The Zoom Business Model – How Does Zoom Make Money?.How does Zoom make money | Business Model - The Strategy Story
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Participants in Zoom Meetings can enter the session through a desktop or mobile application or web-based browser platform. The Zoom Chat feature allows users to communicate via an extension to its Meeting product. Users can chat, create groups, and share files. The Zoom Workspaces and Rooms products allow companies to utilize hardware solutions to host a virtual meeting using their mobile device, desktop, laptop, or camera.
Zoom focuses its Workspace product on larger organizations that want to host meetings across several office locations. Zoom makes hardware integration easy by offering organizations hardware solutions to manage their organization's communications. This cloud-based phone system comes with intelligent routing, automated call attendants, voicemail, dialing destinations, call-recording, and more. Organizations can large-scale online events featuring video screen sharing and simultaneous audio with no lag.
Zoom makes the majority of its earnings from subscription fees charged to B2B customers. They operate on a "freemium" model, meaning users have access to basic features for free and can pay additional subscription fees for different features within the product itself.
The company's standard freemium model allows users to hold group meetings with up to attendants, with sessions lasting up to 40 minutes. Their customer list includes a who's who of the world's top companies, adding to its reputation as the market leader in remote-based communication solutions for business. The Chat and Zoom meetings product it's the company's flagship offering. Users can cast a video call or jump onto a chat with colleagues or friends with this subscription.
The freemium version limits sessions to 40 minutes, while the premium version allows for unlimited session lengths. Businesses can pay for a monthly or annual subscription with a tiered pricing plan for small teams, small to medium companies, and large enterprises.
This product provides users with virtual conferencing systems allowing companies to run video-call meetings and conferences. Customers can purchase the hardware through Zoom or choose to run through existing Cisco or Polycom systems.
B2B customers pay Zoom a subscription fee for using the service, with monthly or discounted annual plans. This Zoom product offers users cloud-based calling solutions for companies that don't come with any phone bills. Users have the option for audio or video chat, and they pay a monthly subscription fee for calls within US and Canada with add-ons for global service. Zoom's Video Webinar package is for organizations that want to run web-broadcasting conferences and large events online.
Users get up to 10,view-only attendees per event with a single license, with customized pricing for up to 50, attendees. Zoom also requires the user to purchase a webinar license, and it offers special packages to organizations in the fitness, education, healthcare, and financial industries. Zoom continues to stay ahead of the pack with aggressive marketing campaigns directed at organizations.
According to a report by Sensortower , Zoom registered almost million new installs in the month of April which is almost 60X growth when compared to April With these astonishing stats, the app also became the most-downloaded non-game app globally for the month of April leaving big giants like TikTok and Facebook behind.
Now, the question arises, how? In this blog, we will find answers to all such questions by analyzing Zoom Business Model. While getting extensive popularity and coming to run profitably enough over the last few years, Zoom actually entered the space of famous apps during the coronavirus pandemic.
And, because of its amazing value propositions, this video conferencing solution is the talk of the town today. The story behind it is inspiring because it was founded by a man whose visa was rejected by the US not just once, but repeatedly 8 times. Yes, Eric Yuan — the founder of Zoom is basically from China and was a part of WebEx, before the company was acquired by Cisco in When Yuan decided to enter an already crowded space of video conferencing — his friends called him insane because he was trying to make a space in the market that was already occupied by big giants like Microsoft and Google with their amazing products.
But, Yuan was confident enough to make it big in the video chat app market. He believed that he could build a product more enjoyable than even Skype with his strong industry insights and experience. Well, it would not be wrong to say today that his confidence paid off. The software he launched in registered 1 million users within a few months, 10 million users a year later, and around 40 million after the two years of its launch. The company impressed several investors in it by revealing the fact that it is already operating on a profit.
And the rest is history. The company truly took off in March of the year Yuan expressed in a blog post that through the period of that month, Zoom was getting Million daily users on its app.
The next month, this figure reached million which is surely an incredible success. Or, we would say it was an opportunity well used at the right time.
