📈 Chartpack: Monetization Models Part 1
How product-led tech companies are making money in 2023
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Hi product people 👋,
Rich here from the Department of Product. Hope you’re having a great weekend so far!
Welcome to the first in our dedicated series of Chartpacks. Chartpacks are designed to equip you with data and insights from across the tech industry so that you can stay ahead and make smarter strategic decisions in your business.
In each edition, we’ll delve into data that we think is relevant for folks working in tech. And in this edition we’re focus on monetization.
Coming up in part 1 of 2
In this first part of the two part series on monetization:
How Duolingo makes money: understanding Duolingo’s current and potential future revenue sources and lessons in how to introduce a freemium model
Zoom’s earnings, revenue sources and why the pandemic increased trust in its brand
How Adobe makes money, how its pivot to subscriptions contributed to overall revenues and the lessons you can apply to your own product
Tools and resources to help you stay on top of how companies are making money
But before that, let’s get a sense of how the overall market is performing. It’s no secret that the past year has been one of the toughest in recent memories. And that means that now more than ever there is a greater emphasis on revenue generation and monetization.
We recently asked 300 our newsletter subscribers whether their product is performing better, worse or about what they expected. 33% of respondents said that their product’s commercial performance was worse than they expected.
Assessing product performance and understanding monetization models
We’ve picked 5 of the world’s most popular product-led companies as case studies for us to learn from. We’ve picked these based on two criteria 1) their strong reputation for product-led development and 2) their successful business models.
The companies are:
Each of these companies has wildly different market caps and revenues. Here’s how they look in context:
Needless to say, Google is by far the biggest beast here, but there are important takeaways and lessons to be learned from each of these companies.
Let’s dig in.
Duolingo’s rise has been a product-led marketing masterclass. Yes, they spent a large amount on TV advertising, but their product-led gamification mechanics and referral programs have helped drive adoption over the past 10+ years.
Duolingo’s revenues are increasing year on year and their losses are shrinking, albeit modestly.
For years, the founders focused on growth and adoption before adding subscription features which fuelled its growth.