Business and strategy

Business Model

How a company makes money: what it sells, to whom, and how it charges for it.

Why does it matter?

Understanding the business model is the first step to making sense of a company's numbers.

How do I read it?

Two companies in the same industry can have different models: one sells a product once, another charges a monthly subscription. The model shapes margins, growth and how steady revenue is.

Example

Netflix earns money from monthly subscriptions and, more recently, from ads. A car maker earns most of its money by selling each car once, plus parts and services.