Strategy
Business Model
Plain English
How a business makes money.
Definition
A business glossaryModelA model is a system or representation used to process data and generate outputs, often trained to perform specific tasks.Open glossary term describes how an organisation creates, delivers, and captures value. It covers who the customer is, what they receive, how it reaches them, and how the money and the costs work.
In practice
Defines how products or glossaryServiceA service is a component or function that performs a specific task within a system.Open glossary term generate revenue and sustain the business.
In context
It gets challenged when a new glossaryChannelA channel is a source or pathway through which users arrive at a product, such as search, social media, paid ads, or direct traffic.Open glossary term changes the economics. Selling the same product direct rather than through a partner is a different business glossaryModelA model is a system or representation used to process data and generate outputs, often trained to perform specific tasks.Open glossary term, not a different route.
The reality
A strong product doesn’t guarantee success if the business glossaryModelA model is a system or representation used to process data and generate outputs, often trained to perform specific tasks.Open glossary term doesn’t work.
Compared with
Business Model vs Revenue Model
The business glossaryModelA model is a system or representation used to process data and generate outputs, often trained to perform specific tasks.Open glossary term covers the whole glossarySystemA system is a collection of interconnected components that work together to achieve a specific function or outcome.Open glossary term: customers, value, costs, glossaryChannelA channel is a source or pathway through which users arrive at a product, such as search, social media, paid ads, or direct traffic.Open glossary term. The revenue model is one part: specifically how money comes in. Two companies can share a revenue model and compete on entirely different business models.
FAQ
Common questions
A few practical answers to the questions that usually come up around this term.
What is a business model?
A business glossaryModelA model is a system or representation used to process data and generate outputs, often trained to perform specific tasks.Open glossary term describes how a company creates and captures value.
Why is a business model important?
It determines how a business generates revenue and operates sustainably.
What are examples of business models?
Subscription, marketplace, freemium, and direct sales.
Can a business have multiple models?
Yes, many businesses use hybrid glossaryModelA model is a system or representation used to process data and generate outputs, often trained to perform specific tasks.Open glossary term.
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