WhatsApp has become the most popular messaging app in the world. They have more than 2 billion monthly active users. Meaning that 25% of the population of the world use this one app.
But have you ever wondered,
Where did they get the idea of creating WhatsApp?
Jan Koum used to frequent gyms, and there he realized that he wouldn't be able to receive the calls of his friends. He kept on missing calls. That made him think that there should be an app, that would provide a status that he was in the gym at the moment, so that his friends could see the status and understand that since he's in the gym, they shouldn't call him then.
On this basic idea, he created the app WhatsApp.
WhatsApp Business Model
The product of WhatsApp is simple: a robust personal messaging service. How it makes money is a little different than many others in the arena. WhatsApp started as a 'freemium' service, where users were able to send messages for free for the first year and then renew at an annual $0.99 fee. They have shifted from this business model and stayed away from in-app advertising. Instead, they make money through WhatsApp for Business and WhatsApp Pay.
There are a number of competitors in the market, all who have different business models for revenue generation. Some of the top competitors are LINE, Kakao, Kik, and Skype.
- LINE - makes money from in-game purchases and other services such as stickers.
- Kakao - generates revenues from advertising.
- Kik - gives users rewards for watching advertisements.
- Skype - is a subscription service for worldwide calling.
Note: Both Acton and Koum have left WhatsApp after disagreements with Facebook over the way the app would be monetized.
2 Ways WhatsApp Makes Money
1. WhatsApp for Businesses
While the service is free for consumers to use, businesses can sign up for WhatsApp for Business to use the platform for sales and support. The WhatsApp Business API is used by major brands such as Netflix, Uber, and Wish. It originally encouraged businesses to use the platform and provide quick responses. WhatsApp would charge businesses for delayed responses. So while the business could respond for free within 24 hours, it would be charged a fee for responses later than that.
The new business API for WhatsApp for Business applies charges based on a messaging tier. The charges are:
- First 250,000 messages: $0.0085 per message
- Next 750,000 messages: $0.0083 per message
- Next 2 million messages: $0.0080 per message
- Next 3 million messages: $0.0073 per message
- Next 4 million messages: $0.0065 per message
- Above 10 million messages: $0.0058 per message
Essentially, the more messages a company sends, the cheaper the rate is.
2. WhatsApp Pay
WhatsApp Pay is a payment feature similar to PayPal. Users can send money to friends, family, and businesses for free. The party receiving the money is charged 3.99% per transaction.
Like other money sending services, this app connects to a linked bank account where the funds are taken from or deposited. This service is currently only available in India and Brazil on specific devices.