Business Model
A business model is a description of how a company creates value, makes money, and operates.
Simply put:
a blueprint of how the business works and where profit comes from
What a business model includes
- Product or value — What exactly the company offers to customers.
- Target audience — Who buys the product or service.
- Revenue streams — How the company earns money:
- sales
- subscription
- advertising
- commission
- licensing
- Sales channels — How the product reaches the customer:
- website
- marketplaces
- physical stores
- partners
- Expenses — Where resources are spent:
- production
- marketing
- employees
- logistics
Why a business model is needed
It helps to:
- understand the business economics,
- assess profitability,
- attract investment,
- scale the company,
- build a development strategy.
Popular types of business models
- Subscription — Customer pays regularly.
Netflix - Marketplace — Platform connects sellers and buyers.
Ozon, Wildberries - Freemium — Basic product is free, premium features are paid.
Spotify - Advertising model — Revenue comes from advertising.
YouTube - D2C (Direct‑to‑Consumer) — Brand sells directly to the customer.
brand websites / online stores
Example
An online school:
- sells courses,
- attracts customers through advertising,
- earns from subscriptions or one‑time purchases,
That is its business model.
Popular tool
Often described using the Business Model Canvas.
Key takeaway
A business model is the system by which a company creates value and generates profit. A strong business model helps a business grow, remain sustainable, and stay competitive.
