Ever wondered how does McDonald’s, the world’s largest fast-food company makes money? What is its business model? McDonald’s operates in over 120 countries in the world as a quick-service restaurant, but do you know it generates major revenue from real estate? Interesting, right?

Well, let’s look at McDonald’s business model and how it makes money more in detail in this article. So, let’s get started…

Introduction to McDonald’s

Does McDonald’s need any introduction? No, Of course, McDonald’s doesn’t need an introduction, it is quite a familiar brand to people over the world. Especially, it became a household name to the US people since its inception. The business was first started in 1940 by brothers Dick and Mac McDonald as 15 cent hamburgers Speedee Service System. Due to business fluctuations in 1948, the brothers closed their business for a few months. After nine months they reopened it as a self-service drive-in restaurant with a menu of 9 items. Hamburger, cheeseburger, milk, coffee, soft drinks, a slice of pie, and potato chips are the menu items and a 15 cent hamburger is the staple of the menu. With the restaurant’s success, the brothers adopted franchising and ran nine franchises before it became a successful food chain. In fact, this concept of franchising is one of the core reasons why McDonald’s has its unique space

Though McDonald’s was started in 1948, it’s history began in 1954 when a Multimixer salesman Ray Kroc visited Dick and Mac McDonald for supplying more Multimixer orders to them. After Kroc learned their business and their need for a nationwide franchising agent, Kroc joined them as a franchising agent. He opened his first McDonald’s fast-food center in Des Plaines, Illinois in April 1955. To the surprise, the first day sales were $366.12.

In 1961, Kroc acquired the total rights of the company for $2.7 million. In 1967, McDonald’s expanded into international markets with the restaurant opening in Canada.

The company has over 38000 restaurants worldwide in over 100 countries as of January 2020. Undoubtedly, its core values and mission are the reasons why McDonald’s is the most popular food chain restaurant in the world.

Okay, enough said! Let’s quickly get into its business model to learn how it makes money.

Business Model

McDonald’s puts its customers and people first. It’s a large network of food chains do the right things, value customers and their experience. These core values help the company still sit top among its competitors. Franchisees, suppliers, and employers make success to the company as they all work towards a common goal. In fact, this is the primary reason for McDonald’s becoming a dominant quick-service restaurant brand.

While franchisees work for successful entrepreneurship and commitment to communities, suppliers work for ensuring the highest levels of safety and quality. The employees are taught and shared complete knowledge of McDonald’s in all its restaurants to motivate them to work towards its goals.

Want to know how Swiggy makes money? Read Swiggy business model here.

As the maximum number of McDonald’s restaurants are its franchisees, the company actually mentions them as a collection of small local businesses providing the same quality everywhere.

With a total of more than 38000 restaurants, 93% of its total restaurants are franchised as of 2018 with an operating income of $8.8 billion. The company’s operating income in 2017 was $9.55. This simply says how valuable the company is.

How McDonald’s Makes Money?

McDonald’s Products

McDonald’s Corporation makes some part of its revenue directly and from all its franchises by selling fast-food items. The menu includes hamburgers, cheeseburgers, french fries, Big Mac, Filet-O-Fish, Chicken McNuggets, oatmeal, shakes, McFlurry desserts, McCafe beverages and other items. McDonald’s offers a full breakfast menu in some of its restaurants.

Product’s Revenue

McDonald’s runs with a brilliant concept of serving the same menu in all its global restaurants without compromising the quality. However, it is never far away from its customer’s tastes and behaviors. It inspired everyone in the company to be customer-centric and is constantly updating their restaurants to provide the utmost customer service.

Read: Dunzo Business Model – How Dunzo Makes Money

In fact, it mentioned three key pillars in its growth strategy which are:

Retain – Retain customers focusing on their strengths

Regain – Regaining lost customers enhancing offerings and convenience

Convert – Converting casual customers into committed customers

Thus the company made a billion dollars revenue with its outstanding strategies.

McDonald’s made $8 billion in revenue in the US market in 2017, the largest amount generated by McDonald’s since its launch.

