During the peak of the Covid-19 pandemic, many companies devised a new way of communicating and working remotely while staying safe. One of the companies at the height of providing video conferencing services was Zoom.
Zoom has saved many businesses time and money, making it simple for anyone in need of hosting an online meeting. But how does Zoom make money if anyone can do so for free?
This question has been on the lips of many especially because it has a unicorn valuation. Zoom’s business model is what we will talk about and how they make their money.
What Is Zoom Video Conferencing Platform?
Video conferencing service Zoom, created in 2011, allows users to host online meetings and video conferences from their computer, tablet, or phone. It was originally named Saasbee, but then renamed Zoom. Its goal is to make video conferencing and online meetings simple.
Its primary market is businesses and universities, but the COVID-19 lockdown broadened its appeal, and Zoom became the go-to app for group video conferencing. When Zoom first launched, it had established competitors like Skype, Cisco WebEx, and Google Hangout. How Zoom succeeded against these giants is a mystery at first, but it becomes clear with a closer look.
Zoom was founded by Eric Yuan, a former Cisco employee. He joined a team of 40 engineers to leave the company to start Zoom. Due to Eric’s in-depth knowledge of technology as well as his 14 years of experience leading engineering teams at WebEx (and Cisco, after Cisco acquired WebEx), Zoom was an immediate success, and its cost was significantly lower than its competitors.
READ ALSO: The World’s Most Expensive Toilet Paper
What Is Zoom Business Model?
A ‘freemium’ business model is used by Zoom, which means it is free for everyone to download and use, but people who want more features and customization can upgrade to a paid subscription.
Video conferencing is free for up to 100 participants, with a 40-minute time limit. For longer or larger conferences with more features, subscriptions are available, ranging from $15 to $20 per month. Several features are geared towards business conferences.
How Does Zoom Make Money?
We will discuss each revenue stream separately so that we can better understand how Zoom makes money.
1. Zoom Meetings and Chats
Zoom allows free meetings for 100 participants and for 30 minutes. If you’ve held a free Zoom meeting, you might have noticed that the number of participants and the meeting length is limited.
However, a meeting with more than two people cannot last more than 40 minutes. The problem here is, even though 40 minutes is enough for personal meetings or a casual chat with a friend, business meetings can be much longer. This brings us to what brings us to the first revenue stream zoom has.
You can choose from three paid plans, Pro, Business, or Enterprise, for users who want to host longer meetings with extra features like cloud storage, recordings, etc. Below are how the plans go.
Pro
Users who pay $14.99 a month per license can host meetings with up to 100 people while not worrying about time limits (30 hours!). In addition, they can record meetings using 1GB of cloud storage, and they can stream meetings using social media.
Business
Subscriptions for the business plan cost $19.99/month/license and include single sign-on, transcriptions recording, managed domains, and company branding. Support is provided by phone, an administrative dashboard is available, a vanity URL is available, an on-premise deployment is an option, managed domains are included, company branding is available, and custom emails are available.
Enterprise
With Zoom’s Enterprise plan, subscribers get all the features and benefits of the business plan plus unlimited cloud storage. They can host meetings with 500 participants and pay $19.99/month/license.
While asking how Zoom makes money from the meeting, we believe our updates above are enough insight into how Zoom makes money from meetings.
2. Rooms and Workplaces
Zoom rooms remain an integral feature that distinguished the platform from other competitors. Using Zoom’s Rooms, remote and hybrid teams can collaborate more effectively through high-resolution video and other features. Zoom’s Rooms offer one-click joining, 1080p HD video, 1,000 video calls, etc.
How does Zoom make money from Rooms? Zoom charges $49 a month per license (or $41.58 when billed annually). As a result of its partnership with hardware manufacturers, Zoom also offers installation services for customers that do not yet have conference rooms; the company earns a percentage from the manufacturers when the hardware is sold to these customers.
Related Post: 10 Best Slideshow Apps With Music
3. Zoom Phone
In Zoom Phone, users can hold a meeting instantly without video. The Zoom app contains all the features of a traditional phone call within the Zoom app. Zoom Phone is commonly employed by remote and hybrid teams for flexible and seamless communication.
Users will also enjoy additional features like
- Automated call routing with automatic attendantsVoicemail
- Call RecordingSecure HD
- VoiceIntegrations with Microsoft Office, Salesforce, and Google Workspace
Zoom Phone comes with a subscription fee of $8 per month per user.
4. Zoom Meeting Webinar
The Zoom Video Webinar service makes money by allowing users to host webinars with up to 10,000 participants. This is different from regular meetings since the participants can merely watch. By using the Chat, Q&A, and Poll features, attendees can interact with the webinar host. The organizer can share their screen, video, and audio.
Pricing for Zoom Webinar starts at $79 per month for webinars with 500 participants and goes up to $6,490 per month per license for webinars with up to 10,000 participants.
