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Business Operations Business Models

How Does Zoom Make Money (Business and Revenue Model)

The Zoom business model

How Does Zoom Make Money?
Here’s what you should know:
  • What is Zoom, and how does Zoom work?
  • How does Zoom make money?
  • Meetings
  • OnZoom Marketplace
  • Phone
  • Zoom Hardware (Rental)
  • Video Webinar
  • Zoom For Business
  • Rooms
  • Add-on Plans (4 types)
  • Zoom United
  • Zoom’s profit and revenue
  • What is the Zoom business and revenue model?
  • Zoom’s funding and valuation

How does Zoom make money if they offer free services? Well, here is a full, in-depth, breakdown of their nine (9) revenue streams and the different products and services they offer, as well as the Zoom business model, their year-over-year revenue, and how Zoom works.

What is Zoom, and how does Zoom work?

Zoom is a communications technology company that provides a scalable infrastructure for online video and audio chat that is used for conferencing, webinars, online learning, telehealth, and more.

Founded in 2011 by Eric Yuan, Zoom went on to hit “unicorn” status as the company hit its first $1 billion valuation in 2017.

Some of Zoom’s competitors include Google Hangouts Meet, Skype, Microsoft Teams, and other video chat technologies.

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

How does Zoom make money?

As of 2017, more than 700,000 businesses, 58% of Fortune 500 companies, and 96% of top US universities use Zoom.

Then during the COVID-19 lockdowns, Zoom hit a peak of hosting more than 300 million meetings per day on their platform with over 2.13 million daily app downloads in 2020. Connecting teachers and students from more than 90,000 schools across 20 countries to continue education through online learning.

So, with all of this growth, how is Zoom making money off of all of these users, both business and individual?

Below is a breakdown of Zoom’s revenue model, all of the products and services they offer, and how they make money off of each.

Here are the 9 ways of how Zoom makes money (in 2021):

Zoom has a revenue model that generates money in nine (9) ways.

#1. Zoom Meetings

Zoom meetings are the most popular and well-known service that Zoom offers, stating they have topped 300 million daily meeting participants, free and paid. 

Cost:

  • Pro (1-9 licenses): $14.99 /month/license ($14.99 – $134.91 monthly)
  • Business (10-99 licenses): $19.99 /month/license ($199.90 – $1,971.01 monthy)

#2. OnZoom Marketplace

Zoom launched a marketplace for online events called OnZoom in October of 2020.

How it works is: (1) Hosts hold live online events (comprised of both, free and paid events), and (2) attendees book a spot.

As of right now, Zoom does not share in any commission from these event sales and all sales go to the host of the event.

OnZoom Marketplace | How Does Zoom Make Money? | Zoom Revenue Model
Source: Zoom

Note: There is a lot of revenue potential here for Zoom, as they can collect commission on each event sale, ad revenue from sponsored listings, rent hardware to hosts, etc.

#3. Zoom Phone

Zoom phone is a cloud phone service that Zoom launched in January 2019.

The way it works is you (1) choose a calling plan, then (2) decide on one of two usage plans: pay as you go or prepaid.

After combining all of the plans needed to run Zoom’s cloud phone service, the total bill can run you anywhere from $30 to $120+ per month, not including overages.

Calling Plans Cost:

  • Pay As You Go: $10 /month/user
  • Unlimited Regional Calling: $15 /month/user
  • Local Calling in 40+ Countries: $20 /month/user
  • Unlimited International Calling (add on): additional $10 /month/user

Usage fees get added on, in addition, to the bill above. Those usage fee options are:

  • Pay As You Go: (per call, per minute)
  • Prepaid: $20 /month
  • Prepaid: $100 /month

Note: Zoom announced it has reached 1 million users licensing the cloud phone service, in January 2021, just 2 years after launch.

#4. Zoom Hardware (Rental)

Another revenue model Zoom adopts is a Hardware as a Service (HaaS) business model, renting out third-party hardware to customers.

