business model before investing significant resources. For example, if an entrepreneur believes that customers will pay for a subscription service for their product, the hypothesis might be: "Customers are willing to pay $10 per month for access to our premium features." This hypothesis can then be tested through interviews, surveys, pilot programs, or other methods to gather evidence and insights.