Just like how Google is synonymous with web searches, many came to associate Zoom with video conferences.

Small businesses, enterprises, educational institutions, and anyone who had to communicate via video conferences used Zoom.

By the time 2020 ended, most people came to know this software program.

The world’s current state brought about changes in the way people live. We had to practice social distancing, which meant most of us worked from home and only interacted virtually.

Instead of going to the office to discuss work, employees now go online to join Zoom meetings. Even Zoom parties became a thing as friends and family wished to celebrate special occasions while miles apart.

Zoom’s popularity skyrocketed as people relied on it to stay connected while stuck at home. According to SensorTower, it even became the most downloaded app worldwide in April 2020.

With such impressive growth and popularity, I would assume that the company is now rolling in cash. But how does Zoom actually make their money?

Let’s take a look at the business and revenue models of Zoom to answer this question.

What Is Zoom?

If you’ve been working from home for the past few months, chances are you’ve probably already used Zoom more than a few times. It has become one of the go-to solutions to connect people while many are stuck at home since the beginning of last year.

But if you haven’t tried Zoom yet, the mechanics of it is fairly simple.

Zoom is a cloud-based software platform that allows users to interact with each other via chat, audio, and video.

This conferencing tool is not only designed for private individuals, but it’s also great for businesses and enterprises.

It allows casual users to hold one-on-one meetings or short sessions with up to 40 people. Organizations can hold conferences with up to 500 participants for a few hours as well.

Aside from the video call features, Users can enjoy screen sharing, live chat, cloud storage, and other collaborative capabilities. There are different products and features that provide a solution for your conferencing needs.

You don’t even need to create an account if you only want to attend a Zoom meeting. Anyone can access it using iOS and Android smartphones, or Mac, Windows, and Linux computers.

Of course, Zoom isn’t the only conferencing tool in the market. Before Zoom entered the picture, the industry was already teeming with incumbents such as Skype and Google Hangouts.

So how did this conferencing tool turn into such a big phenomenon?

Before we understand how Zoom makes money, let’s first have a look at the story behind its success.

A Little Backstory

The story behind Zoom is inspirational because the man who founded the company had his US Visa repeatedly rejected eight times.

However, this didn’t stop him from giving up on his dreams. He knew that the Internet was the wave of the future, and he was inspired to move to California’s Silicon Valley.

By the time he finally migrated to the US from China in the mid-’90s, Eric Yuan joined Webex as a founding engineer.

The company quickly grew and went public in 2000.

In 2007, Cisco acquired Webex and Yuan climbed the ranks to become the Corporate VP of Engineering. He was in charge of collaboration software and often met with customers.

During those conversations, Yuan discovered that the customers weren’t satisfied with Webex and the solutions it offers.

People were getting frustrated that the company wasn’t listening to their demands. Yuan firmly believed that he could develop a platform that could make the customers happy.

He tried to pitch Cisco a new video conferencing system in 2011.

When the company shot him down, he realized that he needed to leave the comforts of his high-paying job to create the product the way he wants it. Yuan left Cisco that year and began developing Zoom, initially named Saasbee, Inc.

While looking for investors, everyone in the venture capital thought that Yuan’s idea was terrible.

The market already had big names like Skype and Google Hangouts in the market. Zoom had to be flawless to win. Luckily, former Webex CEO Subrah Iyer had faith in Yuan and gave him $3 million seed money.

In 2012, Yuan changed Saasbee, Inc. to Zoom and launched a beta version of the platform.

Its first customer was Stanford University. Two years later, the company released its first product and raised a $6 million Series A.

By 2013, Zoom already had 1 million participants. The product’s high quality and low price attracted many users. Zoom also added more features over the years which provided customers with more video conferencing solutions. When Zoom went public in April 2019, the company had a valuation of around $9.2 billion. The number rose to $140 billion by the end of October 2020.

The company grew to exponential heights last year as it played a massive role in connecting the whole world. But how does zoom make money?

How Does Zoom Make Money?

The company operates on a freemium business model. Does this mean it’s equal to a free-to-use app?

No. Zoom still needs to make money to continue its operations.

This type of revenue model means that Zoom provides its user base with limited services without charging a fee. You can use Zoom Meetings and Chats for free and host a conference for 40 minutes with up to 100 people.

You might think that Zoom is only a simple video conferencing tool, but it offers more services than that. However, you need to upgrade to a paid subscription plan if you want to unlock and enjoy its special features.

So to answer the question above, Zoom makes money through a variety of products and add-on features. Let’s look into each of them in more detail below.

Zoom Meetings and Chats

The company’s core product is Zoom Meetings and Chats. It’s the most popular and commonly used service offered by Zoom.

Zoom Meeting and Chats allows customers to join a video conference call with other users through the mobile app or desktop version. There’s also a chat feature, which lets users share text messages, images, URLs, audio files, and other content.

Under this, Zoom offers four different subscription plans that determine what features a user’s account includes. Here are they:

Basic

This option is free and intended for personal meetings. You may have unlimited one-on-one meetings, but there are limitations to your group sessions.