It valued at 126.04 billion in the year 2018, emerging as the most valuable fast-food chain brand.

Real Estate Revenue

McDonald’s locates and leases sites from landowners that are interested to grow McDonald’s corporation units. Those landowners have to sign a contract of leasing back the improved McDonald’s unit to the company after 20 years. The company then would sublease the store to the franchise demanding a 40% markup for the real estate services. Thus it ensures it has control over the franchise making the person a tenant. This is an unargued business strategy of making steady cash flow to manage the costs and make profits. Only in FY2014, McDonald’s Corporation had received $6.1 billion in rental income as per reports.

As you see above, McDonald’s has a heavy franchised business model which is the company’s long-term business strategy. With a large number of franchisees, over 93% of its total McDonald’s Corporation units, it makes a great deal of income from rental income.

It reported about $37 billion in property and equipment, which is definitely a big deal from real estate. Hence, it’s no surprise to say McDonald’s is a commercial real estate service provider making good amounts of profits.

So, this is how McDonald’s, the world’s leading fast-food chain makes money in two completely different ways.

Read: UberEats Business Model – How UberEats Makes Money

Challenges

McDonald’s had seen a disappointing revenue in FY14, the net margins declined by 14% leading the company to oversee cost reduction strategies. Thus it closed underperforming restaurants and revised its other strategies. However, within a short time, the company boomed. In 2019, it posted a net income of $6.03 billion.

The fast-food industry has hefty competition, hence it is really difficult for any company to keep up the position. However, as McDonald’s is constantly working on improving the quality and performance in all its franchisees and restaurants, the company is keeping its position. Moreover, the company identified three accelerators (digital, delivery, and experience of the future in the US) that would drive the company towards growth in all aspects.

Bottom Line

So, this is how McDonald’s works and makes money. This is, in fact, a unique and inspiring business model that is bringing profits to the company.

Are you a gamer? Playing virtual games with your friends can be fun and exciting right. Video games provide entertainment. Many people play video games for relaxation. Others play online games such as casinos for making money.

If you love gaming then Discord is the best platform for you. At Discord, you can chat with friends while playing games.

Let’s discuss what is Discord, how it is different, how Discord is making money.

What is Discord? 

Discord is the excellent group-chatting destination originally designed for gamers. But later Discord has become a go-to platform for all the communities. Generally, Discord is primarily divided into multiple servers. These servers have individual members, channels, rules and topics. The platform allows users to communicate through video, audio or text. On the other hand, users can get access to live stream games from their PC.

Discord is designed to allow people to interact with each other effectively. Every community is known as “SERVER”. The application works equally to the Slack application. The servers on Discord are mostly filled with voice and text channels. Also, users can share audio, images, music, gif, internet links and more. In fact, these channels are dedicated to a specific topic and have several individual rules.

Let’s keep the things simple, there might be a channel that is specially dedicated to talking about the game. Another channel might be used for sharing the pictures. And another for texting. Here the opportunities are endless.

What Makes Discord Different?

Though there are thousands of instant messaging applications available on the internet. But Discord stands out from the crowd. Let’s discuss what makes the platform different from others.

A Place to Call Home

The application Discord provides you with the ability to build your own place. People can feel free as home. Discord server is just like your home. It is the place where you can communicate with your friends. The messages are shared with dear ones only to those who invite.

Organized Conversation

As mentioned above Discord is offering topic-based channels. These channels are dedicated to text, video or audio. These organized conversations are the method to interact with things. Share the cooking mishaps with your dear ones. 

Pop in to Talk

If you’re planning to communicate with your friends or family members, then it’s time to get a seat at voice channel. You can pop-in and pop-out audio, text and video chats all day.

Who uses Discord?

Generally, people use the Discord platform for several reasons such as

• Screenshare group painting
• Yoga classes
• Virtual wedding parties
• Comedy clubs
• Run podcasting business
• Business meeting

Simply put, Discord is built for everyone who wants a place to interact with their friends, clients and communities.

As per research, there are over 100+ million active users per month. Over 13.5 million active servers per week and 4 billion server conversation minutes every day.

