Business Model

How a company creates value, delivers it and gets paid for it.

Also known as: business model, how the company makes money, monetization model

A business model answers three questions: what value you create and for whom, how you deliver it, and how money flows back to you. Engineers often build the first two and improvise the third — then discover that who pays, how much, and how often reshapes the product itself. Pricing is product strategy wearing a finance costume.

value:        what pain disappears, for whom
delivery:     product, service, marketplace, API — how it reaches them
capture:      subscription, transaction cut, license, ads — how you get paid

Sketch it on one page (business model canvas) before building: customer segments, value, channels, revenue, costs. The exercise forces the uncomfortable questions early — who exactly pays, why they switch, what it costs to serve them — while answers are still cheap to change.

The classic mistakes:

“We’ll figure out monetization later.” Later arrives with an architecture and a user base shaped for free. Revenue models constrain product design; decide early enough to build for them.
One revenue stream assumed forever. Single-stream businesses are fragile and hard to value. Even early, know what the second stream could be.
Confusing revenue with unit economics. Money coming in says nothing about money kept. A model that loses money per customer is a machine for going broke faster as it grows.
Copying a famous model blindly. SaaS, marketplace, freemium — each fits specific cost and distribution shapes. The model must fit your product’s economics, not someone else’s story (see SaaS, marketplaces).

Test it like a product: the model is also an assumption. Pre-sell, pilot pricing, a concierge test at real prices — evidence for the model, not just the product.