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Business Operations Business Models

How Does Salesforce Make Money (Business and Revenue Model)

The Salesforce business model

How Does Salesforce Make Money?
Here’s what you should know:
  • What is Salesforce, and how does Salesforce work?
  • How does Salesforce make money?
  • Subscription Services
  • Support Services (Success Plans)
  • Professional Services and Other Revenues
  • Salesforce’s Subsidiaries, Acquisitions, and Exits
  • Salesforce’s profit and revenue
  • What is the Salesforce business and revenue model?
  • Salesforce’s funding and market cap

How does Salesforce make money? Here is a full, in-depth, breakdown of their three (3) revenue streams and the different products and services they offer, as well as the Salesforce business model, their year-over-year revenue, and how Salesforce works.

What is Salesforce, and how does Salesforce work?

Salesforce is a customer relationship management (“CRM”) software provider that offers services like marketing, sales, and customer service packages for small businesses and Fortune 500 companies.

Founded in 1999 by Marc Benioff, Parker Harris, Dave Moellenhoff, and Frank Dominguez, Salesforce began trading on the New York Stock Exchange (NYSE) on June 23, 2004, under the ticker symbol “CRM”.

Since that time, Salesforce has continually ranked as one of the top CRM software providers with over 150,000 customers paying for its services.

How Salesforce works is: Business customers can choose from a range of CRM packages like marketing, sales, customer service, and more using Salesforce’s à la carte business model. Once they choose a service, they will be billed on a monthly or yearly basis.

Some of Salesforce’s competitors include HubSpot, Pipedrive, Mailchimp, and other customer relationship management (“CRM”) companies.

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

How does Salesforce make money?

According to a Salesforce webpage, the company has over 150,000 paying customers that range in size from small businesses to Fortune 500 companies. So how does Salesforce make money off of all those customers?

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

Here are the 3 ways of how Salesforce makes money (in 2021):

Salesforce has a revenue model that makes money in three (3) ways – subscription revenue, support revenue, and professional services.

#1. Subscription Services

Salesforce makes the majority of its money through its CRM subscription services offered.

According to page 47 of Salesforce’s 2020 Form 10-K, their most popular service packages by revenue are: sales, service, platform, marketing, and commerce; which totaled $19.97 billion in revenue for Salesforce in 2020.

As noted above, Salesforce has over 150,000 paying customers, ranging from small businesses to Fortune 500 companies. Some of which include brands such as Adidas, T-Mobile, IBM, Morgan Stanley, AWS, and many, many more.

Salesforce Subscription Cost:

  • $25 to $1,250+ per month, per user (depending on the plan and service)
Salesforce Subscription Cost | Salesforce Business Model | How Does Salesforce Make Money?
Source: Salesforce

#2. Support Services (Success Plans)

Salesforce also makes money from its support services offered through their Success Plans.

The company offers three (3) tiers for its “Success Plan” support service: Standard, Premier, and Signature. All of which offers its own set of perks like 24×7 phone & developer support, expert coaching, account management, and more.

While the Standard tier is included with every paid subscription package, Premier and Signature come at their own separate costs. (Which can be seen below or by clicking here).

Salesforce Support Cost:

  • Standard: Included in all licenses
  • Premier: 30% of net revenue
  • Signature: Price based on complexity and scale

Note: Subscription and support revenues accounted for roughly 94 percent of Salesforce’s total revenue in 2020.

#3. Professional Services and Other Revenues

In addition to the subscription and support revenues, Salesforce makes the remaining portion of its money from “Professional Services and Other Revenues,” as the company describes it. Which, collectively resulted in $1.28 billion of revenue for Salesforce in 2020.

These revenues, according to page 71 of Salesforce’s 2020 Form 10-K, are recognized as services “rendered for time and materials contracts, on a proportional performance basis for fixed price contracts or ratably over the contract term for subscription professional services contracts. Training revenues are recognized as the services are performed.”

Salesforce’s Subsidiaries, Acquisitions, and Exits

To date, salesforce.com, inc. has made a total of 68 acquisitions, 43 investments, 15 lead investments, and 13 successful exits.

Salesforce Acquisitions | Salesforce Business Model | How Does Salesforce Make Money?
Source: Crunchbase

Salesforce’s profit and revenue

In 2020, Salesforce reported $21.52 billion in revenue.

Note: Because salesforce.com, inc. 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 Salesforce’s publicly released financial reports, including annual reports, through Salesforce’s investor section on their website.

What is the Salesforce business and revenue model?

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

  • Subscription based business model
  • À la carte revenue model
  • Fee-for-service (FFS) business model
  • Mergers & acquisitions (M&A) business model

Salesforce’s funding and market cap

According to Salesforce’s Crunchbase profile, Salesforce has raised $65.4 million over 6 rounds and has a market cap of $279.63 billion as of September 2021