Looking at the active users, you might be wondering how the Discord is making money and surviving in the competition. Now let’s have a look,

Discord Revenue Model

Discord has more than 100 million active users. The platform is earning $1.7 billion through the voice chat market. Though the application is available for free. The company is generating income through other segments such as game subscriptions, game store, discord merchandise, cosmetics and more.

The ultimate focus of Discord is to offer hassle-free communication destinations to everyone. On the other hand, the application is focusing on integrating the communication service in the gaming industry.  Discord is valued at over $700 million with the current investment of $20 million.

How Does Discord Make Money?

Discord’s operational model is still a work in progression. Though the company doesn’t encourage advertisements or selling their user sensitive information to third parties. The company has no intentions of relying on investments or funds. Rather, Discord is transformed into a “Semi-Freemium” operational model. This model is offering rich features to its users. Discord is making money through selling its merchandise, game store, subscription service and more.

The platform Discord is using various business segments to make revenue.

Game subscription service – Discord Nitro

Discord is offering “Discord Nitro” for all the gamers around the world. Gamers need to pay $9.99 per month to activate the Discord Nitro. Many interested gamers are getting subscribed to Discord Nitro. They have access to massive amounts of games, premium features and a lot more.

• Personal Discord tag
• Special Nitro profile badge
• Custom emojis and animated avatar on profile
• Amazing and rich quality screen share
• Share upto 50MB

The company is making a good income through Discord Nitro. Since there are many loyal customers are subscribing to the plan and providing good support to the company.

Game Store

This was the biggest achievement for Discord. The platform introduced as a “Game Store” in Aug 2018. The Game Store is available globally. Here game developers can sell their designed games on Game Store. Also, game developers can publish on Discord Store as well. As the Game Store is having a good number of users, developers can easily sell their games. When a customer buys the game, developers need to pay 10% as referral charges for Discord. It means developers will receive 90%. It’s no surprise 90/10 profit is considered a win-win solution for developers and Discord.

Discord Merchandise Store

Discord is making good profits through its merchandise store. But how? The platform is offering fashionable goods at the cheapest price. The better price and quality branded fashion products are attracting millions of customers globally. The Discord merchandise store is offering eye-catching fashion collections such as t-shirts, socks, hoodies and more. Though the revenue may be little through merchandise stores. But, the revenue generated through Discord merchandise stores is worth it.

However, Discord is earning good profits through marketing and promotional tactics. Also, the company encourages its users for purchasing Discord fashion and cosmetic products.

Cosmetic Items 

Discord will make you happy with cosmetic products. The platform is offering excellent and high-quality cosmetic items for its customers. The products include customer emojis, sound and sticker packs. Also, customers don’t get any advantage of buying these cosmetic products. But these items will enhance the user experience.

Funds and Investments

Discord is catching everyone’s eye. Therefore the company is receiving huge support from many large businesses in terms of investments and funds. The investment will help Discord to improve its platform. According to the analysis, Discord has raised $280 million through funds and investments.

Is Discord safe?

Discord is safe or not!!! The answer is completely dependent on how you handle or use the platform.

The platform allows a good amount of safety and security features for the users. These features can be ranging from “what is posted on your server” and “who is texting you”. Let’s keep the things simple, when you’re introducing your server to the people globally, you just cannot figure out the threat-to-your-safety profiles. So it can be impossible for you to filter the scammers or unauthorized people when they’ve real profile names. The best way to protect yourself on Discord is to send or accept invitations carefully.

Wrapping Up

Discord is the leading platform where gamers interact online. The application allows people to communicate through audio, video or text. People around the globe interact through Discord applications. Discord is available for free and used by millions of users worldwide. User age must be 13+ to hang out with their friends or communities through Discord. The platform is used for multiple purposes such as family trips, art projects, health support and more. It’s a perfect place for the people who often need to interact. The Discord follows a simple and straightforward operational model. Though the platform is against advertisements and selling its user data. Discord is implementing multiple business strategies to increase their revenue. The revenue segments are game subscription service, game store, merchandise store, cosmetic items and more. Discord is valued at over $700 million with the current investment of $20 million.

