What Is a Business Model?

By Jeremy Bowman – Updated Feb 25, 2025 at 11:49 PM EST

Key Points

Business models define how companies earn revenue, including methods like subscriptions.
Understanding a company's business model helps investors assess potential profitability.
Different industries often converge on a successful business model, influencing competition.

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People working in an office. — Image source: Getty Images.

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Meta Platforms and Netflix. The Motley Fool has positions in and recommends Meta Platforms and Netflix. The Motley Fool has a disclosure policy.