Revenue Model

A Revenue Model explains how a company earns money, who pays, and through which channels. It is a core part of a business plan and determines profitability and scalability.

Companies may use a single model or multiple revenue streams depending on their business type.

Common Types of Revenue Models

• Subscription Model: Recurring payments (e.g., Netflix)
• Freemium Model: Free basic service + paid premium features
• Advertising Model: Revenue from ads (e.g., websites, apps)
• Commission Model: Earnings from transactions (e.g., marketplaces)
• Sales Model: Direct product/service sales
• Licensing Model: Charging for usage rights

Why Revenue Model Matters

• Determines business sustainability
• Influences pricing strategy
• Impacts growth and scalability

Key Components

• Target customers
• Pricing strategy
• Revenue streams
• Payment methods

"A streaming platform charges ₹199/month subscription—this is a subscription revenue model."