Zoom is a video conferencing application, designed for business use. The product basically has a mass-market business model with no noteworthy differentiation between customer segments. It targets businesses of all sizes and industries that seek video conferencing solutions and has established a strong brand as a result of its incredible performance. Here is How Does Zoom Work and maintain its position in the market:.
It is a one-stop solution for all types of needs for collaboration as it allows every mode of communication — may it be chatting, video conferencing, group meetings or simply calling.
It offers 4 different membership plans, one out of which is a free plan. You can get details about its pricing here. Its global adoption is however fueled by its two main products i.
The Chat comes as an extension to its Meeting product where users can connect through a chat with one another, share documents, or make groups. These solutions are specifically meant for larger-scale businesses that need to work and collaborate across various offices.
Now that we know all about it — How does zoom work, what are its features, and the Zoom business model — it is time to see how the app makes money to continue its operations and ways it use to stay profitable while serving its users in the best possible way. In , Eric finally decided to leave to give a shot at the video-conferencing business, taking his new product in the direction he wanted Webex to follow. More than 40 engineers followed Eric and left Webex to become a part of his venture.
Zoom managed to get traction because it differentiated itself in many different ways from the existing players. Zoom video conferences were easy to set up and compatible with all devices, including desktop and mobile, via Android and iOS apps. Zoom kept growing, adding new features along the way. In October , Zoom launched the Zoom App Marketplace , allowing third-party developers to build applications on top of Zoom.
In Dec , 10 million users were participating in daily Zoom meetings. By April , the daily meeting participants had increased to million. Zoom primarily makes money from Zoom Meetings, the core offering it sells using a freemium model.
It is also the most commonly used and popular service provided by Zoom. Zoom rooms are conference room systems that allow users mostly large organizations to have Zoom video meetings seamlessly.
Rooms come with a day free trial. The more the number of conference rooms the organizations want to connect through Zoom rooms, the more money they have to shell out.
Suppose the customers already have conference rooms set up using Polycom, Cisco, or Lifesize equipment. In that case, they can use the Zoom conference room connector to start Zoom Meetings directly from existing conference room systems.
If needed, Zoom also provides customers with installation support for the conference rooms. A cloud-based calling solution available as an add-on to the existing Zoom service, Zoom Phone brings traditional phone capabilities directly into the Zoom application, turning Zoom into a complete collaboration product by providing voice, conferencing, messaging, and video services together.
With Zoom Video Webinars, users can host online web conferences.
Zoom app business model -
Zoom makes the majority of its earnings from subscription fees charged to B2B customers. They operate on a "freemium" model, meaning users have access to basic features for free and can pay additional subscription fees for different features within the product itself. The company's standard freemium model allows users to hold group meetings with up to attendants, with sessions lasting up to 40 minutes.
Their customer list includes a who's who of the world's top companies, adding to its reputation as the market leader in remote-based communication solutions for business. The Chat and Zoom meetings product it's the company's flagship offering. Users can cast a video call or jump onto a chat with colleagues or friends with this subscription.
The freemium version limits sessions to 40 minutes, while the premium version allows for unlimited session lengths. Businesses can pay for a monthly or annual subscription with a tiered pricing plan for small teams, small to medium companies, and large enterprises.
This product provides users with virtual conferencing systems allowing companies to run video-call meetings and conferences. Customers can purchase the hardware through Zoom or choose to run through existing Cisco or Polycom systems. B2B customers pay Zoom a subscription fee for using the service, with monthly or discounted annual plans. This Zoom product offers users cloud-based calling solutions for companies that don't come with any phone bills.
Users have the option for audio or video chat, and they pay a monthly subscription fee for calls within US and Canada with add-ons for global service. Zoom's Video Webinar package is for organizations that want to run web-broadcasting conferences and large events online. Users get up to 10,view-only attendees per event with a single license, with customized pricing for up to 50, attendees. Zoom also requires the user to purchase a webinar license, and it offers special packages to organizations in the fitness, education, healthcare, and financial industries.
Zoom continues to stay ahead of the pack with aggressive marketing campaigns directed at organizations. The company plans to focus more on the B2B model rather than accumulating its private user base. The team at zoom never dreamed of overnight success or fast publicity. The founder and CEO of Zoom said in an interview that keeping their existing customers happy was always the first priority of the team at Zoom — even if that forced them to slow down sometimes.
