Zoom is a video conferencing software that allows the user to have face-to-face meetings with participants. If you are wondering how this popular video communication tool generates revenue, then you have come to the right place. In this article, we explain how does Zoom make money and its business model.
What is Zoom?
Zoom is a cloud-based, high-quality conference tool that allows customers to virtually interact through audio, video, and chat. Zoom’s competitive edge is its ease of use and high-quality output.
Zoom is the best way to have a meeting from just about anywhere, all while being able to chat live with others. In 2019, Zoom was used by over half of Fortune 500 companies and it’s only grown since then, with 227% growth in 2020.
Zoom is a video conferencing tool that also offers Zoom Meetings and Zoom Rooms. A Zoom Meeting is a meeting that you access through the site with your webcam or phone. A Zoom Room is a piece of physical equipment set up in a conference room that lets companies host and launch Zoom meetings.
|Headquarters||San Jose, California, United States|
|Services||Videotelephony, Business Telephone Systems, Online Chat|
|Business Model||Free Model|
How does Zoom work?
Zoom is free to use. With just an email invitation, you can join your meeting via the Zoom app. All you need to do is follow the instructions in the email invite, which will include a link to install Zoom on your device and the conference code.
To start your own Zoom Meeting, you’ll need a Zoom account. You can create a free account on Zoom’s website, then start your meeting. A meeting is a meeting, whether it’s an audio-only or video conference. Zoom offers a variety of plans with a limit of 40 minutes, but with unlimited participants. The Basic plan is free.
Did you know that a free account can do a lot? You can record and save your meetings, share your desktop with meeting attendees, and chat with all the people in the meeting.
If the promo features of the free Basic plan are not enough, Zoom can be upgraded to a Pro plan, Business plan, or Enterprise plan. Each upgrade comes with a host of features, such as the ability to have more than 100 participants in a meeting, and longer duration – up to 24 hours!
What is the Business Model of Zoom?
Zoom makes money from sales of subscriptions to its platform, of which there are four tiers it currently offers.
The first is its Basic tier which costs nothing and provides for up to 100 participants. The next level is the Pro plan, which starts at $14.99 per month and upgrades with user management and admin control, personal meeting IDs, and 1GB of MP4 or M4A cloud recording.
The third plan is called Business and costs $19.99 per month per host, with a minimum of 10 hosts. This plan includes on-premise deployment, company branding, and custom emails.
The Enterprise plan is the most expensive, costing $19.99 per month for one host or $199.99 per month for 50 hosts, with a minimum of 50 hosts. Enterprise has some exclusive features that may be worth the money, like unlimited cloud storage, dedicated customer success managers, and bundle discounts on Webinars and Zoom Rooms.
Zoom has seen revenue grow 5 times in the past 2 years. In 2019, Zoom had revenue of $330.5 million, an increase of 118% from the previous year. In 2018, this number was up 149% from 2017.
How does Zoom make money?
Zoom offers a variety of products. The company operates on a freemium model that gives a free, basic product to both private and business customers. The basic package includes group meetings with up to 100 people and up to 40 minutes.
Zoom is often offered as a freemium service (free to use, with some premium features for paying customers). The freemium model has been essential in Zoom releasing its products to the public, with potential customers becoming more aware of the software through word-of-mouth.
Here are the following ways that Zoom makes money from:
Zoom Meetings & Chats
Zoom is an instant messaging company that is also a video conferencing service. It has tons of different ways for customers to connect, all through the application.
Zoom Meetings and Chats is their flagship product, which allows people to jump on a call or start up a chat over the application. They can access the application through Zoom’s desktop or mobile apps.
The free version of our service limits usage time to 40 minutes while restricting the user count to 100 attendees. Businesses will have to pay $14.99 per month or $12.49 for an annual account.
Zoom Rooms & Workspaces
Zoom Rooms are video conference rooms systems that organizations can use to run video meetings. These rooms work seamlessly with existing hardware providers like Polycom or Cisco or you can purchase Zoom-certified equipment.
The company’s Professional Services unit ensures that the installation of conference rooms goes smoothly. Their services start at $49 a month per installed conference room and increase to $41.58 per month with annual billing.
