Business Operations Business Models

How Does Honey Make Money (Business and Revenue Model)

The Honey business model

How Does Honey Make Money?
Here’s what you should know:
  • What is Honey, and how does Honey work?
  • How does Honey make money?
  • Sales Commissions
  • Honey’s profit and revenue
  • What is the Honey business and revenue model?
  • Honey’s funding and valuation

How does Honey make money if it’s free? Here is a full, in depth, breakdown of their main revenue stream and the different products and services they offer, as well as the Honey business model, their year over year revenue, and how Honey works.

What is Honey, and how does Honey work?

Honey is an online deal finder that finds and automatically applies the best coupons and discount codes on eCommerce sites at checkout.

Founded in 2012 by George Ruan and Ryan Hudson, Honey now has more than 17 million active monthly users and was acquired by PayPal on January 6, 2020, for $4 billion.

How Honey works is: Users first need to download Honey’s Google Chrome browser extension. Once the extension is installed, users can use Honey to compare and apply coupons at checkout.

Some of Honey’s competitors include Groupon, Ibotta, RetailMeNot, Swagbucks, Upside, Rakuten, Dosh, and other coupon deal finders.

Honey App in Apple App Store | Honey Business Model | How Does Honey Make Money?
Source: Apple App Store

How does Honey make money?

Honey has 17 million active monthly users and works with more than 30,000 online retailers according to a November 2019 PayPal press release. So how does Honey make money through all of these users and partnering brands?

Below is a breakdown of how much money Honey makes and its revenue model. Including their main revenue stream and how much they earn from their services.

Note: No updated numbers on monthly active users and partnering retailers have been released by PayPal since their 2019 press release when acquiring the company.

Here is how Honey makes money (in 2022):

Honey has a revenue model that makes money in one (1) way – sales commissions.

#1. Sales Commissions

Honey makes money by earning a commission through partnering merchants on affiliate networks.

As of January 2021, Honey works with more than 30,000 online retailers across 24 affiliate networks including networks like eBay, Groupon, ShareASale, and Rakuten. The full list of affiliate networks Honey uses is listed here.

The way it works is: Whenever Honey members purchase from a partnering merchant using (1) Honey to find the best available coupons or (2) Honey’s Gold rewards program, Honey earns a commission from each sale.

Honey Affiliate Networks | Honey Partnerships | Affiliate Business Model
Source: Honey

Note: The commission percentage Honey earns on each sale solely depends on the affiliate network and the partnering brand. Each affiliate network and brand offer different commission percentages.

Honey’s profit and revenue

Paypal hasn’t yet released any official financial statements on the revenue of Honey. But according to PayPal CEO Dan Schulman, Honey brought in roughly $100 million of annual revenue in 2018.

Note: Because PayPal Holdings Inc., the parent company to Honey Science Corp., is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of PayPal’s publicly released financial reports, including annual reports, through PayPal’s investor section on their website.

What is the Honey business and revenue model?

Honey makes money through a few revenue models that they combine within their company, they are:

  • Affiliate business model

Honey’s funding and valuation

According to Honey’s Crunchbase profile, Honey raised $31.8 million over 6 rounds and was acquired by PayPal on January 6, 2020, for $4 billion.

Before this, Honey’s founders, George Ruan and Ryan Hudson were self-funded up until March 2013 when Kai Buehler gave them their first investment for an undisclosed amount.

Some of their lead investors include Mucker Capital and Anthos Capital.