You can only host a meeting with up to 100 participants for a maximum of 40 minutes per session. Now, this may already seem sufficient for casual users, but others might require more room and time.

Pro

For $149.90 / year/license, the Pro subscription plan allows a small team of 100 or less with extra time to collaborate and talk.

A user can host a session with a limit of 30 hours per meeting. That’s more than enough to cover everything that you probably need to discuss. This plan includes features such as 1 GB cloud recording and social media streaming as well.

Business

Those with small or medium businesses would benefit more from this plan. It’s priced at $199.90 / year/license and includes all features in the Pro subscription.

But instead of only 100, up to 300 participants can join per session. The Business account also offers extra services, including company branding, managed domains, single sign-on, and recording transcripts.

Enterprise

The last option is for larger companies and enterprises since it can host up to 500 participants.

It’s the most expensive as it costs $240 /year/license. This subscription plan includes everything in the Business account, plus unlimited cloud storage and recording transcripts. There’s a dedicated customer success manager as well.

Users with at least one license can also add the optional add-on paid plans. These add-ons include premier support, cloud storage, audio plan, and large meetings.

Zoom Phone

With the rise of cloud-calling solutions, the company gave birth to Zoom Phone as an addition to its existing service. It includes all the usual features that you can find in an office telephone, such as voicemail, call waiting, conference lines, and more.

Through this solution, Zoom brought traditional phone capabilities directly into the application. It integrates seamlessly with Zoom’s other services, transforming it into an all-in-one product for messaging, calling, and video conferencing.

Zoom Phone is targeted mostly towards businesses that have hundreds to thousands of phone numbers to convert. Because of this, the service became one of the company’s great sources of revenue. Zoom offers three subscription models, namely:

• US & Canada Metered. This variant is available for $120 /year/user. You’ll get a virtual US & Canada phone number, advanced phone features, and the ability to make or receive metered calls from multiple devices and apps.
• US & Canada Unlimited. Instead of metered rates, this option lets you have unlimited calls within the US and Canada. It also offers the same features as the subscription plan listed above, plus an optional add-on for unlimited calling to 18 countries. The price for this plan is $180 /year/user.
• Pro Global Select. For this option, businesses have to pay $240 /year/user. You’ll enjoy a direct calling number and unlimited local calling in 40+ countries. It includes the same features offered in the US & Canada Unlimited subscription plans as well.

Zoom Rooms and Workplaces

Another way that Zoom makes money is through Zoom Rooms and Workplaces. This product allows users to run a video call meeting with a conference room setting. Instead of something similar to a webinar or a standalone meeting, Zoom Rooms and Workplaces act as a centralized office where teams can collaborate.

The purpose of this service is to create a virtual space for teams to work together while in different geographical areas. Like Zoom Phone, the target market for this product is businesses.

Companies can use their existing systems like Polycom, Cisco, or Lifesize, to run Zoom’s conference rooms seamlessly. Zoom and Zoom-certified providers can also handle the installation of the required hardware and infrastructure if you don’t have existing computing resources.

Similar to Zoom Meetings, Zoom Rooms and Workplaces has three subscription plans as well. The more conference rooms or workplaces that you need, the more money you need to pay. It costs $49/month/room, but if you opt for an annual billing cycle, you’ll only pay $41.58/month/per room. There’s also a free 30-day trial for those who want to try its different features first.

Zoom Video Webinars

If you’ve been bored during the pandemic like me, you’ve probably joined a few webinars hosted in Zoom. This product is another source of revenue for the company. The video conferencing service allows a user to broadcast an online web conference with up to 10,000 attendees.

As the host of the webinar, you can share your screen, video, and audio.

You also have options to promote attendees as your fellow interactive video panelists, share their screen, and mute and unmute them when it’s their turn to talk.

Moreover, Zoom provides different features based on the organizer’s subscription level to make the webinars interactive. Attendees can use features such as chat, Q&A, pooling, virtual hand-raising, and more.

Webinar organizers can also change the privacy settings and make registration mandatory if they want. They can hold the session once, reoccur successively, or set the same webinar video at various times. Zoom Video Webinars have optional add-on plans as well, which is another revenue-generating factor.

The price for Zoom Video Webinars depends on the number of attendees. It starts at a capacity of 100 attendees for $400/year/license and can be scaled up to 10,000 attendees for $64,900 /year/license. You can also contact sales if you want to host webinars with up to 50,000 participants.

Final Thoughts

Before the pandemic even hit us, Zoom already had an impressive growing user base. It’s winning market shares and proving to be a great competition against big players like Skype and Google Hangouts.

Businesses are now adding video conferencing as part of their daily operations. With this, we can expect that Zoom will continue growing in the coming years.

Thanks to its freemium business model plan, customers get to experience quality service and video conferencing features. And with this method, Zoom successfully attracts its users to upgrade into a subscription tier, which helps them generate revenue.

Looking for ways to earn money during the pandemic? Read ”10 Ways to Make Money From Home During COVID-19” to learn more.