Craigslist is undeniably one of America’s best known classified websites.
It puts up ads for potential sellers and buyers can access products across a wide range.
From job postings to housing to gigs to community services, the list is simply huge.
So most users wonder how does Craigslist make money?
Are you one of those who are interested in knowing the answer of this question, because probably you want to run a website like Craigslist?
Are you looking for make money the same way that Craigslist does?
It is a good idea, but there are much better options for you.
To know about those options, you have to read this article entirely.
First I am going to tell you how Craigslist makes money.
Then I will explain that you don’t have to run a website like that to make money the same way.
How Does Craigslist Make Money?
Craigslist does not charge any money.
The postings in most of the sections remain free.
So the question are…
What their revenue model is?
How can they make their business sustainable?
So far the website has resisted putting up ads despite advice from several financial analysts.
You could be wondering, aren’t they interested in making money?
Well, that’s exactly why it is important to analyze every stream of money flow that Craigslist has.
It will throw valuable inputs into the complex revenue model and business strategy of the website.
To know how Craigslist makes money, first you have to understand its business model.
1. Understanding The Craigslist Business Model
Before we get into further details about how Craigslist makes money, it is important to get a better idea of their revenue model.
The analyst community is rather divided on this front, and there is widespread confusion.
Some like UBS has maintained a rather confused stance.
They have highlighted the lack of clarity in Craigslist’s overall revenue generation system.
Some analysts and industry veterans have also maintained that perhaps generating revenue is not the central goal of the company.
But then a fundamental business question comes to the forefront.
If you are not making money, what is the fundamental purpose of the business? Charity or social service can never be the central theme of running any business.
That seems to defeat the whole purpose of creating an enterprise.
The amount of revenue that is generated as listing fees might cover the operational expenses, but it isn’t sufficient for profits.
Craigslist does not seem to be very flustered with this basic fact.
The goal of the company seems to be unilaterally focused on improving their quality of service.
Another point that has been highlighted is the amount of revenue it really needs.
2. Craigslist, as a Company Is Not Too Keen on Employee Addition
Despite being in business for over a decade now, they run their operations with less than 30 people.
So if you want to get to the bottom of the ways Craigslist makes money, it is essential to appreciate the efficiencies of scale as well in the company.
You have to remember that this is one of those companies that has withstood storms like the Lehman Crisis.
So the basic question is what is the key to their profitability? How have they constructed their revenue channels to maintain a smooth flow of funds?
For greater clarity, it becomes extremely important to understand the key income streams that Craigslist has? If you want to examine how does Craigslist make money, it is somewhat necessary to get to the bottom of the business basics that Craigslist follows.
That will highlight the money angle of this rather successful business concept.
3. The Craigslist Income Stream
If the question about how Craigslist makes money been bothering you, then the revenue stream will give you some indication.
This online classified platform has a perfectly constructed revenue model.
This platform helps you in making money simultaneously adds to its own kitty as well.
Initially, to start off with, Craigslist began to charge fees for listing in specific categories.
Needless to mention these were the rather competitive areas of business growth.
For example, in 1995, they started with $25 a job posting in San Francisco.
This served a dual purpose.
Not only did it help them in making money, but it was also a brilliant strategy to avoid spamming.
The basic belief was if you are not interested or invested enough in your business; you will not get into Craigslist postings.
The founders of the company kept increasing the ambit of chargeable listings gradually.
As the website started getting popular, the money flow too kept increasing.
The funds were then reinvested in improving the website’s quality to a much better position.
The Advertisements are listed category wise, and there is a difference in listing rates as per the region and popularity.
4. The Competitors
The competition involved also plays a crucial part in creating a superlative revenue generation model.
Here is a list of some of the important and relevant listing charges they levy on average positions.
It will help answer the key question, how does Craigslist make money? This defines overall channels of making money for this Classified behemoth.
- It charges $25 to post job listings across 6 important cities in the US
- Job listings in San Francisco area cost $75 per listing
- Listing fee for apartment rentals in New York is around $10
- Different by-dealer category listings in the US cost anywhere between $3-5
- Therapeutic services listings in US are for $10 on Craigslist
- In Vancouver/BC and US, furniture by-dealers have to pay $3 per listing
- Cars and truck by dealers have to spend around $5 per listings.