In addition to its own apps, Zoom-owned apps, like Slack, Salesforce, and Trello can be installed on its marketplace, which is also where it makes money from special packages for Education, Finance, Healthcare, and Government organizations.
Related Post: How Does Zelle Make Money? Zelle Business Model
How Profitable Is Zoom?
Among the search queries we get is how much does zoom make in a day? let’s see how profitable the platform is. Zoom became profitable in April of the same year following its IPO in April of the same year, Zoom became profitable in 2019.
The COVID-19 lockdown further boosted Zoom’s profitability, earning the company a net profit of $671 million in the 2021 financial year. This is up from a mere $22 million in the previous year, according to Statista.
Additionally, Zoom has raised $146 million through six rounds of Venture Capital Funding. Zoom’s top investors are the National Science Foundation and the Corporation of Public Broadcasting and Horizon Ventures and Emergence Capital.
Financial results were released by Zoom in late February for the fiscal year that ended in January 2022, the company posted a net income of $1.4 billion, an increase of 104.6% over the previous year. Revenues grew 54.6% to $4.1 billion.
According to Zoom’s earnings press release, its total revenue is attributed to the acquisition of new customers and expanding services offered to existing customers. As more and more people began working or studying from home during the pandemic and needed a reliable way to connect with coworkers or attend online lectures, Zoom’s video-first communications platform saw a spike in usage. This led to high profitability.
Due to the size of this customer group, Zoom has demonstrated its ability to scale its offering in response to user needs and its ability to attract large enterprise clients.
SEE ALSO: How Does TikTok Make Money? TikTok Business Model
How Safe Is Zoom Mobile?
A lawsuit claims that Zoom accounts, email addresses, and photos were sold on the dark web despite its vast popularity. Zoom has been reported for many privacy issues and security frauds. Zoom users often sign in to Zoom using their Facebook IDs, making it easy for hackers to access private information.
They also collect data on its users and send it to LinkedIn as part of a sales prospecting service, called LinkedIn Sales Navigator. The lawsuit claims that Zoom does this without obtaining consent from its users.
It is not uncommon for hackers to infect computers with malware and use Zoom software to gain access to a user’s account. They listen in on meetings and listen secretly to audio calls, known as Zoombooming.
Zoom did not offer end-to-end encryption to its users in the past, which allowed anyone to access all the audio and video files. By May 2020, Zoom began offering end-to-end encryption to paid users exclusively. Nevertheless, from October 2020, this feature became available to both Zooms paid subscribers and free subscribers.
Despite this, Zoom still has a privacy issue. Some users have reported scam/fraud calls/ participants during meetings or selling their personal information. While asking how Zoom makes money, a lot goes into the paid subscription platforms. However, there are other non-subscription franchises zoom makes money from.
Zoom Business Segments
Essentially, Zoom only has one business segment. It does, however, break down its revenue by three broad geographical regions: Americas; Asia Pacific; and Europe, Middle East, and Africa. The attribution of revenue by region is based on the customer’s billing address.
According to Zoom, it doesn’t separate profits by region. The Americas is the company’s largest revenue-earning region, but its Asia Pacific region is growing faster, along with Zoom’s Europe, the Middle East, and Africa.
Recent Zoom Update/Development
On Jan. 10, 2022, the Zoom company announced that it had become the first video communications client to complete the Common Criteria certification process, an international standard for the objective evaluation of IT products that ensures those products meet a standard set of security requirements.
Zoom received the German Federal Office for Information Security Common Criteria Evaluation Assurance Level 2 (v3.1 rev. 5) certification, which is recognized in more than 25 countries as a leading benchmark for IT product security accreditations.
Conclusion
Zoom has more than 300 million daily participants and 149.8 million users. Zoom now has more than 2854 employees and is expected to have an 88% increase in revenue by 2021. Customer satisfaction is achieved through easy communication and collaboration with this business model, which in turn increases profits.
Frequently asked Questions About Zoom
As Zoom can be used across a range of platforms, including Windows, MAC, iOS, and many more, it is widely accessible. Founder Eric Yuan wants to make the experience better than anyone else’s.
Zoom made progressive earnings over the years listed 2018, $7 million ; 2019, $21 million ; 2020, $671 million ; 2021, $1.06 billion.
Zoom remains a profitable business that can grow earnings at 10-13% annually despite no longer being a hypergrowth stock. It dominates the web conferencing market that it serves.
Zoom’s products are free to use, and it makes money from subscriptions, hardware sales, advertising, and investments in other startups. Its freemium model means that customers aren’t charged a fee to use its products.
References
- Moneybmper.com – How Does Zoom Make Money?
- Makeuseof.com – How does Zoom make money and is it profitable?
- Productmint.com – The Zoom Business Model – How Does Zoom Make Money?
We Also RFecommend