Amazon is the king of e-commerce.

When discussing e-commerce websites, Amazon will be at the top of the list. Simply put, Amazon marketplace is ruling the roost!!! The platform is popularly known for quality products and services, delivered around the world. The platform is helping both merchants and customers. Here merchants can list their products or services. On the other hand, customers can get their desired product or service at the best price.

What is Amazon?

Amazon is the world’s leading e-commerce website and a popular cloud service provider. Amazon is a large internet-based enterprise. The platform sells products or services from a wide range of categories. It includes books, electronics, fashion, cloud service, and more. The online marketplace used by businesses and individuals. Amazon is the largest e-commerce retailer serving people around the world.

It all started in 1994 as a bookstore set up in the garage of “Jeff Bezos” and now the Amazon is ruling the e-commerce world. Its success has enabled it to grow and transform into “a-to-z store” in their true sense.

Amazon Business Model

Amazon has developed to become an outstanding ecosystem over the past 2 decades. The internet-savvy must have accessed an Amazon service at least once. Amazon’s have implemented a smart business strategy to increase their earnings. The team came up with a well-designed strategy that has several revenue sources. It includes books, games, web services, prime, Alexa and more. 

Amazon’s business model is “e-commerce model”. The interesting fact is Amazon is the biggest advertiser around the world.

Amazon has reported revenue for its Q3 2020, including profits over 37% to $96.1 billion. North American sales are more than 39%, Amazon has earned $59.4 billion. While international sales are growing over 37%, the revenue is $25.2 billion.

What Does Amazon Sell?

If you’re a merchant or customer of Amazon then you might have know Amazon sells more and more through subsidiaries. As already mentioned, Amazon operational model is completely based on e-commerce. The platform will sell products or services on its platform. On the other hand, Amazon allows third-party merchants to sell their products for millions of customers globally.

Currently, Amazon is offering below-mentioned products/services:

• Apparel
• Electronics
• Groceries,
• Sporting goods
• Amazon Prime
• Amazon Drive
• Amazon Publishing
• Amazon Web Services
• Merchant and vendor products
• Fire TV
• Echo & Alexa
• Appstore for Android

Who are Amazon’s Customers?

Are you eager to know who Amazon’s customers are? Let’s discuss. There are three customers sets such as

• Customers – People who purchase products or subscribe to Amazon services.
• Seller customers – Sellers or merchants who promote their products or services on Amazon.
• Developer customers – These people are focused on providing AWS technologies.

How Does Amazon Make Money?

It’s no surprise Amazon is earning good income through retail sales. The sales are considered as the primary source of income for Amazon. As discussed earlier there are other channels such as books, prime, web services, etc from which the company is earning income.

Let’s dive into the topic!!!

Retail Sales

Amazon is the best marketplace for sellers and customers. The platform is offering excellent products or services to its customers through online and offline channels. It recognizes profit when the seller delivered the product or service to its customer. 

The company is offering a simple and transparent payment structure for their sellers. No hidden charges are encouraged on Amazon. When a seller sells their products or services on Amazon, they need to pay commission for referral and closing. Keep a note, there is no listing fee, subscription or payment collection fee. Amazon charges when a customer makes a sale.

Amazon has over 2.5 million sellers on its platform. As per the analysis, Amazon has earned $1 million from 25,000 sellers and $100,000 from 200,000 sellers. Also, the company has earned $17.2 billion from offline or physical stores.

Third-party Sellers

If you’re new to the e-commerce world becoming a third-party seller is helpful for you. At Amazon, the third-party sellers will list and sell their products effectively. But Amazon is responsible for fulfilment and shipping. This commission is identified when the seller requests a service through Amazon.

According to research, the third-party seller business segment has fetched more than $12 billion in 2020. It means the segment has grown by almost 23% compared to 2019. The revenue is generated by offering services such as shipping, fulfilment and other services. Though it’s not considered as direct sales growth Amazon is making good income through third-party sellers and still continues to prosper in coming years.

