A business model and monetization are closely related concepts in that part of an effective business model is the development of a means to generate revenue and earn profit -- monetization. Two companies can have very similar business models, yet use different methods of monetization to generate revenue.

Business Model Basics

A business model is an outline or description of how a company plans to operate or conduct activities that creates a perceived value from customers and generates revenue. Target's business model includes the offering of various types of moderate quality products and services at reasonable prices through both brick-and-mortar stores and online sites. By contrast, Amazon.com emphasizes a massive breadth and depth of product offerings and efficient distribution systems in offering goods exclusively online.

Monetization Basics

Monetization is essentially the final piece of a systematic look at a business model. For-profit companies need to have a model that successfully generates revenue. A product-based reseller monetizes by selling goods at specific price points to customers. A service provider similarly charges prices for the provision of services. Some online service providers and media companies generate revenue through the sale of advertising to companies interested in reaching their user base.

Value and Profit

Value is a central component in both business models and monetization. Your business model must include factors that convey a certain level of value to customers. In essence, the strategic element of the model must come first. Once you have a solid plan to offer a mix of products, service and fair prices to convey value, you can focus on monetization tactics that optimize revenue and profit. Within your business model, you also need to consider cost controls. This is not really a factor in monetization. You can generate money but not earn profit if your model isn't set up to control costs.

Online Models and Monetization

Online service and media companies often use similar business models but distinct monetization approaches. Specifically, they use a combination of customer fees and ad revenue. Some online newspapers charge subscriptions to customers and also sell advertising to generate revenue. Other publishers don't charge customers to access content. Instead, they hope to attract a large base of readers and then monetize by selling a higher volume of advertising to companies interested in the audience.