How Does Zoom Make Money?

We all know how the pandemic has affected our lives. People all over the world had to stay at home and get their work done. Kids started attending online classes, and the offices started holding meetings online.

That is exactly why Zoom gained its popularity. The pandemic situation helped Zoom grow in a way that even the founders and creators of Zoom hadn’t thought of. Zoom was still successful in the market even before the coronavirus.

But how did that happen? The market was already flooded with similar video conferencing apps like Skype, Webex, and Google Hangouts. In such a situation, how did Zoom manage to steal the limelight?

Zoom was created to serve the purpose of a cloud-based conferencing tool. The app allowed its users to attend meetings or even host meetings from any part of the world. These virtual meetings let the users connect with people through video, audio, and chat.

But how did it manage to survive and grow in a market that was already filled with similar products? It was because of the kind of service they provided. Their high-quality audio and video output successfully attracted people and helped them survive in such a competitive market. 

The CEO of Zoom, Eric Yuan, migrated from China to the USA in the 90s. Soon, he got a job at Webex in 1997 as a founding engineer. In the next few years, Webex started growing rapidly and by 2007, it was acquired by Cisco for $3.2 billion.

But in 2010, Eric decided to leave his job and start his own company. He felt that Webex video collaborations started off really well but slowly, the app was not living up to the expectations of the customers.

It failed to evolve with time and bring in developments. That is when he left his job and started his own video conferencing venture in 2011. Zoom was finally launched in 2013. 

Since then, Zoom has kept evolving and bringing the customers the best features and services.

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How Does Zoom Make Money? (2022)

How Does Zoom Make Money?

Zoom makes money from various sources like meetings, chats, Zoom phone, webinars, and much more. Here is a list of items that will help you understand Zoom’s money-making model –

1. Zoom Meetings And Chats

Zoom makes money from various sources like meetings, chats, Zoom phone, webinars, and much more. Here is a list of items that will help you understand Zoom’s money-making model – 

Zoom Meetings And Chats – When you hear Zoom, the first thing that comes to your mind is an app that helps in hosting video conferences. That is the core work that Zoom does.

So it is quite obvious that Zoom earns a good amount of money from such meetings. When you connect with people through Zoom, it permits you to connect with people through audio and video.

Not just that, it also provides the users with the feature of Zoom chats where people attending the meeting can have a conversation over text, and share images, videos, audio, and other important content. 

But did you think all these features come for free? Of course, the basic plan where you can host personal meetings is always free of cost, but you can only admit 100 participants, and the meeting would last for only 40 minutes.

If you want better features, then you will have to pay a certain amount of money. Zoom provides you with various plans, so you can choose the one best suited for you and make payment accordingly.

2. Rooms And Workspaces

Another amazing feature of Zoom that helps them earn a huge amount of money is Zoom Rooms and Workspaces.

If you are running a company and want to hold a meeting with a huge number of colleges and staff members, Zoom Room is the one that will provide you with the facility of hosting a conference room so that large organizations can hold meetings seamlessly for hours. 

But, Zoom also allows you to enjoy a 30-day free trial so that you can try the features of Zoom Rooms and understand whether you really need it. 

Once your free trial ends, you can subscribe to them at $49 per month for one room.

If you're running a big organization and need more rooms, you can keep adding them, but the charges will also keep increasing. For example, if you need 15 rooms, you will have to pay $735.

3. Zoom Phone

Gone are the days when you needed your phone and your call log to make phone calls. Zoom also provides you with the feature of making traditional phone calls through their app.

Just like you can host meetings, attend video conferences, and talk to various people over such meetings, you can also make phone calls to people you are connected with over Zoom.

With its chat feature that allows you to send text, audio, pictures, and videos, along with the calling feature of Zoom, it is a complete package. 

But of course, such features will not be provided to you for free. Zoom provides you with a list of plans so that you can choose a plan that suits you and make payments accordingly.

The basic plan starts at $10 per month that allows you to “Pay as you go”. The next plan is $15 per month, which allows you to make unlimited regional calls. And the last plan which costs $20 per user per month allows you to make global calls. So, you can choose your plan according to your needs. 

Zoom phone also comes with various other features like call recording, auto-attendant, etc. so that the users can enjoy every call they make via Zoom phone.

4. Zoom Video Webinar

If you want to host seminars on the Zoom app, you can easily do it by hosting a webinar or an online web conference. This feature allows you to hold a conference meeting with up to 500 participants for just $79 a month.

But, you will always have the option of increasing the number of participants in the conference, but for that, Zoom will keep charging you accordingly. This particular feature has helped a lot of start-ups, and small companies, survive during the pandemic. 

But what if you have to host a webinar that will need more than one session? For that, you can use the feature of Zoom events. When you need to organize multiple zoom webinar sessions, you can always use the feature of Zoom events.

It has some amazing event management features like enhancing reporting, ticketing, registration, etc. This feature will help you to organize an online event easily. Zoom will charge you $99 per month for organizing events where you could add up to 500 participants.

Such innovative features show how Zoom has evolved over time and understood the necessities of users. That is also why Zoom has been able to survive in the market for so long.