Subscription Services

Ever since the world’s leading e-commerce platform Amazon enrolled the industry synopsis, the company has to experience amazing growth. Amazon’s operating model has been sourced in subscription services such as prime, AWS, Kindle, audible and more.

Did you know that Amazon is making good profits through subscription services? Yes!!! The company is earning billions of dollars from subscription services. The business segment follows a simple approach. The subscription includes Amazon prime membership, the company charges when the user requests for prime membership. Here the company charges for accessing the content such as music, video, e-books, audiobooks, baby registry and more. The cost for Amazon prime membership is $7.99 per month. Users need to pay a subscription fee in advance to avail the services. On the other hand, the company is offering AWS service. This service helps businesses to run their business without any IT cost. Amazon has generated $14.2 billion in the year 2018 and $67 billion in 2020.

AWS (Amazon Web Services)

Buying and maintaining physical servers and also data centres can be a difficult task for many companies. Therefore Amazon has introduced Amazon Web Services to help small and large businesses. This way Amazon is earning significantly more through AWS. The portfolio includes various services such as storage, database, compute, end-user computing, media, networking, content delivery, VR & AR, security and more. Currently, many industries such as advertising & marketing, game tech, healthcare, telecom, travel, manufacture, etc are using AWS for smooth operations.

Amazon basically uses standalone pricing. The pricing may vary from one service to another. For example, database service is offering various solutions such as Amazon Aurora, Amazon RDS, Amazon Redshift and more. The company charges $0.10 per GB-month for Amazon Aurora service. This way Amazon is earning a good income from other products such as analytics, blockchain, business application, customer engagement and more. The revenue is generated when the users use Amazon Web Services. When the user requests for on-demand storage or networking services, the revenue is generated.

The sales commissions are paid by Amazon that is related to the contract terms. This could be extending the service for a certain period, it could be 6 months or 1 year. The contribution of Amazon Web Services to company sales has touched the sky during few years. AWS has generated more than $35 billion in 2020. The company has derived almost 12% of its revenue from Amazon Web Services.

Amazon Advertising

It’s no secret that Amazon is earning good income through advertising. Since there are millions of customers on Amazon, many businesses are displaying their products or services in the form of advertisements. Currently, Amazon Advertising is offering sponsored, display and video advertising. There are few people who know about Amazon’s advertising revenue. The company has earned more than $69.65 billion through advertising.

For small and large businesses, Amazon’s advertising is the best option because the customers on the website have more purchase intent. Customers will click the ad and increase the sale.

Amazon Music

If you’re a music freak, Amazon Music is the best service for you. There are few competitors such as Spotify, encouraging the people to subscribe and enjoy unlimited music on the move. This way Amazon Music is offering on-demand music, unlimited access to songs, listen offline and more. Currently, Amazon Music is offering 3-months free-trial. Later users need to pay $7.99 per month to get subscribed to Amazon Music.

Other Sources

So far we have discussed how Amazon is making money through retail, third-party sellers, subscription services, advertising, AWS and more. Now let’s discuss other sources where Amazon is driving good income through Amazon media and content.

Amazon media and content is the next move for revenue success. The company has entered the media. The strategy has been generating high revenue. The company acquired IMDB (Internet Movie Database) in 1998. The platform is a popular celebrity, video and other content sources. The platform IMDB is generating revenue through subscription, ads and promotions.

Conclusion

If you’re a shopaholic Amazon must be your favourite destination for you. Whether you’re planning to shop for trendy accessories or the latest mobile phone, Amazon got you covered. This article has provided in-depth information about how Amazon makes money. There are several distinct ways to earn income. The primary sources are retail sales, third-party sellers, subscription services, AWS, advertising, music and other sources. As mentioned above the Amazon has earned more than $96.1 billion in Q3 2020.

Online education is inclining towards becoming a new normal the same as working from home after the Covid-19 pandemic has shut down the world. However, though online learning is one trend in recent years, the forceful shutdown of schools, colleges, and universities opened the doors to many challenges. While the unprepared professors for online teaching are one challenge, monitoring test takers to prevent cheating is the other.

