Zoom Business Model – How does zoom make money

How is this pandemic treating you? Are you still bound to working from home? In 2020, working from home has become the new normal. Co-ordination between team members is highly important. As no one has expected this situation and all the projects are in progress, the team members need to constantly communicate with each other. Also, a pandemic should not put a full stop to your work, dont you agree? 

One such platform that has increased its users and became known to people of all sectors and industries is Zoom. In this social distancing and quarantine time, many people are confined to their homes. Be it working or studying. So more and more people or businesses are using the services of zoom to communicate with one another. 

Zoom has proved to be one of the most effective business models. In this article lets understand the zoom business model and how does it actually makes money. 

But first things first, let’s understand what is zoom before discussing its business model.

What is Zoom?

Zoom has been in the market since 2011. It offers video conferencing service (remote). This platform allows users to connect with other people virtually. People can work from anywhere in the world at any time, meeting is now made easy. Zoom connects people virtually and helps them staying up to date at work, even if they are not present physically. It is the brainchild of Eric Yan, who previously worked as Cisco WebEx. 

Zoom meetings have become the new normal. People have been using this term lot more now. This platform is quite comfortable to conduct meetings, people can share anything on their screen. Be it notes, presentation, or sharing their screen for other members in the meeting anything is possible. So be it video conference, webinars, or meetings you can host anything on Zoom. The best thing is that it is available in macOS, Windows, Android, iOS. It is also available as integration for other video conferencing apps and browsers. One can say that it is quite hard to find a mobile or laptop without Zoom these days. 

As now that you know the premise of the app. Aren’t you curious about its business model? Yes, then without any further ado lets jump into the topic then.

Zoom- Business Model 

Right from the start Zoom has received the attention. Within the first 5 months, it has gained around 1 million users. The business model of Zoom is freemium meaning it offers both subscription and free plans. The main focus of this app is to get its free users to become loyal customers. Under the free plan, you can use Zoom for unlimited one on one meetings. This is best for individual users. If you’re looking for a temporary service till this goes back then this is perfect for you. Also for a group meeting, you can add upto 100 participants and talk upto 40 minutes for free. One of the main reasons why more people are using this app is because it is offering amazing features even if its for the free version.

As you know that apart from free this platform also has subscription platforms. If you need to communicate with people from different parts of the world regularly then it is better for you to choose among the subscription plans that Zoom is offering. The benefit of this subscription plan is that you will get additional features. Wondering what the features in question are? You can add more people than 100, you will have increased hours for a meeting, integration with other services, and lastly customer support. 

The major benefits of this business model are that they’re getting their users to adjust to them through the free plan. And once they find out how good this app is they would definitely not mind investing their money in subscription plans and also with the word of mouth more and more people will switch to Zoom.

Who are the users that Zoom targets mainly?

So this brings us to the point, who does this platform target mainly i..e, who are their users. It is important to understand its user base to understand how does it make money. 

There are primarily Businesses, investors, and individuals who use this app. But you can say that people use this video conference service mainly to communicate with their team members. One can say that Zoom makes long business meetings more convenient and simple. Also, another reason behind its popularity is that it supports 100 participants in a free plan and more than 100 in the subscription plans. See isn’t it better for you if you want to communicate with your whole team at the same time. It will save you time because it is better to explain once to everyone rather than one-on-one. Dont you agree?

But this doesn’t mean that only Enterprises or businesses are their primary users. Over the years the individuals have become the most important part of them and have contributed to its steady growth. And because of this pandemic, the users have now increased. In 2020 it has added around 2.22 million users, which is more than 2019. Currently, it has more than 12 million users. Yup, you heard it right. The pandemic has increased the popularity of Zoom and more and more people are in need of this app now. 

Since you have understood about the users of Zoom then it is time to know about how does it make money?

How does it make money?

You must be curious about the money-making process of Zoom. In this article, you will get all the information as per the best knowledge of our team. 

First things first, let’s talk about the most obvious method that everyone is aware of. Yup, you guessed it right the subscription plans. 

Subscription plans 

The primary source of income for Zoom is from the subscription plans. Once more and more people have used their free plan and are interested in the app they will be able to choose between the subscription plans it offers. As you see each of these plans comes with different additional features that will help the users in conducting meetings peacefully. So check all the three plans apart from the basic plan/ free and then choose a plan that works best for you. The subscription plans are Basic, Pro, Business, and Enterprise. As you see anyone can use the Basic version. But if Pro is highly suitable for small teams. Whereas business is perfect for small and medium businesses and lastly the enterprise plan is highly suitable for large enterprises. As the prices change frequently it is better to check them on their website.

Basic- Free

Pro- $149.90/year

Business- $199.90/year

Enterprise- $199.90/year

Add-on‘s 

Another source of income for Zoom is add-ons. Although Zoom offers additional features when you upgrade. But it offers all the features that make video conferencing simple and easy even in the free plan. But it charges its users for add-ons. With add ons, you can get additional features like extra cloud recording storage. But the free users must upgrade their plan to access the add-ons. The users will not get add-ons with the subscription plans. So they must pay for their desired add-on separately apart from monthly subscription fees. Some of the add-ons that Zoom offer with it paid plans are Zoom Rooms, Zoom Phones, Zoom Webinars.

Zoom Rooms: The users can create dedicated rooms to hold their conferences. But they have to pay $49/room/month.

Zoom Phones: With this add-on, the users can make calls right from their phone.

Zoom Webinars: The users cannot by default hold webinars, they need to subscribe for higher plans. So it charges monthly fees to host webinars. The price varies based on the number of participants and they can add upto 10,000 participants. 

Plans for different sectors

This is also another major source of income for the Zoom. It offers a fully customized suite of tools & services for different industries. Yup, you heard it right. The sectors that Zoom is currently serving are Finance, Government, Education, and Healthcare. As all the industries are different from one another, having a customized suite of services and tools can help them in communicating more effectively.

Investments 

As you have all the other methods mentioned how can you miss this one? This can also be considered as the income source. Dont you agree. Investors are highly interested in this platform. From 2011-2017 it has raised around $145.5 Million in different series of funding rounds. It was even termed as unicorn company back in 2017, allowing it to raise around $100 Million. Zoom went public in 2019 and by the end of it, this company was valued at a whopping sum of $16 Billion I,e., $36 per share. 

Wrapping up 

Pandemic has forced people to work from home and with Zoom, most businesses are able to manage their workflow effectively. Also, one of the video conferencing platforms that were in the mouth of everyone for the past 6 months is Zoom. Hope you have understood about the Zoom business model and how it makes money. So in case you want to know more about such interesting business models check out other articles on our website.

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