The performance of real heat engines can be characterized by their power versus efficiency curves. Real heat engines with sources of irreversibility that include friction and heat leaks exhibit fundamentally different power versus efficiency curves than those predicted by many previous studies in the finite‐time thermodynamics of endoreversible heat engines, in which finite‐rate heat transfer was the only irreversibility considered. It is shown that the thermoelectric generator provides an instructive illustration of a cyclic, irreversible heat engine with a power versus efficiency curve that qualitatively reproduces the key features of the corresponding curves for real heat engines. The generic sources of irreversibility are easily identifiable and analytically expressed so as to reveal more transparently the basis for the power versus efficiency characteristic.