Zoom is an online cloud-based video conferencing web and mobile application, which works on the strategy of the freemium business model. For example, institutions, offices, schools, and governments faced many lockdown problems in the pandemic. Zoom came to the rescue and made the meetings and classes go smoothly, and in return, the company was charged for providing seamless high video and audio conferencing. Here we will see How Does Zoom Make Money and its business model.
Zoom is not a new application as it was founded in 2011 by Eric Yuan, initially named Saasbee, but gained popularity in recent times of lockdown due to the high demand of work from home. It works on the model of software as a Service, also known as SaaS applications. In this service, the provider maintains the cloud server, code, and database. The consumers pay the subscription fee for the service on a monthly as well as yearly basis. Some businesses offer a month free subscription or some services free with limited access to provide customer satisfaction.
Netflix, Amazon Prime, Dropbox, and now Zoom are some of the popular SaaS-based applications. The business model of Zoom works wholly on a various subscription basis of multiple products. The popularity grew so fast that the significant competitor SKYPE fell behind from a large number of users. Moreover, from private individuals to big business giants preferred Zoom. Its business model became so successful that the revenue shot up to around five times in no time.
Money Making Model of Zoom
Zoom works on the model which gives limited services free and generates revenue from the user’s subscriptions and various plans, which help them grow their finances. These services ranging from meetings to united are the base for the organization to make money. The charges and subscriptions are categorized based on users, their utilization, and the products which the company provides are, by which the company makes most of the money:
- Zoom Meetings
- Zoom Phone
- Zoom Events and Webinar
- Zoom Rooms
- Zoom United
These products are available for education, healthcare, and developers, with plans suitable for their purpose.
Zoom Meeting
Zoom meeting is an essential product of the Zoom application; it provides good quality video conferencing. It is further categorized based on the number of participants who can join the meeting.
Basic
There are many users of this version worldwide, where the host can add up to 100 participants for the meeting. They can share screens, documents, raise a question and many more. This version has limited access, so the session ended in 40 minutes, but one meeting was not time-bound.
Pro
Most of the work uses zoom free version, but the benefits don’t end here. The Pro version comes with all the benefits of the basic version. In addition to it, the user can increase participants up to 1000 with a simple add-on. There is no time limit, but the group meeting can last up to 30 hours, including social media streaming and 1 GB of cloud recording. This version is suited for small project teams or small classrooms. The cost of the subscription to this version is $14.99 per month.
Business
This version is the best fit for small businesses, where the application provides all the benefits of the previous version. In addition to it, the host can add up to 300 participants. It gives this version, with the business branding as well. The price of the business version is $19.99 per month.
Enterprise
The last version of Zoom comes with all the benefits of previous versions. In addition to it, the host can add up to 500 participants to the meeting. The previous version had limited cloud storage access, but it made the cloud storage unlimited for its users. The price of this version is $19.99 per month.
Zoom Phone
Zoom took the video and audio conferencing to the next level and added the feature of Zoom phone called enterprise cloud phone system. The company decided to make its application a single stop for meetings, calls, messaging, and sharing content.
Three Plans of Zoom Phone are:
US & Canada Metered
This plan is called pay as you go. The plan is only available for US and Canada numbers, where the user can use Zoom phone for domestic SMS and MMS services. The calls can be made and received from multiple devices. For providing the service, the zoom will charge the outbound call at set metered rates. The price of the plan is $10 per month per user.
US & Canada Unlimited
The plan is called an unlimited regional calling plan. This plan is also available only for US and Canada numbers, including all the benefits of the previous version; the user enjoys unlimited calling to 18 specific countries/territories. Users can subscribe to the plan at a rate of $15 per month per user.
Pro Global Select
The plan is also called a choice from 40+ countries. This feature gives the feature of direct dialing the number. The unlimited domestic calling is in 40+ countries and territories. Users can subscribe to the plan at a rate of $20 per month per user.
Zoom Events and Webinar
The new feature allows users to create their own branded public or private events. The host has a different option for customizable registration for the participants and a built-in ticketing option. The host can set free, paid, live, or on-demand events too. The product also gives the host an option for tracking the tickets sale, revenue, and more, which can be used to understand the event’s performance. This product has two plans:
Zoom Webinar
The version provides unlimited webinar sessions for up to 30 hours for around 500 attendees. The registration and participants list can be easily exported and managed. The aid registration feature helps in quickly selling and managing the tickets. Including live streaming, the sessions can be recorded on the cloud as well. The subscription cost of the plan is $79 per month per license.
Zoom Events
The version is also available for up to 500 attendees and is used for organizing and conducting online events seamlessly. The plan provides everything provided in Zoom events, and it provides all-in-one event management solutions in a single place. The plan comes up with customizable registration and ticket options. The subscription cost of the plan is $pp per month per license.
