A revenue model is a framework that outlines how a business generates income. It defines the sources of revenue, such as sales, subscriptions, or advertising. Different models can be used depending on the industry and target market, allowing businesses to choose the most effective way to monetize their products or services. Common revenue models include direct sales, where products are sold directly to customers, and freemium, where basic services are offered for free while premium features require payment. Understanding these models helps businesses strategize and optimize their financial performance in a competitive market.