Business Model

A company’s “business model” is the way that it makes money.  Examples are often the easiest way to truly understand a new term.

The business model of most TV stations is to provide free shows to the audience and make their money through television commercials.

Google’s business model is to provide free search to it’s users and earn money through sponsored advertising.

The business model of many movie theaters is to charge some money for the movie tickets, and then charge a lot of money on snacks like popcorn.  They hope that many people will pay a lot of money for these snacks.

The business model for amusement parks is to make people pay an entrance fee, and then give them unlimited free access to the park after that.

Some cell phone companies use the business model of giving a “free” cell phone to users if they sign a one or two year contract where they must pay a minimum monthly fee.

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