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Business Models Business Operations

How Does Houzz Make Money (Business and Revenue Model)

The Houzz business model

Houzz logo
Here’s what you should know:
  • What is Houzz, and how does Houzz work?
  • How does Houzz make money?
  • Subscription Revenue (Houzz Pro)
  • Interest Revenue (from Houzz’s Credit Cards)
  • Seller Fees (from third-party sellers)
  • Interchange Fees (Houzz Mastercard Credit Card)
  • Additional Houzz Credit Card Fees (Transactions and Penalties)
  • Houzz subsidiaries, acquisitions, and exits
  • Houzz profit and revenue
  • What is the Houzz business and revenue model?
  • Houzz funding, net worth, and valuation

How does Houzz make money? Well, here is a full, in depth, breakdown of their five (5) revenue streams and the different products and services they offer, as well as the Houzz business and revenue model, how much money Houzz makes per year, and how Houzz works.

What is Houzz, and how does Houzz work?

Houzz is an online platform to get ideas, find professionals, and shop for home improvement, remodeling, architecture, interior design, and more.

Founded in 2009 by Adi Tatarko and Alon Cohen, Houzz now has more than 65 million users and 3 million+ contractors on the platform.

So, how does Houzz work? To use Houzz, simply download their mobile app on the Apple App Store or Google Play store, or visit their website.

Once there, you can do things like search for home design ideas, shop for products, and hire professionals to do the job.

Some of Houzz’s competitors include Angie’s List, Thumbtack, Wayfair, and other home improvement marketplaces.

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

How does Houzz make money?

According to Houzz, Houzz has more than 65 million users and 3 million+ contractors on the platform. So how does Houzz make money off of all these users and contractors?

Below is a breakdown of how much money Houzz makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 5 ways how Houzz makes money in 2022

Houzz has a revenue model that makes money in five (5) ways; from subscription revenue (Houzz Pro), interest revenue from their credit card products, seller fees from third-party sellers, the interchange fees they collect from their Houzz credit card transactions, as well as additional credit card fees (transactions and penalties).

#1. Subscription Revenue (Houzz Pro)

One of the ways Houzz makes money is through the subscription service they offer to the contractors and design pros on their platform.

For these professionals, Houzz offers four (4) paid subscription tiers; Starter, Essential, Pro, and Ultimate. All of which provides an all-in-one tool for marketing, CRM, and project management each offering its own set of additional perks like marketing solutions, dedicated customer support, additional users, and more – depending on the subscription plan they choose. You can see the pricing below.

According to Houzz, there are more than 3+ million contractors and design pros using the Houzz Pro software. Meaning, that they are all paying at least $65 per month – plus any additional users added on (if any).

How much does Houzz Pro cost? (Houzz Pro pricing)

  • Starter: $65 per month
  • Essential: $99 per month
  • Pro: $199 per month
  • Ultimate: $399 per month
  • $30 to $40 per month, per user for any additional add-on users (depending on the plan)

Note: There are more than 3+ million contractors paying to use the Houzz Pro software.

#2. Interest Revenue (from Houzz’s Credit Cards)

Houzz also makes money from the interest they collect on their issued credit cards to Houzz customers.

Of the two (2) credit card products Houzz offers, Houzz Mastercard and Houzz Credit Card, one offers interest-free purchases if paid in full within the promotional period of 6 to 12 months. Which you can see how much their APR is for both, below.

Houzz credit card interest rate (APR):

  • 26.49% to 28.49% APR depending on which Houzz credit card
Houzz Credit Card Interest Rates | Houzz Business Model | How Does Houzz Make Money | How Does Houzz Work
Source: Houzz

#3. Seller Fees (from third-party sellers)

In addition to subscription and interest revenue, Houzz also makes money by taking a fee, or commission, from every item sold by a third-party seller on their marketplace.

Although Houzz does not disclose how much gross merchandise value (GMV) they transact year over year, Houzz does have about 10 million products listed across more than 900 categories from 20,000+ merchants on their marketplace, per reports.

Oh which, Houzz takes a 15% seller’s fee for every product sold on its marketplace.

#4. Interchange Fees (Houzz Mastercard Credit Card)

Another way Houzz makes money from their credit cards is off of the interchange fees.

How does Houzz make money from interchange fees? Houzz makes money whenever a Houzz cardholder uses any of their issued credit cards.

When this happens, Mastercard charges the merchant an interchange fee between 1.25% + $0.05 to 3.15% + $0.10 of the charge amount. From that, Mastercard gives a percentage of its interchange fee revenue to Houzz. Although it’s unclear what percentage Houzz receives from Mastercard.

#5. Additional Houzz Credit Card Fees (Transactions and Penalties)

Lastly, Houzz makes more money from its credit cards via the additional transaction and penalty fees they charge customers.

What are the Houzz credit card fees? Houzz charges fees (just like any typical credit card does) on things like balance transfers, cash advances, late payments, and returned payments. Which you can see the cost of each one below or you can read their full rate and fee summary on their website.

Houzz credit card fees:

  • fees up to $41 for late and returned payments
  • $10 or 5% of the amount of each balance transfer / cash advance, whichever is greater

Houzz subsidiaries, acquisitions, and exits

To date, Houzz has made a total of 3 acquisitions.

Mergers and acquisitions business model
Source: Crunchbase | Houzz

Houzz profit and revenue

Houzz has not released any official reports in regard to company earnings.

Note: Because Houzz is a privately held company, they are not required to make their annual reporting, such as Form 10-K’s, pubic.

What is the Houzz business and revenue model?

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

  • Subscription business model
  • Commission based business model
  • Fee for service (FFS) business model
  • Interest revenue model
  • Business to business (B2B) business model
  • B2B2C (partnerships) business model
  • Mergers and acquisitions (M&A) business model

Houzz funding, net worth, and valuation

Houzz’s Crunchbase profile shows Houzz has raised $613.6 million over 8 rounds and has a valuation of $4 billion as of June 2017.