However, thanks to technology, online proctoring services such as ProctorU chased away the challenges the universities and professors facing- proctoring the students taking online tests. ProctorU is a completely automated proctoring service that uses both a live proctor and AI. Though online education is becoming more popular and the use or demand for ProctorU is likely to increase more, the question of how it makes money is still probing.

Let us unveil the business model of ProctorU and how it makes money in this article. So, are you game?

What is ProctorU?

ProctorU is both AI and a human-based online proctoring service for online exams. It serves various universities, professional organizations boosting the online exam trend while also ensuring exam integrity. Simply put, it uses webcams and screen-sharing technology to proctor students taking online tests.

ProctorU was founded on 1st October 2008 by Jarrod Morgan, ProctorU Inc. is currently headquartered in Hoover, Alabama, US. The founder originally created the proctoring service for Andrew Jackson University before the institutions across the world started using it. After the founder realized that students loved the software when he attended a conference, ProctorU was made a business.

Though the software has tough competitors like Examity, Proctorio, and ExamSoft WorldWide, etc., ProctorU is unique in its way by providing great convenience and flexibility for students and effective results for institutions. In fact, it is more effective than an in-person proctor who alone has to monitor a group of students in a room. Because ProctorU offers one-on-one proctoring for high stakes exams protecting the exam integrity. The company has a good number of employees, out of those over 80% are proctors.

ProctorU has protected over 3,934,863 exams in the last year. It removed over 1,653,000 unpermitted resources before the exam and took action on 547,000 during exams in the last 12 months period.

Thus it held over 500000 exams in the last 6 months. Additionally, ProctorU’s proctors have earned a 91% satisfaction score from test-takers.

Read: Wikipedia Business Model – How does Wikipedia Make Money

ProctorU Business Model

Okay, let’s get into the topic of how ProctorU makes money. For this, you need to know how this popular online proctoring service works. Though the revenue and profits of ProctorU are unavailable. It was reported that in 2010, the proctoring service had generated over $100,000 revenue with around 20 clients. However, let us see how it works to analyze how much it makes.

How ProctorU Works?

ProctorU ensures online exam integrity by verifying the identity of the test taker and preventing any prohibited activities such as receiving help from others in the room. It records the screen of a test taker to detect the use of any unauthorized materials.

Read: Microsoft Business Model – How Microsoft Makes Money

So, here is how it works.

Once the ProctorU software is activated on the test taker’s PC or laptop, it asks the person to show two photo ID proofs to verify the identity before the exam starts. The webcam and AI technology help to verify if the right student is taking the test. The test taker further needs to answer some questions and enter a biometric signature to prove the identity.

Now, after the identity is verified, the person needs to show he/she is alone in the room in which he/she is taking the test with the help of a webcam.

The test-takers need to have a computer, webcam, microphone and reliable internet connection to activate and take tests using ProctorU.

ProctorU’s both live proctor and AI monitors the test taker and detects suspected behavior such as the test taker going out of view of the webcam or copying, opening another browser, leaving room for help, or someone else entering the room. The AI can detect things that a proctor can’t detect sometimes. Say, AI detects faint reflections, suspicious eye movements, low sound levels, shadows etc.

Additionally, the whole exam is recorded for future reviews and records.

Read: Kickstarter Business Model – How does Kickstarter Makes Money

So, as this whole process involves expert proctors and advanced technology, the pricing may be a little expensive. However, the pricing is not listed by the company publicly. The pricing plans include:

ProctorU Auto

ProctorU Auto is a fully automated proctoring service where no proctor is present during the test. Though a proctor is not present, the AI technology verifies the right test taker using multi-factor verification. It even flags any suspicious behavior and records the test for future review purposes. Educational institutes and low stake exams mostly prefer this plan.

ProctorU Live+

ProctorU Live+ is suitable for higher stake exams such as government or professional certification exams that need close monitoring. Here live professional proctors monitor the test takers one-on-one and the test is monitored by AI as well.

Thus even the small things can be caught that humans can’t detect and vice versa.

Proctor Pro

This is a premium version of Live+ service as it provides higher customizability and highly trained proctors and a team to troubleshoot technical issues.

