It’s impossible to imagine today’s world without technology. Human beings are surrounded by software, applications, tools, devices, and gadgets all around the time. People use technological products and services for various purposes throughout the day. Platforms enabled by technology are also used widely across the world. One such platform is Zoom – the video conferencing platform.
Now, most of the Zoom users don’t pay anything. Therefore, whenever people read or hear about Zoom, the first question that comes to their mind is “How Does Zoom Make Money?”. Well, not many people know how this platform earns revenue. Don’t worry, as we have explained it in this blog post.
It is available in web application, desktop application, and mobile application forms. Zoom does not need any introduction as self-employed professionals, freelancers, employees, top executives, and many others use this platform on a regular basis. The Zoom platform became extremely popular during the lockdowns.
The reason behind the same is that a large number of people started using Zoom to conduct online business meetings. Zoom is also used for online teaching by academic and vocational teachers. Many people also use Zoom to arrange webinars on a variety of topics.
What Exactly is Zoom? How and Why Is It Used?
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Before we explain how does Zoom make money, let us explain what exactly Zoom is and how it is useful. Zoom is a proprietary cloud-based SaaS application that is used for the purpose of conducting video conferences. It is developed by Zoom Video Communications, an American communications technology company. The CEO and founder of Zoom Video Communications is Eric S. Yuan, who is a Chinese-American billionaire. He founded Zoom in the year 2011.
Based in San Jose, California, Zoom Video Communications went public in the year 2019. Zoom allows users to communicate with each other via video, text, audio, or a combination of the three. Zoom can be used for one-on-one meetings between two persons as well as video conferences that include up to thousand participants.
The Zoom platform also has other features, such as screen sharing, online whiteboard, conversational intelligence, and so on. Users can even share files with each other to discuss important matters. They can even create groups. Users can access Zoom on Windows computers, MacOS computers, Android phones, iOS phones, and tablets.
How Does Zoom Make Money? What Is Its Business Model?
Small, medium, and large business firms across industries and countries use Zoom. Educational institutes, vocational institutes, health organizations, spiritual retreat centers, and many other entities use the Zoom platform. Some of the world-renowned companies also use Zoom.
Talking about the business models, Zoom offers two plans. The free plan of the Zoom platform allows up to 100 participants. Subscribers of the free plan can conduct online meetings up to 40 minutes. On the other hand, the subscribers of the paid plan can conduct online meetings for unlimited time. Zoom offers multiple paid plans to users. The price of the plans may vary from one country to another.
Let’s have a look at different ways in which Zoom makes money
Subscription Fees
As we have mentioned earlier in this blog post, Zoom offers different paid plans. These paid plans are ‘Pro’, ‘Business’, and ‘Enterprise’. All these plans have certain limits for cloud storage and some additional features. Subscribers of these plans pay fees to Zoom. The maximum percentage of the revenue that Zoom earns can be contributed to the subscription fees.
Add-On Services
Once a user becomes a subscriber of the Zoom platform, the company tries to cross-sell other services, such as extra cloud storage in return for an additional fee. Zoom has also created other software products, for example, Zoom Rooms. Zoom Rooms are conference rooms that allow users to hold virtual conferences by involving everyone in the room. Zoom cross-sells these new products to existing users.
Hardware Solutions
You must have understood how does Zoom make money through subscription fees. Now, let’s see how does it makes money by selling hardware solutions. Zoom Rooms and Zoom Workplaces, which are software products built by Zoom, involve renting hardware from the company. Same is the case with the Enterprise plan of Zoom.
Zoom provides the necessary hardware pieces to the businesses so that they can hold meetings, conferences, and other events smoothly. Items like phones, whiteboards, speakers, tablets, and cameras are rented by subscribers of Zoom. Subscribers pay a monthly rental fee for every piece of hardware that they rent.
Advertisements
Zoom didn’t use to display advertisements to its users until November 2021. The subscribers of the free plan of Zoom see ads when they use the platform. The businesses whose advertisements are being shown to the users pay Zoom on a per-impression basis.
Thus, whenever a user sees an advertisement, the advertiser pays a small amount to Zoom Video Communications. It’s easy to understand that Zoom makes a lot of money from the advertisements as it has a large number of users who use the free plan. However, the revenue that Zoom makes from advertisements is little as compared to other methods.
Investments
Knowing how does Zoom make money is incomplete without understanding how it earns revenue from the investments made in other companies. Just like many other well-established and reputable companies, Zoom also started investing in startups.
As the startup culture is growing, more and more companies look forward to invest in trustworthy startups. Zoom started investing in new business firms in April 2021 by building a fund called ‘Zoom Apps Investment Fund’. The value of this fund is $100 million.
Zoom Video Communications earned a revenue of $4 billion in the year 2021. Its revenue for the fiscal year 2022-2023 is expected to be around $4.3 billion. The Zoom video conferencing platform has grown over the years in terms of both revenue and popularity.
Final Thoughts
We hope that we have provided satisfactory answers to your query regarding ‘how does Zoom make money’ in this blog post. If you wish to share something, you can use the comments section below.