Here is a small note by Zoom Founder that shows why they are so successful today:. We always worked on making our free product work incredibly well. We provide most of our features free and that helped us build a loyal user base. That is the reason every day there are such a huge number of users coming to our website, free users.
If they find our product useful, very soon they are going to pay for the membership — Eric Yuan. When Eric founded Zoom, there were a number of doubts. How can one fight against rivals like Google and Microsoft? However, the man behind Zoom — Eric Yuan — was confident about his idea. He understood that there is a lot that can be done to make things better in this industry. And this should be a thumb rule for every startup — either solve a big problem or solve the already solved problem in better ways.
Eric chose the latter and became what he is today — the CEO of a billion-dollar company. So that was all about How Does Zoom Work. It is a great example of how video-conferencing apps should be. With its amazing business model — the software is winning market shares and giving neck-to-neck competition to big players in the market like Sykpe. Well, if you too want to create an app like Zoom — you must pull your socks now. No doubt there are still a lot of ways to stand-out for new players in the market.
But, the journey to follow all of them would not be an easy one. The benefits and returns on investment of making video conferencing apps like zoom are clear enough with such apps getting immense success. Also, their trend is not going anywhere anytime soon with the world adopting work from home policies. So, what are you waiting for? In , Eric finally decided to leave to give a shot at the video-conferencing business, taking his new product in the direction he wanted Webex to follow.
More than 40 engineers followed Eric and left Webex to become a part of his venture. Zoom managed to get traction because it differentiated itself in many different ways from the existing players. Zoom video conferences were easy to set up and compatible with all devices, including desktop and mobile, via Android and iOS apps.
Zoom kept growing, adding new features along the way. In October , Zoom launched the Zoom App Marketplace , allowing third-party developers to build applications on top of Zoom. In Dec , 10 million users were participating in daily Zoom meetings. By April , the daily meeting participants had increased to million. Zoom primarily makes money from Zoom Meetings, the core offering it sells using a freemium model. It is also the most commonly used and popular service provided by Zoom.
Zoom rooms are conference room systems that allow users mostly large organizations to have Zoom video meetings seamlessly. Rooms come with a day free trial. The more the number of conference rooms the organizations want to connect through Zoom rooms, the more money they have to shell out. It is a business model that offers basic features to a user at no cost and charges a premium for advanced features. The term freemium is attributed to Jarid Lukin of Alacra, a corporate information and workflow tool provider, who coined it in The practice, however, dates from the s.
However, free users may never convert to paid users if the product is not up to the mark. Having too many features can also prevent users from upgrading to a premium version. The features that users are generally provided within the premium services include extra storage, more flexibility or time allowed on the app, and customizations. Users are also offered additional personalized or customer service associated with an account.
T o learn the Freemium model in detail and how Canva is leveraging the freemium model, check out this story. Sometimes, free trial and freemium are confused as the same.
Typically free trials are time-bound and allow a user to test a few parts of a product or service. Meanwhile, users in the freemium model get to access the entire application indefinitely. To understand how Zoom makes money, let us know its products first. If you were to ask a Zoom employee what they provide, their standard answer would be,.
We provide a unified communications platform that delivers happiness and fundamentally changes how people interact, connecting them through frictionless and secure video, phone, chat, and content sharing. It provides HD video, voice, chat, and content sharing across mobile devices, desktops, laptops, telephones, and conference room systems. It can support up to 1, video participants.
As of now, it also provides end-to-end encryption. The Basic version of Zoom Meetings limits usage time to 40 minutes per meeting while limiting participants to attendees. To lift these restrictions, customers will have to pay a monthly subscription fee.
Apart from the Basic plan, it provides three other plans: Pro, Business, and Enterprise. The following image shows these in detail:. Zoom also offers optional add-ons. These work in a la carte fashion. The optional add-ins are stand-alone features that a home or business user may specifically require.
These are a great way to sell individual features, particularly in price-sensitive markets like India.
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