Exam Fee

As you have seen above, ProctorU makes money from exam fees and convenience fees.

When it comes to exams fee, nearly half of institutions pay exam fees for students whereas the other half is paid by test takers itself. The convenience fees are generally paid by students.

Though the costs of ProctorU are not available on the website, it is estimated as follows. The pricing for an exam proctored by ProctorU varies based on the time allotted for the exam. The cost range is between $8.75 to $30 per exam.

According to Illinois Online, the pricing of ProctorU is as follows:

• $8.75 for a 30-minute practice exam
• $14.75 for 1-hour exam
• $21.50 for 90 minute and 2-hour exam
• $30.25 for a 3-hour exam

It refunds the fees if the exam is canceled within 48 hours before the test time.

Convenience Fees

Whenever appointments are made less than 72 hours prior to the test time, ProctorU charges $5 as a convenience fee. It charges an $8.75 convenience fee if appointments are taken less than 24 hours before the exam.

Investor Funding

Additionally, the company is also backed by funding from Eastside Partners. ProctorU raised $13 million in funding over 2 rounds held in January 2020.

As said, there are no reports of the exact revenue of the company. However, analyzing the success of the company, on average it generates about at least $30 million in revenue every year as per a report.

Final Thoughts

The demand for online education, e-learning is rising exponentially and so is the demand for online proctoring. Hence, it is clear that ProctorU is making a good amount of profits. Especially, after the college doors were shut down, the traffic for the company has tremendously increased. Despite all, ProctorU has a profitable business model that is bringing notable revenue growth to the company.

Messages are probably the easiest way to communicate with one another in this day and age. This is because you don’t have to disturb others when you say something to them. Not only that but it is also the cheapest way to communicate with someone instantly. You don’t have to call them to say something. All you have to do is simply leave a message so that they can read it afterward. Just a couple of decades ago you could not message anyone across the world instantly. You could only send SMSs through your mobile phone to someone from your mobile phone. However, you could not send instant messages to someone who was living on the other side of the world. But all of that changed when social networking sites made their entry. They have completely changed how people communicated and interacted with each other in the 21st century.

There is no doubt that social media platforms have made the world a smaller place. The distance between two people has become irrelevant and the borders have been blurred. You don’t have to spend lots of money if you want to communicate with others. All you need to do is connect with the other person using a social networking site. The only thing you needed was a computer and internet connection. But as technology became more sophisticated you could do all this through your mobile phone. This advancement has given rise to different types of social media platforms. Some of these were designed exclusively for messaging. In today’s world, you will hardly find someone who uses SMSs to communicate with others. There are lots of apps for messaging and today’s article is about one such application called WeChat. So let’s dive into the topic.

What is WeChat?

Most of the people who know about this application only know that this is a messaging app which is not wrong. Because when WeChat was initially released it was just a messaging app. But over the years it has gotten more features and became much more than a messaging application. What many people don’t know is that it is a Chinese social media application. This application is created by the company Tencent. Tencent has become quite popular in recent years because of the release of their hugely successful online battle royale game PUBG. The creation of the application was started in the year 2010. The initial version of the application was first released in the same year which was created by Allen Zhang. It was officially launched in the year 2011 and during this time it was known as Weixin. By 2012 the application had already reached 100 million users.

After this, the company wanted to introduce it to people around the world so they rebranded it. This is when the application was renamed Wechat for the global audience. After this, the popularity and user base started increasing rapidly. Soon it was competing with global giants like Facebook and WhatsApp. The great thing about this was it was not hard for it to attract users even though it had fierce competition. This is because the application offered a lot more features compared to other social media platforms. Most people know it only as messaging that allows them to send text messages or voice messages but it can do a lot more than that. You can create public accounts, make digital payments, post feed, create your own mini-apps, and much more. This offers more features than one could imagine from a social media platform. Let’s see how it works. 

How does it work?