Broadly the money that Craigslist makes through these listings is sufficient to cover their operational expenses.
5. Maintaining a Superior User Experience
The company has often made it clear that their motive has been primarily to maintain a superior user experience.
One of the biggest advantages of a Craigslist listings is the relatively longer shelf life.
While most newspaper listings are stale by the end of the day, the ones on Craigslist stay afresh for days together.
This is exactly why most users are keen on investing the additional amount on the website.
Given the popularity and consistency with which the website operates, it makes huge business sense for most users.
They make for greater exposure and a much better rate of returns for the amount spent.
Till date, Craigslist has been vehemently against posting advertisements to make money.
The company has been rather steadfast in their resolution in upholding the integrity and the website’s commitment towards keeping its content ad-free.
Needless to mention, it further improves the overall user experience to a large extent.
6. Craigslist vs. Newspapers
One of the biggest impacts of the no-profit business model that Craigslist follows has been on newspapers.
Studies indicate that the overall newspaper classifieds were hurt to a large extent as a result.
In fact, according to the Newspaper Association of America, average classified revenue dropped to less than half in a matter of just 10 years.
They slumped to mere $6 billion from $19.6 in 2000.
Craigslist was conceived in the latter half of 1990s.
Needless to mention that they played a key role in the whopping 70% decrease in revenue inflow.
No doubt they started feeling the pinch.
Soon questions were being raised on the way the online classified platform was making money.
There were several allegations of abetting illegal trade.
While the veracity of those activities and if they helped Craigslist to make money is debatable, the business model is what was hurting newspapers.
Ad revenues were predominantly the basis of sustenance for most newspaper organizations.
Craigslist created a severe dent in the bottom line for these newspapers.
7. Costs of Posting on Craigslist
For an average citizen, posting on Craigslist cost nothing compared to the amount of money they could make through it.
Earlier they had to buy this classified space in Newspapers.
But not anymore.
Gradually the whole trend of Newspaper postings started dwindling.
As a result, fingers were started being pointed on how Craigslist makes money?
Newspapers realized that business dynamics were changing dramatically.
This online platform had drastically changed the dynamics of Classified postings.
The entire business angle was changing overnight.
Increasingly the focus was on the number of postings compared to the premium positioning.
Of course in this context, Craigslist alone can’t be lamed.
As internet started making inroads into our daily lives with the turn of the century, print medium started feeling the hit.
It wasn’t just in classified ads but newspapers were at a disadvantage.
Increasingly efforts to match the reach and potential of Craigslist were defeated.
The outcome meant that Craigslist continued to attract more and more users.
Their performance encouraged people to use this platform more frequently and take advantage of the lower rates with increasing frequency.
8. The Volume Game
When you are analyzing how does Craigslist make money, it is very important to pay attention to one of their biggest bets, ‘Volumes’.
If sheer numbers can move businesses, this is one of the best examples highlighting this point.
Craigslist attracts a huge number of users every day.
So their formula is very simple.
Instead of levying $100 on 10 users, they attract 1000 users willing to pay $10.
The result is there for everyone to see.
The collections are invariably 10X actual targets.
So when they get into the whole business of making money, they move with the basic mantra that they just need to get enough viewers on a per day basis.
If you get an adequate number of people to view and use their website every day, they will be able to monetize it comfortably at some point without fail.
9. The Main Idea
The idea is to drive volume through offering a superior product.
If the product is really good, no one will complain paying a small fraction of profit as fees.
The policy against no banner ads perhaps also adds to the credibility element for Craigslist.
A lot of viewers are convinced by the fact they see sheer value in the overall product they get.
Be it in the reasonable listing price, the wide listing reach and also the kind of business it helps to generate.
The online platform is all about creating value in a unique manner.
What Craigslist is doing in generating revenues is nothing new.
Newspapers have been following the policy for almost a century before they get on the screen.
Classified listing is one of the basic revenue generators.
But in this, you make money not through the money you charge but predominantly through the number of people you can convince to pay that money.
Now the other aspect is the concept of value.
Well, Craigslist, recognized that quite early on.
