Revenue Model
BeginnerA revenue model is the specific way a business earns money from its customers, such as by selling products, charging subscriptions, taking commissions or selling advertising.
The revenue model is one part of a business model. It focuses on the question: how exactly does money come in?
Common revenue models include one-off sales, where customers pay for each product; subscriptions, where customers pay regularly for ongoing access; commissions or transaction fees, where a business takes a percentage of each sale it facilitates; advertising, where businesses pay to reach the company's users; licensing, where others pay to use the company's intellectual property; and usage-based pricing, where customers pay according to how much they use.
For example, a hotel booking website might earn a 15% commission on each booking, while a music streaming service earns revenue from subscriptions and from advertising shown to free users.
The choice of revenue model affects how predictable income is, how quickly the business can grow and how it relates to customers. Subscription models often provide steady, recurring revenue, while one-off sales can be more unpredictable. Many businesses combine several revenue models.
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