How Does Zoom Make Money and Is It Profitable?

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How Does Zoom Make Money and Is It Profitable?

Zoom has long been a key participant in the online meeting and video conferencing sector.

It has saved many companies time and money throughout that period, making it simple for anybody who needs to conduct an online meeting to do so. But how can Zoom generate money if anybody can host one of these sessions for free?

Zoom and Video Conferencing

Zoom is a video conferencing service that enables users to participate in meetings by computer, tablet, or phone. It began as Saasbee in 2011, but was quickly renamed Zoom. Its purpose is to make it as simple as possible for users to arrange an online meeting or video conference.

Zoom’s primary audience is the corporate and academic sector, but the COVID-19 lockout broadened its reach, and it quickly became the go-to tool for group video conferences.

Zoom had established rivals like as Skype, Cisco WebEx, and Google Hangout when it first debuted. It’s a surprise how it was able to take on these monsters from afar, but it’s actually understandable if you look a little closer.

Related: What Are the Benefits of Upgrading to Zoom Pro?

Eric Yuan, the company’s creator, formerly worked for Cisco. He left the business as corporate vice president to launch Zoom with a team of 40 Cisco engineers.

Eric’s extensive grasp of technology, as well as his 14 years of experience directing engineering teams at WebEx (and later at Cisco when Cisco purchased WebEx), instantly made Zoom stand out. It was also substantially less expensive to use than its rivals.

What Is Zoom’s Business Model?

Zoom has a business model known as ‘freemium.’ This implies that it is free to download and use for everyone, but a paid membership is available for those who desire more features and customization.

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How Does Zoom Make Money?

Zoom offers several income sources. We’ll go through each income source individually so we can see how Zoom makes money.

1. Zoom Meetings & Chats

If you’ve ever held a free Zoom meeting, you’ll know that there is a restriction to the number of attendees and the length of the conference.

The Zoom Basic subscription enables users to hold meetings for up to 100 participants for free. The only stipulation is that meetings with more than two persons cannot go more than 40 minutes.

The hitch is that, although 40 minutes is plenty for informal gatherings or talking with friends, professional meetings often run longer. This takes us to Zoom’s first source of revenue: paid meetings.

Users who wish to hold lengthier meetings with additional features such as cloud storage, recording capabilities, and so on, may pick from three subscription plans: Pro, Business, and Enterprise.

  • Pro members may arrange meetings with up to 100 people without worrying about the time restriction (30 hours!). They also receive 1GB of cloud storage for recording and replaying meetings, as well as the opportunity to broadcast social media.
  • Meetings with up to 300 attendees may be hosted by business subscribers. They also receive features like single sign-on, transcript recording, controlled domains, and business branding. The business plan is $19.99 per month per license.
  • Subscribers to Zoom’s Enterprise plan get all of the perks of the business plan and more. Subscribers may hold meetings with up to 500 people and have unlimited cloud storage. The enterprise plan is likewise $19.99 per month/license.
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These are the three revenue streams for Zoom’s meeting functionality. Rooms and Workspaces are its second income source.

2. Rooms and Workspaces

Zoom Rooms are described as “modern workplaces for hybrid teams.” Rooms facilitate distant and hybrid team collaboration by providing high-resolution video and a few other capabilities.

One-click joining, 1080p HD video and audio, 1,000 video participants or 10,000 webinar viewers, calendar integrations, and more capabilities are available in rooms.

How does Zoom profit from Rooms? It costs $49 per license per month (or $41.58 per month if invoiced yearly).

Zoom also offers installation assistance to clients who do not have conference room setups. It collaborates with hardware manufacturers to give these consumers with the appropriate hardware, and it gets a portion of each hardware sale from the manufacturers.

3. Zoom Phone

Zoom Phone is a cloud-calling service that enables users to have brief meetings without the usage of video. Within the Zoom app, the function provides regular phone features. It is mostly used for flexible and seamless communication by remote and hybrid teams.

It enhances the Zoom experience by adding features such as;

  • Auto Attendants and Intelligent Call Routing
  • Voicemail & Call Recording
  • Secure HD Voice
  • Microsoft Office, Salesforce, and Google Workspace integrations

Zoom Phone subscriptions begin at $8 per month per user.

4. Zoom Video Webinar

Zoom also generates money by offering video webinars. Users of Zoom Video Webinar may hold webinars with up to 10,000 attendees.

It differs from conventional meetings in that participants are only allowed to observe. The organizer may share their screen, video, and audio, while participants can engage with the webinar presenter using the Chat, Q&A, and Polling capabilities.

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Related: Which Is Better for Video Meetings: Microsoft Teams or Zoom?

Zoom Webinar cost ranges from $79 per month per license for 500 participants to $6,490 per month per license for webinars with up to 10,000 attendees.

Zoom also generates money through providing specific packages for Education, Finance, Healthcare, and Government enterprises, as well as via its marketplace, where third-party applications like as Slack, Salesforce, and Trello may be added.

After listing Zoom’s several income sources, let’s take a look at its profitability.

Is Zoom Profitable?

Zoom become profitable in 2019 after going public in April of that year. The COVID-19 lockdown increased its profitability even more, resulting in a net profit of $671 million in the fiscal year 2021. According to Statista, this is up from $22 million in the 2020 fiscal year.

Zoom Still Dominates Video Conferencing

Although the epidemic is almost over and demand for remote work and video conferencing is projected to decline, it is apparent that Zoom’s worldwide popularity is not going away anytime soon.

Zoom has also announced plans to extend its operations in other countries in order to maintain continued growth even after demand for remote work solutions has peaked.

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