How does WhatsApp make money? An uncomplicated answer

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Written By Esosa

 

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WhatsApp started in 2009 and ever since then, they’ve bloomed. If you’ve been curious, just like me, you must have asked this question: how does WhatsApp make money? Many people want to know how they started small and became one of the major messaging apps in the world.

Well, I did my thorough research and found really interesting things about this popular messaging app.

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For those who are reading this and asking, what is WhatsApp? Here’s a quick answer:

WhatsApp is a messaging app for exchanging messages with your friends and family. You’ll get fast, simple, secure messaging and calling for free. Download WhatsApp today to share messages, photos, videos, and voice messages with your contacts.

Before I answer the question: how does WhatsApp make money? Let’s learn a brief history of this messaging app.

How WhatsApp Started?

Jan Kaoum and Brian Acton didn’t just start WhatsApp in 2009 out of the blues. They used to work with Yahoo for 9 years, from 1998 to 2007. When the two worked with Yahoo, they tried to get jobs on Facebook but they kept getting rejections.

So in 2009, these two had a glowing idea after getting an iPhone and they realised the app industry is seriously underserved. And they were right because back then the Apple store had only been around for six months. 

The two got together, created WhatsApp, and the first version they put out wasn’t a messaging app just yet. You could only update your status that other people could see. Things really turned out great for them when Apple launched Push notifications the same year WhatsApp started. The app gained traction and you could ping users when anyone on their contact list updated their status. Users enjoyed this feature enough that they started using it to ping each other, leading to the app’s transformation into an instant mobile messaging service.

The messaging tool, which is now at the heart of the service, was included in WhatsApp version 2.0, and the number of users surged to 250,000. By early 2011, WhatsApp had risen to the top 20 of the Apple App Store’s App Store Apps list.

As the app increased in popularity, the founders attracted the attention of potential investors. The creators were adamantly opposed because they intended to create an ad-free service and were concerned that accepting venture capital would compel them to sacrifice their ideals.

The founders detested commercials and were opposed to ad-based revenue, according to a 2012 post on the WhatsApp blog titled “Why we don’t sell ads.”

Regarding their reluctance to take venture capital, WhatsApp’s founders accepted $8 million from Sequoia Capital in April 2011, but only after they were guaranteed that the service would remain ad-free.

By February 2013, WhatsApp had expanded to almost 200 million active users, and Sequoia invested another $50 million at a $1.5 billion value. But, if there were no ads and no plans to include them in the future, how did WhatsApp make money in its early days?

In its early days, WhatsApp used the freemium business model, in which the app was free for a year to entice users and then paid a tiny yearly membership price of $0.99 for continuous usage.

Facebook buys WhatsApp

how does whatsapp make money

WhatsApp reaching success before 2016 was the least of good things that have happened to Jan and Brian. In 2014, Facebook gained WhatsApp. But they hit a problem after selling the messaging app to Facebook. Facebook doubled back on their agreement not to place adverts on WhatsApp. 

Brian pushed the idea of users being charged after a certain number of messages were sent, but Facebook rejected this idea, and so this led Brian to leave and in 2018, Jan followed suit. 

how does whatsapp make money

How does WhatsApp make money?

WhatsApp makes money through three sources: WhatsApp for Business, WhatsApp Pay and Click to WhatsApp ads. 

WhatsApp for Business

WhatsApp for Business allows you to send and receive WhatsApp messages on your computer. Gather feedback, close deals, hear from your customers on all devices they use every day. So how does WhatsApp make money from WhatsApp for business? WhatsApp generates revenue by billing registered businesses for delayed responses. Businesses are permitted to react to user messages for free for up to 24 hours. When businesses and customers become accustomed to using WhatsApp, the company can charge for messages to a set level.

WhatsApp Pay

What is WhatsApp Pay and how is it going to make money by monetising WhatsApp? It’s been a while since WhatsApp introduced its payment service, WhatsApp-Pay, in India and Brazil. The reason why the service got introduced so quickly in India could’ve been the success of Paytm, another popular chat app that has made its way into our day-to-day life. But, there is a difference between both apps. 

WhatsApp pay is a payment feature that the app is adding to help with customer utilisation. It will help to boost customer payments within the app, which can lead to more profit for WhatsApp.

Click to WhatsApp ads

You may add a Send Message button to your Facebook or Instagram advertisements with ads that click to WhatsApp, which will launch a chat thread in the WhatsApp Business App.

How much does WhatsApp make?

In the nine months preceding September 30, 2014, WhatsApp made a meagre $1.28 million in revenue. Forbes forecasted that WhatsApp’s income per user would be $4 by 2020, resulting in $5 billion in revenue for Facebook. However, the predictions were incorrect since they expected WhatsApp would have 1.3 billion total monthly users by 2020—a figure WhatsApp has attained by the middle of 2017. Even if this app’s earning potential is still far from being realised, the product can be expected to contribute more to its parent company’s baseline revenue.

The bottom line is, as much as we know the answer to the question, how does WhatsApp make money? No one really knows the exact money they make as of 2022 except Facebook. They actually don’t share their revenue breakdown. 


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