Zoom Rooms
Traditionally the conference room needed sophisticated hardware and software. But, nowadays, people need to start a meeting instantly or connect with other rooms, maybe with smartphones or the web at the same time. Features like a whiteboard, content sharing, and scheduling the meetings from a single platform are included. Zoom room is a cloud-based solution, which uses flexible hardware which works on wireless multi-share mode. The Zoom room provides 720p HD video and audio meetings and supports up to 1000 participants or 10,000 webinar viewers. The hardware supports up to 10 room controllers and three displays.
The Zoom room plans are categorized into two categories:
Zoom Room Licenses
If the Zoom room needs up to 49 Zoom room licenses, then the plan is perfect. The price of the subscription is $49/month/room.
Zoom Room Enterprise
If more than 49 zoom room licenses are required, this plan is suited, whose price is $49/month/room.
Zoom United
Zoom united is a collaboration of Zoom meetings, Zoom webinar/events, and Zoom Phone. All in one subscription makes it easy for subscribers and prevents them from paying more. Zoom United comes with three plans with different benefits and subscription prices:
- Pro
- Business
- Enterprise
They are also categorized based on several participants who can join the meeting; the phone call feature is usual. Three quality of the conference is clubbed with the other three segments of the phone, respectively. The subscription fees of Pro, Business, and Enterprise are $30, $35, and $35 per month per user, respectively.
Additional Services
Apart from the services discussed above, Zoom also provides a few add-on services too, for which the user is charged every month. The additional services are:
Toll-Free Numbers
Users can add this service with any of the planes above. This service will let another call you free of charge; this is most widely used for business or enterprise purposes. This feature starts at $10 per month.
Additional Phone Number
Users can add additional local, toll-free, or international premium numbers to their plan and use the other number as a designated company number. The subscription fee for this feature is $10 per month.
International Calling Add-On
The feature can be added to only unlimited calling Zoom Phone plans. The feature helps the user to call on international countries unlimitedly. The global countries are limited and specified on the zoom website. The service can subscribe at $10 per month.
Premier Developer Support
This feature acts as a support team for any problem. The user will get prioritized technical support and quick troubleshooting to resolve the issue by availing of the feature.
Zoom Phone Power Pack
The company introduced this feature to support Zoom phone users. If a business purchase uses Zoom Phone, the toll-free number service is activated, there will be queuing calls. It provides enhanced call queue analysis and a desktop user experience that streamlines call handling. The subscription fee for this service is $25 per month.
Money Making Zoom IPO
Video conferencing app Zoom entered the NASDAQ market with the ticker ZM on 18th April 2019. It came with an offer price of $36 and ended at $66 on the closing. Currently, ZM is trading at the cost of $294.95, raising an amount of $356.8 million. The investors saw potential in the company and invested in it, making the company more valuable.
Profitability of Zoom
It is the basic version of Zoom, which most people use and are aware of, But the vast business model, where the user has to subscribe for various other products, makes Zoom one of the profitable companies. It made a cold start and remained non-profitable, and even booked losses in the year 2018. The pandemic changed the scenario of the revenues for the company. And the company became profitable in the years 2019 and 2020. The situation is evident through the consolidated financial sheet of the company. In 2020, the company made revenue of $622 million, gross profit shot up to $507 million, and the year’s income was $12 million.
Zoom’s Competitors
The major competitor in the video conferencing industry was Skype for a long time. Erin observed all the drawbacks of Skype and worked on it to make a seamless video conferencing app that can challenge Skype. The pandemic gave Zoom a chance and the platform which is required. At the same time, it got its competition from Google Meet and Microsoft Teams. But the company maintained its place in the market, even though Zoom experienced some data and security issues, but Eric and his team made all the effort to make Zoom a safe and secure place.
Conclusion
Zoom, working on a freemium model, became successful in targeting its customer base. The competitors of zoom don’t provide the products and services they provide. It has left no stone unturned to satisfy and give the customer everything in one place. The products of Zoom and their benefits attract the customer and prefer to pay for the subscription. The pandemic gave them the perfect opportunity they needed, and it took the chance and gave their fullest.
Frequently Asked Questions
1. Which model is Zoom based on, and what is it?
Zoom provides free audio and video service, also grants limited access to the user. So, if the user wants to use more functions, they have to pay for the monthly subscription.
2. How many products does Zoom have?
Zoom has around five main products and four additional products.
3. Is Zoom a loss-making company?
No, since 2019, the revenues of the company have shot up.
4. Does Zoom only have monthly subscriptions?
No, Zoom has an annual subscription as well.
5. What is the limited access in the accessible version of Zoom?
The limited access for the basic version is up to 40 minutes for 100 participants and 24 hours for one-on-one video chat.
6. Is Zoom safe to use?
Zoom is entirely safe and keeps privacy at utmost priority. The team continually work on maintaining the server and code,
