Nine ways a business actually makes money

A revenue model is simply the answer to “where does the money actually come from?” Most founders default to the first model they can picture and never question it. But the model you choose shapes everything downstream — how predictable your income is, how easily you scale, how much you’re worth. So it’s worth knowing the whole menu.

The menu

• Transaction — pay once per product. Clear value, low commitment; revenue is unpredictable.
• Subscription — pay regularly. Stability and higher lifetime value, if you keep delivering.
• Freemium — free tier, pay to upgrade. Scales users fast; the challenge is conversion.
• Advertising — advertisers pay for your audience. Needs real scale to mean anything.
• Commission / marketplace — take a cut of others’ transactions. Scales without holding stock.
• Licensing — others pay to use your IP or brand. Great when you own something unique.
• Leasing / rental — pay to use an asset temporarily. Good for high-value, reusable things.
• Service / time-based — charge for time or outcomes. Trust-led, but time caps your scale.
• Usage-based — pay for what you consume. Scales with the customer; revenue fluctuates.

There’s also data monetisation and affiliate revenue — both real, both dependent on scale and trust.

The best businesses combine models

Rarely is it just one. Spotify is subscription plus freemium. Nike is product sales plus membership. Platforms run marketplace plus ads. The combination is where the strength is. Three questions point you to yours:

1. How often does the customer need this? Often → subscription. Rarely → one-off.
2. Can I scale without more effort? If yes, lean digital and platform models.
3. Where is the value really created? In the product, the access, or the data?

Pressure-test it with AI

This is a decision to argue out loud, and AI is a useful opponent — it won’t get bored, and it’ll surface the model you hadn’t considered. Use it to map your options against those three questions, then to play devil’s advocate on the one you’re leaning toward.

Act as a business model strategist. My product: [what it is]. My customer: [who]. Walk me through which revenue models fit, using these three questions: (1) How often does the customer need this? (subscription vs one-off) (2) Can I scale without more effort per customer? (digital/platform models) (3) Where is the real value created? (product vs access vs data). Recommend a primary model and one complementary model, name the biggest risk of each, and give a real company that runs the same combination.