It works just like a telecommunications company (like Verison) that, in order to use their product, you need the hardware – like the modem and/or router. Which you can rent from them for a monthly rental fee.

Rental Cost:

  • Rental devices range from $2.99 to $200 per month per device
Zoom Rental Hardware | Zoom Business Model
Source: Zoom

#5. Zoom Video Webinar

Zoom also offers a service for webinar hosts to carry out large live events that can host anywhere between 100 to 10,000+ attendees, using their meetings service infrastructure.

Cost:

  • Licences can range between $40 to $6,490+ per month depending on the attendance size

#6. Zoom For Business

Zoom also takes on a business-to-business (B2B) revenue model that offer their services across four (4) industries: Education, Healthcare, Government, and Finance.

More than 700,000 businesses, 58% of Fortune 500 companies, and 96% of top US universities use Zoom as of 2017. Some of those companies and organizations are Fidelity, Capital One, Johns Hopkins School of Medicine, NIH, and the CDC.

Zoom Partners
Source: Zoom

Education: Zoom provides online class services for K-12 and higher education schools.

  • 20 – 149 students: $7.50 per student/licence ($150 – $1,117.50 monthly)

Healthcare: Zoom is playing a big role in the advancement of Telehealth.

  • Small clinics & providers: $14.99 per month
  • Larger enterprises: $19.99 per month

#7. Zoom Rooms

Zoom Rooms is another option ideal for customers who have a dedicated meeting environment in shared spaces (such as conference rooms).

Rooms require hardware that you can rent from Zoom. Hardware rentals range from $25 to $200 per month per device.

Cost:

  • Up to 49 rooms: $49 /month/room ($49 – $2,401 monthly)

#8. Add-on Plans (4 types)

Zoom offers five (5) add-ons you can add to all of their products. These add-ons are Cloud Recording, Audio Conferencing, Large Meeting, H.323/SIP Room Connector, and Premier Support.

Source: Zoom

Cloud Recording: Cloud storage provides additional space to store, stream, share, and download meetings and webinars from the Zoom Cloud.

  • 100 Gb: $40 /month
  • 500 Gb: $100 /month
  • 3 Tb: $500 /month

Audio Conferencing: Enhance meetings, webinars, or rooms with call-out functionality and toll-free dial-in numbers.

  • $100 /month plus an additional $10 /month/number for dedicated dial-in numbers

Large Meeting: Zoom has an option to increase the participant capacity up to 500 or 1,000 in addition to the meeting plan you choose.

  • 500 participants: $50 /month/license ($50 – $500 monthly)*
  • 1,000 participants: $90 /month/license ($90 – $900 monthly)*

* 10 licenses maximum for large meetings add-on.

H.323/SIP Room Connector: Added to communicate with desktop, tablet, mobile devices, Zoom Rooms, and other SIP or H.323 endpoints.

  • $49 /month/connector

Premier Support: Pay for additional support for priority response.

  • Cost unknown

#9. Zoom United

Zoom United is a bundle of Zoom Meetings & Zoom Phone that Zoom offers to save money with a package deal.

Cost:

  • Pro (1-9 licenses): $25 /month/license ($25 – $225 monthy)
  • Business (10-99 licenses): $30 /month/license ($300 – $2,970 monthly)

Zoom’s profit and revenue

In 2020, Zoom reported revenues of $622.7 million with a net profit of $21.7 million.

Note: Because Zoom 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 Zoom’s publicly released financial reports through their investors’ press release.

What is the Zoom business and revenue model?

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

  • Freemium (upselling) business model
  • Software as a service (SaaS) business model
  • Infrastructure as a service (IaaS) business model
  • Hardware-as-a-Service (HaaS) business model
  • Business-to-business (B2B) business model

Zoom’s funding and valuation

According to Zoom’s Crunchbase profile, Zoom has raised $146 million over 7 rounds with a valuation of $57.5 billion.

Note: Zoom went public April 18, 2019.