As a result, they made sure that the money they were earning was deployed back in the company.
This meant that more steps were undertaken to improve the entire user experience.
People appreciated the relative sense of superior value that Craigslist delivered.
As a result, volumes id one of the biggest factors how Craigslist makes money on a sustainable basis.
This is particularly important because it also shows the sustainability of the business model.
Think of the number of upheavals this company has faced since inception.
The company has been witness to a host of economic crises globally.
10. Covering the Global Market
Not just in the US but global market too bore the brunt of these economic mishaps.
On an average it has weathered, the
- Severe dot com bubble
- Sub-prime crisis
- The Lehman collapse
- Global recession
It has almost single-handedly brought an end to the classified section in newspapers.
This despite the fact that they have not altered the way their website looks.
There has been no significant change in their interface.
However, that has not impacted their views.
An average of 55 million visitors use Craigslist on a monthly basis.
What’s even surprising is that Craigslist despite everything does not feel threatened.
They are not available in the form of an app yet.
While most new companies are making a beeline towards developing a new app, this company is not interested at all.
But the steady stream of visitors continues on the site.
11. The Current Worth
In the current circumstances, Craigslist is worth around $3 billion in sheer value.
While most other online set-ups are busy trying to lower profit margins to adjust to competition, this firm clocked a record 80% profit in 2016.
It has recorded a whopping $700 million in revenues in 1 year alone.
Most financial experts believe that their focus on quality first and profit later is the key trigger for their success.
This is how Craigslist makes money.
In many ways, they have been able to maintain their margins too in this way.
Consistency has been another of their strong points and a key factor how Craigslist makes money.
Even the interface of the website has seen bare minimum changes.
In many ways, it reflects the company’s commitment.
Some analysts feel that this could be a trigger for their failure going forward.
But in many ways, it has also added to the customer’s comfort zone.
For over two decades now, they know exactly how to use this website.
There have been bare minimum changes.
That means even for extremely senior citizens; they can operate the website for use.
Though there are many new variants which have sprung and are attracting users, Craigslist has managed to maintain its supremacy.
Brand loyalty has also played a crucial role.
Repostings cost much lesser than new postings on Craigslist.
Regular users on the site have also been able to capitalize on the networking abilities of this website.
Those who have been using this website for a considerably long time have been able to draw significant advantage.
Their old contacts, detailed network list has ensured that they get the most profitable deals.
So, this is how Craigslist makes money…
All and all, if you have thought about how does Craigslist make money, you need to understand the basic rule of running a business.
Consistency and Volumes are the primary catalysts for growth.
Not only can they make sure that the flow of customers continues, it also means that revenue and profits follow.
Craigslist makes money by following both very closely.
They are constantly improving the quality of the website.
This helps in attracting more and more viewers.
They are keen about establishing a distinct brand identity.
May it be the no app policy or even the quality of profit concept.
It sure adds a distinct degree of credibility and improves the overall customer experience.
Users are encouraged by the way they make money and in the bargain help Craigslist to make money as well.
A constant eye on quality ensured that the flow of viewers does not diminish.
That alone has played the most important role in taking it forward.
This made sure the fund flows continued and business model managed to thrive.
So You Want to Make Money the Same Way that Craigslist Does, But… Please Read the Following
Now that you know how Craigslist makes money, you may like to follow their footsteps and run a similar website.
However, if you’ve followed my above explanations carefully, you know that running a website like Craigslist can be easy technically, but it is not that easy to make money with it.
Craigslist has been around for so many years.
People of different countries know it very well.
It takes time to have a popular classified ads website like it, and chances are your site can never reach where Craigslist is.
So you may ask whether there is a better option…
Well, if you are a programmer and you can run a website like Craigslist, then there is a much easier way to make millions of dollars without having to go through the hassles of running a website like Craigslist that needs constant supervision and technical support.
Instead of running a website like Craigslist, you can join our fully-automated system that sells hundreds of high-tickets products for you.
The good thing is you won’t have to work and have a team like Craigslist, because the system takes care of everything for you.
Running a website like Craigslist will be nothing but hassles for you.
Besides, it won’t make money as you expect it to.
Therefore, I suggest you to follow me here on this site if you like to make a lot of money through our system.
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