Ask a class “how does a business make money?” and most will say “it sells things.” True — but it’s only one of at least twelve answers. Understanding the range is what separates a student with a product idea from a student with a business idea. Here are the twelve, each in plain English with a real example and a prompt you can drop straight into a lesson.
The twelve revenue models
Product sales · A bakery selling bread
Ask the class: What does it cost to make one, and what will someone pay?
Subscription · Netflix, gym memberships
Ask the class: Why do predictable monthly payments make a business more valuable?
Freemium · Spotify free vs. Premium
Ask the class: What should be free, and what’s worth paying to unlock?
Advertising · YouTube, free newspapers
Ask the class: If the product is free, who is the real customer?
Marketplace / commission · eBay, Airbnb, Uber
Ask the class: Why take a small cut of many sales instead of selling directly?
Licensing · A band licensing a song
Ask the class: How can you sell the same thing many times without running out?
Franchising · McDonald’s
Ask the class: What are you really selling — burgers, or a system?
Pay-per-use · Pay-as-you-go data
Ask the class: When does charging per use beat a flat fee?
Bundling · A meal deal
Ask the class: Why does the bundle often sell better than the parts?
Razor & blades · Printers and ink
Ask the class: Why sell the first thing cheap to profit on the refills?
Data / insights · Market research firms
Ask the class: How can what a business knows become the thing it sells?
Affiliate · A blog’s “buy” links
Ask the class: How do you earn from a sale you didn’t make yourself?