How Craigslist Makes Money

Many users of Craigslist have wondered how the service makes money. On the surface, it appears like Craigslist does not impose any fees, and this is almost right.

Only a few classified sections on the site require fees while posting in the majority of parts is free. Many financial analysts have urged Craigslist to increase revenue by introducing banner advertising, but the site has so far rejected any commercialization efforts.

Streams of Income

Craigslist only makes money from a few different sources. In six major U.S. cities, it charges a $25 fee to post a job listing. It costs $75 to post a job in the San Francisco region.

Finally, to list an apartment rental in New York, the corporation charges a $10 fee. Craigslist’s running expenses are only covered by the revenue earned from these fees. Since its beginning, the company has never produced a profit.

This is done on purpose — Craigslist’s president, Jim Buckmaster, has claimed that the company’s priority is to provide a superior user experience over making money.

Streams of Income Potential

Other revenue streams being considered by Craigslist include banner advertising and Google text ads. However, the corporation is still hesitant to do so because it is concerned that adverts will detract from the site’s quality.

Craigslist’s president, Jim Buckmaster, points out that the site debated collecting fees for job listings for years, so a change to banner advertising may take some time.

Confusion Regarding the Business Model

The business strategy of Craigslist has perplexed some Wall Street experts, including UBS. Buckmaster has claimed that making a profit is not the company’s primary goal.

The organization’s revenues from job listings cover running costs, but it has never made a profit in its history.

However, the corporation does not regard this as a problem because they are virtually entirely focused on maintaining and improving the website. It also has no intentions to hire new personnel, therefore it does not require additional money. Craigslist employs merely a couple of dozen people.

Effect on Classified Ads in Newspapers

Newspaper classifieds have seen a major loss in revenue since Craigslist’s start in the late 1990s. Revenues fell from $19.6 billion to $6 billion between 2000 and 2010, according to research by the Newspaper Association of America.

That’s a 70 percent drop, and the trend doesn’t seem to be slowing down. Although numerous factors led to the fall, the group feels that Craigslist and other online classified sites played a significant influence in reducing newspaper revenues.

This makes sense given that posting on Craigslist is free, whereas newspaper ads may be quite expensive.

Craigslist’s top executives are making a lot of money, but they’ve kept their financials secret from the public eye.

To sum up, Craigslist’s CEO J. Buckmaster may be experimenting with new company ventures in order to enter new emerging marketing and create new channels for alternative advertising chances.

With over 55 million users, financial consultants and analysts agree that Craigslist has been able to earn great money with its existing business since its inception.

Craigslist was able to create a significant presence because of its simple and straightforward ad cost billing mechanism.