Starting Up · StudentHub Lesson
Business Models & Revenue Streams
A business model explains how a company creates, delivers, and captures value through revenue streams.
What you will learn
- Define business model and revenue stream
- Compare common revenue models (subscription, one-time sale, freemium, commission)
- Explain the difference between revenue and profit
- Identify which revenue model fits different types of products
- Evaluate trade-offs of different revenue streams
Watch the lesson
We haven’t confirmed a lesson video that matches this topic closely enough yet, so the notes below are the lesson for now. A recommended video will be added once we’ve checked one properly.
Topic notes
Main Idea
A business model describes how a company creates value for customers and captures some of that value back as revenue.
Key Concepts
- Revenue stream: the specific way a company earns money
- Common models: one-time sale, subscription, freemium, commission/marketplace fee, advertising, licensing
- Revenue is not profit — revenue is money coming in; profit is what's left after costs
- Choosing a model depends on customer behavior, product type, and how often value is delivered
Definitions
- Business model: the plan for how a company makes money by delivering value
- Subscription model: customers pay recurring fees for ongoing access
- Freemium: basic features are free, advanced features cost money
- Commission model: a platform takes a percentage of each transaction
Examples
A gym uses a subscription model (monthly fees for ongoing access), while a furniture store uses a one-time sale model (pay once per item). A marketplace app like an online store might take a commission on each sale made through it.
Common Mistakes
- Choosing a trendy model (like subscriptions) without checking if it fits customer buying habits
- Confusing revenue with profit
- Relying on a single revenue stream when diversifying could reduce risk
Key concepts
Important terms
- Revenue stream
- A specific source through which a business earns money.
- Subscription model
- Customers pay recurring fees for continued access to a product or service.
- Freemium
- A model offering basic features free and charging for premium features.
Worked examples
Problem
A music app wants recurring income and free access to grow its user base — which model fits best?
- 1. Identify goal: grow users while earning steady revenue
- 2. Freemium lets users try free, upgrade for premium features
- 3. Subscription revenue also recurs monthly
Answer: Freemium model (free basic tier, paid subscription for premium features)
Quick revision
- Business model = how value is created and revenue captured
- Revenue ≠ profit
- Subscription = recurring payments for ongoing access
- Freemium = free tier + paid upgrade
- Commission = percentage cut of transactions
Check your understanding
Question 1 · Multiple choice
What is a business model?
Question 2 · Multiple choice
Which revenue model charges customers a recurring fee for ongoing access?
Question 3 · True or false
Revenue and profit mean the same thing.
Question 4 · Short answer
Give an example of a freemium business.
Question 5 · Multiple choice
A marketplace that takes a percentage of each sale uses which model?
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