The truth is, scaling from $5 to $50 million is not the toughest part of a new venture - it's getting your users to pay you anything at all. The Penny Gap, according to Kopelman, can be understood as follows: But that doesn’t account for the massive gap between unpaid and paid products, or the power that dynamic holds for growing a consumer business. Most entrepreneurs assume that the cheaper a service is, the more people there will be who are willing to pay for it. Kopelman pointed out that while lower prices generally create higher demand, there is a unique phenomenon that occurs between free ($0.00) and paid ($0.01). In this article, we explain why, and how this knowledge can help your company and apps succeed. And while WhatsApp built an incredible product that solved a real need, their understanding of the Penny Gap may have been their shrewdest product move of all. Years after the post was written, WhatsApp used a novel approach to solving the Penny Gap while creating one of the fastest growing mobile networks on the planet. Instead, he suggested that price affects demand to a point, but the relationship is far from linear - there is a gap between free and any other price. He argued that most entrepreneurs misunderstand how subscription pricing works and assume that as price goes down demand goes up in equal measure. Users can communicate instantaneously with WhatsApp Business's customer care agents or small business owners thanks to the platform's 2018 introduction.Seven years ago, First Round Partner Josh Kopelman wrote a seminal blog post on the importance of free services in consumer-facing business models. WhatsApp Business Statistics How many WhatsApp Business downloads are there?Īs of June 2022, Indian businesses were the ones that downloaded WhatsApp Business the most, with almost 292 million downloads on Android and iOS devices.Īround 220.5 million WhatsApp Business downloads were made by users worldwide in 2021, up 25.3 percent from the prior year. WhatsApp Payment features are only available in India, Brazil, and select users in the US for now. Where is the WhatsApp Pay service available? Users can send and request money to their contacts for free, but businesses must pay a 3.99% fee per received transaction. How much does WhatsApp charge for its payment service? To use the WhatsApp Pay service, you must first activate the feature using your bank information. Because WhatsApp Pay uses the government's UPI payment system, all payments made with it are secure. Yes, WhatsApp Pay is secure, thanks to WhatsApp's ability to maintain end-to-end encryption, which is used to protect users' privacy.Īs a result of this advanced technology, only the users who are conversing have access to the messages being exchanged. Simply put, it is a payment feature within chat that allows you to send and receive money from anyone on your contact list. WhatsApp Pay is a Unified Payments Interface (UPI) platform that allows for bank-to-bank transactions to be completed using a smartphone. Source: Craft What is WhatsApp Pay? (WhatsApp payment service) Source: Seeking Alpha, FEEDOUGH What is WhatsApp's market share in the mobile messenger apps industry?Īccording to reports, WhatsApp owns more than 34% of the global mobile communication apps industry. The fee is fixed but varies depending on the country. This means that businesses can respond to user messages for free for the first 24 hours, but must pay a fee for each message sent after that. It charges businesses for delayed responses. They make money instead through WhatsApp for Business and WhatsApp Pay. They have abandoned this business model in favor of in-app advertising. WhatsApp began as a 'freemium' service, allowing users to send messages for free for the first year and then renew for an annual fee of $0.99. Source: CrunchBase How does WhatsApp make money? (WhatsApp business model) Douglas Leone, Jim Goetz, Michael Abramson, Michael Moritz
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