A revenue model is a framework that outlines how a business generates income. It details the various sources of revenue, such as sales of products, subscription fees, or advertising. Understanding the revenue model helps businesses strategize and forecast their financial performance. Different types of revenue models exist, including freemium, where basic services are offered for free while premium features require payment, and transaction-based, where revenue is earned from each sale. Companies often choose a model that aligns with their target market and business goals to ensure sustainability and growth.