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What is WhatsApp Business Model (How To Earn Money WhatsApp)
Date: 13 Jun , 2015
Category: Others Problems
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All Even though Jan Koum chooses not to be much revealing when it comes to the details of revenue generation process, he definitely has made clear how the cross platform instant messaging service provider does NOT make money (or going to in near future), advertising. The CEO mentions clearly in the blog with excerpt from movie Fight Club-
"Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need."

So how exactly do they make money? Well until now, on the classical business model of Pay-for-Service (with various investments from other sources). However considering the magnitude of mass to which the company caters its service, it is expected that WhatsApp is heading towards an IPO or a 10 figure acquisition like Instagram. Until then following are the few notable strategies the company seem to follow.
  1. Employee strength is very low. WhatsApp employs only 11-50(very less number) engineers who work on the development of the application or involve in customer support (taken count from linkedin).
  2. WhatsApp does not spend a penny on advertising, again saving costs. They rely on word of mouth publicity. It has been the #1 downloaded application on several application store platforms, such as Google Play, Apple iTunes, etc. which itself advertises their service. This strategy probably helped in European markets where the telecom companies (with exorbitant charges on messaging services) ignored its presence initially and allowed the network to grow to such strength.
  3. WhatsApp prides itself on working with extremely limited budgets, and hence, is extremely efficient.The website is worth $10 only with almost zero maintenance expenditure.
  4. The platform is extraordinarily simple, thus attracts users from diverse demography from teens to grand parents.
  5. Reliance Communications has recently announced its exclusive partnership with WhatsApp in India. Under this partnership Reliance Communications has launched a WhatsApp Plan, for all Reliance GSM subscribers. Thus, WhatsApp gets money via partnership with telecom companies.
  6. WhatsApp, has secured $8 million in financing from Sequoia Capital, and possibly other investors. This funding accounts for the running costs (data storage, servers etc.)
  7. The cost of downloading WhatsApp on iTunes is only 99 cents, and on other platforms is available for free. But there is a catch, WhatsApp is free only for the first year. Second year onwards there is a fee for $1.99 for a period of 3 years, and this is where they are going to make money. Currently WhatsApp has over 100 million subscribers, and suppose 80 million are non-iOS users, they will earn a cool $160 million easily. (However in India however even after completion of one year they are extending some months limit for free usage every time. Probably in order to avoid any unwanted bump in the growth of the network in such a large and promising market before achieving the targeted strength).



by.Bebbisingh
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