Which statement best describes revenue streams and cost structure in a business model?

• A. Revenue streams are sources of income; cost structure lists ongoing costs needed to run the business.
• B. Revenue streams are costs; cost structure is income.
• C. Revenue streams relate to marketing; cost structure relates to product development.
• D. Revenue streams are fixed; cost structure is variable.

Answer: (A)

Understanding how a business makes money versus what it spends is key. Revenue streams describe where the company’s income comes from—the different ways it earns money from customers, such as product sales, subscriptions, licensing, or advertising. The cost structure, on the other hand, outlines the ongoing expenses required to run the business, including fixed costs (rent, salaries) and variable costs (costs that rise with production or sales).

So, the statement that revenue streams are sources of income and the cost structure lists ongoing costs needed to run the business accurately captures how a business model shows money coming in and money going out.

For context, a SaaS company might have revenue from monthly subscriptions and tiered plans, plus potential revenue from add-ons. Its cost structure would include fixed costs like office space and core staff, as well as variable costs such as cloud hosting and customer support that scale with usage. This distinction helps entrepreneurs design viable strategies around pricing, channels, and cost management.