How Does Zoom Make Money: We Answer Your Questions about the Video Conferencing Platform

how does zoom make money

In the past year, Zoom has become the preferred video conferencing tool for individuals and businesses alike. Zoom might have been late to the market when compared to its competitors, Skype and Google Hangout. But its approach to cloud-based conferencing was far superior to the competition, which enabled it to dethrone them. 

During the COVID-19 pandemic, Zoom saw an increase to around 300 million daily meeting participants. That is three times more than daily participants on Google Meet. So, how did Zoom dethrone giants like Microsoft, Google, and Skype?

We look at that along with a common question most people have about the product ranging from how it became so popular to how does Zoom make money?

What is Zoom?

Zoom was established in 2011 by a former Cisco executive, Eric Yuan. Having previously worked as an engineer at Cisco WebEx, he understood the drawbacks of the video-conferencing application. He decided to venture off on his own to eventually create Zoom, addressing most of the issues faced by WebEx users. 

After two years of handwork, Yuan and his team launched Zoom, cloud-based video telephone and chat service. Users have the option to select from different package plans when using the application. 

  • Free – Users can host a meeting with up to 100 participants. The meeting has a 40-minute time limit, after which it automatically disconnects. 
  • Paid subscription plans– Starting from $150 per year. You have 3 main packages to choose from and tons of different add-ons, depending on your needs. Ultimately, you get an unlimited time limit for your meetings with the paid package. Depending on the package you go with, you get more add-ons such as an additional number of participants, recording transcripts, and so on. 

How Did Zoom Become So Popular?

Most people believe that Zoom is only popular because it enables users to host meetings with up to 100 participants for 40-minutes for free. But Google Meet, WebEx, and other platforms offer similar if not more features for free users. 

What sets it apart from the rest is its user interface. It is one of the easiest interfaces to use. All users have to do is download the app on their laptop and mobile phone, create an account and use it. Scheduling and joining meetings is a breeze. 

The app also introduced features like screen share, polling the audience, and so on before its competition. In the modern world, any application that is easy to use and offers more features will trump its competition. Zoom did just that. 

In the past year with the COVID-19 pandemic, everything went virtual from schools to weddings. Zoom served as a host to millions of classrooms, meetings, hangouts, and so on. All because users found it to be the easiest platform to use. 

Word of mouth is another reason why the platform is so popular. When a user signs up and creates a meeting, others that join will also need to sign up to Zoom. This has led to an increase in users on the platform. 

Zoom may not have been one of the first video-conferencing platforms but its features allow businesses and individuals to have most of their communications in one platform. It is also accessible through your mobile, desktop, or any browser, giving you the ease to use where and whenever you like. 

How Does Zoom Make Money?

With so many users signing up for free, how does Zoom make money? The company utilizes the freemium model to draw users in. However, if they require more features, they have to pay for them. 

For example, an individual that is streaming a wedding would likely need more than 40 minutes to stream the whole event. So, they are likely to purchase their plan to host it. 

Meaning, Zoom relies on its subscription plans to generate money. Zoom also has tons of corporate and educational clients. For hosting meetings and classes, these companies and schools need to be paid users. Otherwise, they are restricted to 40-minute meetings with 100 participants. 

You won’t find many companies and schools that opt for Zoom’s free services because their requirements exceed the limits with the free account. 

The platform also has tons of add-on features for users. One such add-on is increasing participants for its Zoom video webinar feature. The webinar is the go-to feature if you host panel discussions, bigger classes, or informative sessions where you want to ensure the audience only interacts through chat or the Q&A features.

This ensures that there are no interruptions and the session goes smoothly. In the basic package, you get to host a webinar for 100 participants. You have the option to upgrade to up to 10,000 participants in a webinar. But there is a monthly charge when you do. 

Zoom also offers additional services such as Zoom Rooms. This feature provides companies with the hardware needed to run Zoom calls. Yes, you can use your own hardware such as a laptop and mobile with a camera.

However, the hardware provided by Zoom is tailored to ensure that your calls are seamless. The company has partnered with DTEN and Aver to supply the hardware. The cost of Zoom Rooms starts at $49 per month. You can save $8.42 on the price if you opt to pay annually. 

Using a mix of freemium and subscription models, Zoom generated over $622.7 million in revenue in 2020. Making it one of the top-earning video conferencing apps. 

The Final Word

With that, we have answered most of the questions people have about Zoom including, how does Zoom make money? The platform’s business model is tailored for everyone, offering freemium and subscription services. 

Zoom continues to shine and stay on top of the video conferencing mountain. The pandemic has certainly contributed to its rise. But the platform’s understanding of what users want and ensuring its interface is easy to use has played a pivotal role in its success. 

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