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Business Models Business Operations

How Does TextNow Make Money (Business and Revenue Model)

The TextNow business model

TextNow logo
Here’s what you should know:
  • What is TextNow, and how does TextNow work?
  • How does TextNow make money?
  • Ad Revenue
  • Purchasing Monthly Data and Activation Kits
  • Charging for International Calls
  • Ad Free Lite and Ad Free+
  • Lock in Number
  • TextNow profit and revenue
  • What is the TextNow business and revenue model?
  • TextNow funding, net worth, and valuation
  • TextNow subsidiaries, acquisitions, and exits

How does TextNow make money and how is TextNow free to use? 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 TextNow business and revenue model, how much money TextNow makes per year, and how TextNow works.

What is TextNow, and how does TextNow work?

TextNow is a telephone service that offers users a free phone number with free texting, free calling, and free nationwide coverage.

Founded in 2009 by Derek Ting, Gary Fung, and Jon Lerner, TextNow has since been downloaded more than 200 million times across all platforms, attracting more than 15 million users per month.

So, how does TextNow work? To use TextNow, simply download their mobile app on the Apple App Store or Google Play store and create an account.

Once you’re signed up, TextNow will then have you verify your phone number via a code and then have you pick what your TextNow phone number will be from a list of available numbers to choose from.

You can then use your TextNow number to send a receive free calls, texts, and voicemails with the option of purchasing additional add-ons (optional).

Some of TextNow’s competitors include WhatsApp, Google Voice, Viber, Signal, Telegram, and other services that offer free phone numbers.

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

How does TextNow make money?

According to TextNow, TextNow now has more than 15 million monthly users and has been downloaded more than 200 million times across all platforms since being founded back in 2009.

So how does TextNow make money off of all these users?

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

Here are the 5 ways of how TextNow makes money in 2022

TextNow has a revenue model that makes money in five (5) ways; from ad revenue, charging for international calls, purchasing monthly data, and multiple subscription services.

#1. Ad Revenue

To keep the service free, one of the ways TextNow makes money is through its in-app ads.

As noted above, TextNow has more than 15+ million monthly users. Which, according to TextNow, collectively sends out over 700 million text messages each month that add up to more than 6+ billion monthly ad impressions. Meaning lots of ad revenue for TextNow.

These ads appear in places like a user’s TextNow text messages and over their keyboard while typing (the keyboard is replaced with an advertisement) for every user who has not upgraded their account to get rid of ads.

#2. Purchasing Monthly Data and Activation Kits

Although TextNow is free to use for all users, TextNow also makes money by offering a subscription service to users who want to also use TextNow without WiFi.

Once a user purchases and receives the TextNow SIM Card from TextNow for $0.99 + $4.99 shipping, they can choose between the 1GB, 2GB, 3GB, and 5GB monthly plan and start receiving high-speed data monthly for nationwide talk and text – WiFi free.

How much does the TextNow data plan cost?

  • $0.99 for an activation kit (one-time fee)
  • $8.99 to $27.99 per month depending on how many GB the data plan is
TextNow data plans and pricing | TextNow Business Model | How Does TextNow Make Money? | How Does TextNow Work?
Source: Apple App Store | TextNow

#3. Charging for International Calls

In addition to ads and subscription revenue, TextNow also makes money from charging users who want to make international calls.

Pricing varies based on which country they are calling – which they are charged by the minute.

For example, a user in the U.S who wants to call someone in India will cost them $0.19 per minute, while a call to Cuba will cost that user $1.37 per minute. You can see how much TextNow international call rates cost by country, here.

Note: TextNow offers users the option to watch ad videos in exchange for $0.01 worth of free credit.

#4. Ad Free Lite and Ad Free+

Another subscription service TextNow offers is for users who are willing to pay for an ad-free experience.

For this, TextNow offers two (2) options; Ad Free Lite and Ad Free+. Ad Free Lite only reduces ads to show at the bottom of the screen, while Add Free+ removes all ads, plus a few additional perks. You can see how much they cost below.

How much does TextNow Ad Free cost? (TextNow subscription)

  • Ad Free Lite:$1.99 per month
  • Ad Free+:$9.99 per month

#5. Lock in Number

Lastly, TextNow’s third subscription offering is a service that, in TextNow’s words, “locks in a user’s number.”

What does this mean? Well, on TextNow, a user’s number will expire after 30 days of inactivity. And by paying $1.99 per week, TextNow will keep a user’s number from expiring – no matter how much they use it or don’t use it, even if it goes past the 30-day period.

Note: By keeping users frequently active with their inactivity “lose your number” policy, they are able to make more money through ad revenue by keeping them engaged on the platform.

TextNow profit and revenue

In 2021, TextNow has reportedly crossed $100+ million USD in revenue.

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

What is the TextNow business and revenue model?

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

  • Freemium (upselling) business model
  • Advertising based business model
  • Subscription business model
  • Fee for service (FFS) business model
  • Business to business (B2B) business model
  • B2B2C (partnerships) business model

TextNow funding, net worth, and valuation

According to TextNow’s Crunchbase profile, TextNow has raised $1 million over 1 round.

TextNow subsidiaries, acquisitions, and exits

To date, TextNow has not made any acquisitions, investments, or exits.