Zoom also partners with DTEN or Aver to provide customers with the necessary hardware tools. All in all, Zoom is a win-win for the e-commerce company and its customers. The company pays a percentage of its hardware sale to Zoom, and in return, Zoom will promote the company’s products to its customers.
Zoom offers a great solution for those who want quick calls without the hassle of video. With Zoom Phone, users can make a VoIP call and use their favorite Zoom tools. So many features!
- “AI-assisted call management and routing” is technology helping agents work smarter.
- “Call recording and voicemail” lets you save your conversation for future reference.
- “Secure HD audio for clear conversations” is perfect for any time of day.
- “An auto-attendant or interactive voice response system” can be a powerful way to ensure that calls are answered by the most qualified individuals.
Zoom’s rivals include other popular products like Skype, FaceTime, and Facetime. Zoom charges $14.99 per month, while its competitors charge around $12.49 when billed annually.
Zoom Video Webinars
Zoom Video Webinars is a web-based service that lets you broadcast your meeting to up to 10,000 viewers. Webinars start at 100 participants but scale up to 10,000 depending on the license you buy. As the webinar host, you have a ton of tools at your disposal.
For example, you can share your screen with attendees, show a video, or allow them to use chat or Q&A to interact with you.
Webinars are available for people to register to either attend or not. They can be either one-time events, or both mandatory and recurrent. And the same session can be held at various times.
Webinar pricing starts at $14.99 per month. A webinar license must also be purchased, but the price depends on the number of attendees you wish to host.
Businesses that offer education, finance, healthcare, and government services should get in touch with Zoom. They offer special packages for these industries. For instance, schools can purchase a premium package for 1800$ that unlocks 20 hosts and accesses the company’s premium features.
What is the founding history of Zoom?
Eric Yuan dreamed of a way to see his girlfriend without the trip. He realized this dream while working at Webex, a video conferencing company based in California.
The idea for Zoom then spawned. Despite being promoted to Vice President, Yuan was not happy with his job. He left Webex in 2011 to start his own company.
Zoom’s story is inspiring. It was launched in 2013 under the direction of Yuan with 40 engineers. Initially, it could only host 15 people. By 2015, Zoom had one thousand business customers. Fast-forward to 2017, where Zoom became a “unicorn” for being valued at more than one billion dollars.
In 2019, Zoom exploded in popularity because of the implementation of Stay-At-Home Orders. One of the reasons Zoom is surging with popularity is that it is already an integral part of many companies’ daily operations.
In March 2020, Zoom was used by 200 million people a day, and this led to a stock increase. Zoombombing is the term given to when a company’s value increases after it’s been observed by many people.
Zoombombing is a new and alarming issue with Zoom — hackers can get access to video calls and show offensive and explicit materials. Due to these security issues, some companies have chosen to switch to smaller, more secure companies.
Zoom is now warning its users of Zoombombing and video call hacking. The company has also been under fire for data mining and sending Facebook activity details to iOS devices. It has since released a software update to fix this issue but is still being scrutinized for mishandling user data and for its lack of clear privacy policies.
How much is Zoom’s worth? (Valuation & Revenue)
Zoom, a company with a total of $146 million in VC funding, is backed by investors such as Horizons Ventures, Emergence Capital, and Sequoia Capital. With its IPO, Zoom made its debut on the stock exchange and raised $356.8 million. Unlike other tech companies like Facebook and Uber, Zoom was profitable. The company made $7.58 million in 2018 and is only expected to grow from there.
Zoom has seen a 88% increase in revenue from the previous year. In 2019, Zoom made $622.7 million. It also saw an increase in net income to $21.7 million. The company is now valued at close to $47 billion.
Zoom Key Statistics
- The Zoom mobile app has been downloaded 485 million times in 2020.
- 45 billion minutes of webinars are hosted on Zoom every year.
- Zoom generated $2.6 billion in revenue in 2020 a 317% increase from the previous year.
- The Zoom app experienced a 2900% increase in meeting participants when the swine flu pandemic hit.
- Zoom has a valuation of $100 billion and has seen a 383 percent increase in January 2020.
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