Revenue model

A revenue model is a framework for generating financial income. There can be a variety of ways for revenue generation such as the production model, manufacturing model, as well as the construction model. A revenue model identifies which revenue source to pursue, what value to offer, how to price the value, and who pays for the value.^[1] It is a key component of a company's business model.^[2] A revenue model primarily identifies what product or service will be created and sold in order to generate revenues.

Without a clear and well-defined revenue model new businesses will be more likely to struggle. By having a clear revenue model, a business can focus on a target audience, fund development plans for a product or service, establish marketing plans, open a line of credit and raise capital.^[3]