Other than the various subscription plans, Zoom also has some other ways of making money like investments, hardware, and advertising. 

To know more about how Zoom make money through these 3 things, keep reading –

1. Investments

If you think that Zoom makes money only through the subscription plans by helping people host meetings, events, and so on, then you are wrong. In 2021.

Zoom announced its new strategy to invest in start-ups that would grow under the Zoom ecosystem. Since then, Zoom has invested over $100 million in more than 20 start-ups. 

This funding strategy has also helped the company's wealth grow. And how does that work?

Once Zoom invests or funds such small companies and helps them grow, every time the company sells its shares, Zoom earns from it. 

As the companies will keep growing, Zoo will keep earning a lot more than they had initially invested in the company. 

But unlike the subscription plans that help them earn money in an instant, this financial strategy will take some time to flourish. Once the company grows under Zoom’s ecosystem, Zoom will get much more returns.

After a few years, Zoom will be able to sell these shares in IPOs and earn huge profits.

2. Advertising

Another way Zooms earns some part of its revenue is from the advertisements. Although the revenue earned from the ads is not huge, yet, it adds up to the total amount of money Zoom earns.

But how do these advertisements work? You must have noticed that after the commencement of each meeting or event, or even phone call, Zoom shows you some random ads.

This is nothing but a marketing strategy by various brands in the market who want their product to be known to people. 

Such brands choose Zoom and pay them a certain amount of money for marketing their brand. 

But Zoom does not show these ads to their paid users. Only the basic users get to see these ads. This feature is very new and was adopted only a few months back in November 2021.

This helps Zoom to generate revenue from the users who do not pay any subscription fees yet use the features of Zoom. As mentioned earlier, this does not help Zoom earn a huge portion of revenue, but with its 10 million active users, this feature certainly does help Zoom earn some decent amount of money.

3. Hardware

Lastly, Zoom also earns some amount of revenue from various hardware products. If you think that Zoom only sold its software to earn a huge amount of money, then you would be wrong.

Apart from selling its video conferencing software, Zoom also sells a few hardware devices. You can easily find things like tablets, telephones, whiteboards, speakers, and many more such electronic devices.

But, Zoom has collaborated with various hardware companies to bring these devices to their customers. Hardware manufacturers like Neat, DTEN, Yealinl, etc. work together with Zoom to bring some of the best electronic devices on the market. 

Zoom hardware mostly aims at solving the issues of video communications. Their only aim is to make sure that these devices enhance the quality of every Zoom meeting.

The customers who buy these devices have to pay a monthly subscription for every device that they use.

This subscription money then gets divided between Zoom and the hardware manufacturing companies. In case of any problem with the devices, the manufacturing companies deal with them. This whole process helps Zoom to earn a significant amount of revenue.

Is Zoom Profitable?

Although Zoom was introduced in the market back in 2013, it became profitable in 2019. Its IPO was also released in April 2019. But the following year, when COVID-19 created a threat to the whole of mankind, Zoom and other such video conferencing apps made a huge amount of profit.

Before the pandemic, video conference calls were only conducted when the host and the participants lived at different geographical locations. But the pandemic changed everything. Schools, colleges, and even the offices went online. 

In the 2020 fiscal year, Zoom only had a profit of $22 million. But, in the 2021 fiscal year, Zoom made a net profit of about $671 million. Furthermore, the pandemic situation made people dependent on such video conference apps. 

Zoom Funding, Valuation, And Revenue

Funding – Zoom has also raised funding of $276 million in the various states to companies in just eight rounds. Among the various investors, some notable ones are – Emergence Capital, Horizons Ventures, Sequoia Capital, etc. 

Valuation – Not only by funding, but Zoom also became a profitable company in 2019 and announced its IPO in 2019. It raised about $356.8 in it. Back then, the value of Zoom was approximately $9.2 billion. And what is its value right now? Its value has raised up to $47 billion. 

Revenue – Back in 2020, Zoom had earned only $22 million. But, after the pandemic, its revenue increased sharply and reached a net profit of $671 million. 

FAQs

  1. Where does zoom revenue come from?

    Zoom earns its revenue from various sources. Not only do they earn their profits from various subscription plans like video meetings, events, phone calls, etc. but also through funding, advertising, and various hardware productions. 
  1. Do companies pay for zoom?

    The basic users of Zoom who use the app to meet their personal requirements do not need to pay any fees. But companies who use the platform of Zoom to hold meetings, host events, and webinars, or do other such works need to choose a plan best suited for them if they want to continue using Zoom. The platform provides its users with a huge number of features and thus, the companies paying for the services seem quite obvious. 
  1. How much money does zoom get?

    The amount of money that Zoom can earn from each user depends. Zoom provides its users with various subscription plans to choose from. The users can choose one particular plan that suits them and pay accordingly. 
  1. Is zoom free or paid?

    Zoom is free for basic users. Such users can use the platform Zoom to do their personal work. But such basic users will have to watch certain videos. Other than that, Zoom is not free for companies who use the platform to get their official work done. They will have to choose a subscription play and pay to enjoy the services provided by this app.

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