Revenue Model
How your business will actually make money
What is a revenue model?
Your revenue model answers the most important question: how do you make money? It's the precise mechanism by which money enters your cash register.
The same product can have completely different revenue models. Software can be sold as a one-time license ($1000), subscription ($50/month), freemium, or commission-based.
The 8 most common revenue models
1. Direct Sales — Fixed price for a product/service. The simplest. 2. Subscription — Customer pays monthly/yearly. Predictable, recurring revenue. 3. Freemium — Free basic product, paid advanced features. 4. Commission/Marketplace — Percentage on each transaction. 5. Advertising — Monetize an audience. 6. Licensing — Sell the right to use your IP. 7. Add-on Services — Cheap base product, expensive extras. 8. Data/API — Monetize your data or technology.
Key takeaways
- →Revenue model = how money enters your cash register
- →Subscriptions give predictable revenue — investors' favorite model
- →The same product can have multiple revenue models
- →Choose based on your customers, costs, and market
Put it into practice
Calculate your revenue model in 30 seconds — free, no signup required.
Calculate your revenue model in 30 seconds