The main function of WeChat is sending messages. Once you download this application you have to register your account using your mobile number. After this, you will be able to send messages to people in your contact list who use WeChat. When it comes to messaging WeChat is quite similar to Whatsapp. You can not only send text messages or voice messages but you can also share pictures, files, videos, and contacts with your friends. It also allows you to create groups if you want to group chat. Similar to other major social media platforms WeChat also allows its users to post stories on their timeline. These stories or updates can be seen by your friends. Not only that but it also allows you to control who can see your posts. While this feature is for close friends but you can also make it public temporarily to connect with others. 

The other thing which is similar to other social media platforms is the feature to send emojis. There is a wide range of emoticons you can use on WeChat to send messages. Other than the messaging feature you can also use it to make digital payments. WeChat also acts as a digital wallet so if you want to use it all you have to do is provide your bank details. After you do this you will be able to transfer money to others, order goods, pay bills, and avail of services. But it is not an instant money transfer as the time taken for the transaction depends on the method of payment chosen by you. There is also enterprise WeChat which can be used by companies for communication. They can use it to track the work of employees, expenses, and other things. The other exciting feature is its mini-program feature.

Business model of WeChat

WeChat is not like most of the social media platforms you use. It can do all the things that a social media platform can do much more. So there are so many more things that it has to take care of than just being a social media platform. Let’s look at the important aspects of its business model. 

Instant messaging

This is the primary feature that WeChat is known for. It has to have this feature if it wants to attract its user base. You have to remember that WeChat is an instant messaging application that allows you to make digital payments and not the other way around. It is the all in one platform for people in China. So it has to make sure that it always adapts to the changing desires of the people. 

Feeds

This is what makes it a social media platform. You can post stories called “moments” that can be seen by your friends. You can keep them updated with your everyday lifestyle. The great thing about this is that you will not be sharing with the people you don’t know. These moments can only be seen by the people in your contact list. Not only that but you can also connect with the people you don’t know using this feature. All you have to do is make your account temporarily public to connect with new people.

Official accounts

This is the feature that makes WeChat a complete social media platform. WeChat allows you to create official accounts. These accounts are similar to pages on Facebook. Using these accounts you can gather followers and show them your content. They can receive notifications if you post something new. Not only that but businesses can use these accounts to redirect users to their e-commerce websites.

Apps within WeChat

Not just for chatting but you can also use WeChat to do many other things. There are a lot of applications that are present inside the application which you can use. You don’t have to use other applications to make use of the internet as you can do everything on WeChat. 

Digital wallet

If you are a millennial then there is no need to tell you why this feature is so important for the application. Today more and more people are using digital wallets to make payments. This is because it is very easy eliminating the need to carry cash. People can make all kinds of payments using this feature. So if WeChat has this feature then people don’t have to install another application to make digital payments. 

Mini program

This feature allows you to create applications using WeChat. Business owners can use this application to create smaller applications that they can use to manage their businesses. This feature is very unit to WeChat which you may not find in any other application. 

How does WeChat make money?

Since it offers various services there are many ways in which it earns money.

Selling emotions

The emoticons on WeChat are very famous and there are lots of emotions on it. If you want to get a cool set of emotions then you have to pay for them. It charges $0.99 per set of emoticons. 

WeChat gaming

Yes, you can also play games on WeChat. Unlike the western world, most of the people in China are only into mobile gaming. WeChat provides them with games that are developed by Tencent. It makes a good amount of money through mobile games.

Advertisements

This is the most popular and common way in which many social media platform makes money. WeChat also charges money for displaying ads on their application. There are various types of ads on WeChat like banner ads, moment ads, video ads, etc. Each type of advertisement has to pay a different amount of money to WeChat.

Digital payments

WeChat also charges its users for making payments through its application. It charges its users 0.01% of the total funds that are transferred. 

Registration fee of official accounts

If you think that official accounts are for free then you are wrong. A person who wants an official account has to pay a registration fee to verify their accounts. 

Conclusion

This is the business model of WeChat. Within a short period of time, it has gained over a billion users. It has features that you can find in multiple applications. But the only downside is that it shares its user information with the Chinese government for surveillance purposes. You can check out other business models like the business model of Costco here.