The appropriate development of a model begins with understanding the problem that is being represented. The aim of this article is to provide a series of consensus-based best practices regarding the process of model conceptualization. For the purpose of this series of papers, the authors consider the development of models whose purpose is to inform medical decisions and health-related resource allocation questions. They specifically divide the conceptualization process into two distinct components: the conceptualization of the problem, which converts knowledge of the health care process or decision into a representation of the problem, followed by the conceptualization of the model itself, which matches the attributes and characteristics of a particular modeling type to the needs of the problem being represented. Recommendations are made regarding the structure of the modeling team, agreement on the statement of the problem, the structure, perspective and target population of the model, and the interventions and outcomes represented. Best practices relating to the specific characteristics of model structure, and which characteristics of the problem might be most easily represented in a specific modeling method, are presented. Each section contains a number of recommendations that were iterated among the authors, as well as the wider modeling taskforce, jointly set up by the International Society for Pharmacoeconomics and Outcomes Research and the Society for Medical Decision Making.