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How does a company with 50 employees generate 694 million USD revenue when Craigslist users never pay fees to post or to contact a seller? Moreover, according to AIM Media Group, the company has an annual income of $1 billion.

Moreover, the private company is the most profitable classified website in the world. The business model and strategy of Craigslist – ‘network first, profit later’ strategy – is so successful that companies like Facebook, Instagram, Quora, and others have used this strategy in their business.

Even after the beginning of Facebook Marketplace, Craigslist is still the place where Americans would go to buy or sell online. Over the last few years, the classified advertisements website has been able to generate 50 billion page views per month. In short, Facebook Marketplace or other platforms cannot compete with Craigslist.

With sections devoted to jobs, housing, for sale, items wanted, services, community services, discussion forums, gigs, resumes, Craigslist offers the broadest range of local classifieds and forums in these sections. All of this begs the question: How does Craigslist make money? Let’s find out.

What is Craigslist?

craiglist

Founder: Craig Newmark

Founded: 1995

Headquarters: San Francisco, California, United States

Revenue: 694 million USD (2016)

CEO: Jim Buckmaster

The Craigslist project was started in 1995, when Craig Newmark, founder, and owner of Craigslist,  came up with this business model idea. At first, the company was designed to be a not for profit model. However, in 1999, it was transformed into a for-profit model. Further, in 1995, the company started as an email distribution list.

Now, Craigslist is the leading online classified. Not only this, but the company is showing constant improvement. For instance, back in 2003, Glaigslist started buying ads. For the same year, AIM reported that the company projected annual revenue of 7 million.

Furthermore, according to the AIM Media Group, there’s a nearly 50 percent increase in the revenue of the company when you compare the data from 2016 and 2018. The success of this 50-person company, which is owned entirely by its founder, Craig Newmark, and CEO Jim Buckmaster, is awe-inspiring.

Moreover, Craigslist is the most used region-specific online classified website. Currently, the site offers the most comprehensive range of local classifieds and forums in various sections devoted to jobs, housing, for sale, items wanted, services, community services, discussion forums, gigs, resumes, etc.

Typically, Craigslist users can post free advertisements. Rarely, depending on the region and the type of classified, users may have to pay for some posts. However, the majority of ads are for free. But how does Craigslist exactly work, and more interestingly, how does the company make money?

How does Craigslist Work?

Craigslist’s business idea is brilliant. In just a few clicks, Craigslist users can search through hundreds of advertisements. The best advantage of this website People all over the world can access it. Furthermore, all ads are location specific and easily targeted. For instance, if you want to post an advertisement on Craigslist, it would probably cost you nothing, but you will be able to target a wide range of people.

Moreover, the advertisement itself can be easily modified at any time. All these benefits are great for Craigslist users. However, many of them are wondering: How does the company make a profit when it lets us post classifieds for free? Well, keep on reading to find out.

How Does Craigslist Make Money?

The majority of Craigslist users wonder how the site generates revenue. At first, it probably seems like there are not many ways for Craigslist to make money. After all, the website does not charge a fee for almost anything. There is also no subscription fee, no commission, and no third-party ads. However, Craigslist charges fees only for a few classified sections. But is this enough to generate millions of dollars each year?

Back in 1998, the company decided to start charging $25 for job postings in San Francisco to avoid spam as well as to cover website costs. Once this strategy proved useful, Craigslist owners decided to make other listings chargeable too. Of course, this business strategy earned them a lot of money.

“Eventually, we realized we were making a lot of money, and it was more than we needed just to cover costs.” – A former Craigslist employee

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