How Does Calm Make Money—The Calm Business Model

Calm is a freemium mobile application that provides mindful meditation programs such as sleep stories, guided and unguided meditation. The Calm app is available for both iOS and Android devices.

The business model of Calm is primarily based on three income pillars—the consumer channel, calm for business, and brand partnerships. The company has monetized all these business fields to distinct streams of income.

How Calm Works

The Calm app works in a straightforward way. After downloading the app and signing up with your account, the user can select any topics of interest from those listed in the app. Calm app topics help users reduce anxiety or stress, improve sleep quality, focus, self-development, and more.

Generally, calm main features offered are the sleep aids and guided meditation products, and videos. With new meditation programs and sleep stories every week, Calm users are constantly engaged with fresh content hence their consistent subscription.

Users can also access the company’s meditation products directly from calm website instead of the app.

Let’s take a look at some of the meditation products in the Calm app in the video below.

How Does Calm Make Money?

The calm app makes money from subscription fees that users pay to unlock meditation products, B2B programs for business organizations, and brand partnerships with top companies. Let’s take a look at each of these calm income pillars.

Subscription fees

The calm app is free to download and comes with introductory courses, including breathing exercises, Day 1 of meditation programs, and more. The free trial lasts for seven days, after which one can choose to purchase the premium plans. The good thing is that even after the free trial elapses, Calm-free products remain unlocked.

To explore all of Calm’s complete library of mindful meditations programs, music, sleep stories, one must pay the subscription fee. There are two subscription plans, annual subscription, and the lifetime subscription, as seen below:

How Does Calm Make Money

Calm users who have subscribed to the premium plan get many benefits, including;

  • Hours of Guided mindful meditation on stress, sleep, and more.
  • Exclusive new music tracks added weekly for relaxation, sleep, and more
  • More than 100 Sleep Stories
  • Everyday original Daily Calm

With all this premium content, Calm can make money as more customers subscribe to the plans to access all the new content.

Business-To-Business Solutions

Calm also offers its app to B2B program divided into two groups Team and Business.

Calm for Team

Calm for Team can only be accessed by 5 to 100 people in an organization freely. The organization has to buy the plan on behalf of the Team. The amount paid entirely depends on the number of users an organization has—the high the number of users, the less the amount paid by an organization per-user-basis.

For instance, an organization with 50 users would have to pay $45.16 per user annually. On the other hand, a team of 20 users will pay $53.78/user annually. Calm efficiently maximizes its revenue using this business model.

Calm for Business

Large organizations with more than 100+ people can subscribe to another package with all the Team plan features as well as account management and digital webinars/events.

The pricing of this business plan isn’t disclosed to the public. The potential size contract (number of employees covered by the plan) is the most likely basis for pricing. The company offers a demo to test all the said features.

All the subscribed employees in either Calm for Team or Business do not pay subscription fees as the organizations cater to them. Some of the Calm corporate partners include Gofundme, Lincoln, Universal music group, and Iterable.

Brand Partnerships

Calm also collaborates with big brands in different ways, including Content Licensing, Marketing Campaigns, Physical Product partnerships, and more.

The companies interested in partnering with Calm have the freedom to choose the goal of the partnership and the number of people they want to reach. There’s no specific partnership pricing; the brands quote their budget range when applying, and it’s upon Calm to approve, haggle or reject it.

Calm has collaborated with big brands like Uber, American Express, American Airlines, Apple, etc. With all these partnerships, Calm earns extra income that supplements the other ways discussed above.

Calm Funding, Valuation, Revenue, and Users

According to Crunchbase, Calm has raised $218 million in 8 funding rounds. In its last Series C funding round, the company raised $75 million with Lightspeed Ventures Partners as the lead investors. Other notable lead investors in previous funding rounds include TPG Growth and Insight Partners.

With its Series C funding in December 2020, Calm has a valuation of $2 billion. The valuation increased from $1 billion in 2019 by about 100% growth.

According to TechCrunch, calm amassed over 100 million downloads with over 4 million subscribers in 2020 from over 190 countries. Over 60% of its 2 million monthly visits are from the United States.

Also read: How does Avatrade make money?

Success Story of Calm App

The company was founded in 2012 by Alex Tew and Michael Acton Smith. 2 years later, Tamara Levitt (who’s one of the top narrators in the Calm app) became the Head of Mindfulness.

Even after starting the company, Michael Smith still hadn’t devoted his time entirely to Calm. In 2014 he decided to commit his full-time to calm by joining Alex Tew. In 2015, things started working in their favor; calm generated $2 million in revenue.

Two years later, the meditation app recorded $22 million in revenue, which was more than ten times what it had generated in 2015. The introduction of sleep stories to help adult listeners sleep increased its popularity hence the increase in revenue. More investors were interested in funding the company with angel investments. In June 2018, calm had its first Series A funding of $27 million with Insight Partners as the lead investors.

The following year, Calm had 2 Series B funding rounds with a total of $115 million. This funding involved some top investors such as Lightspeed Ventures Partners and TPG Growth, which led to the company’s $1 billion valuation.

With its Series C funding in December 2020 which foresaw its $2 billion valuation, Calm app is now one of the popular meditation apps in the world.

Also read: How does Payoneer make money

Steve K

An enthusiastic human being with determination and zeal to explore new ventures. Steve is an entrepreneurial spirit searching for changes and learning to exploit them as opportunities and impacting people for good.

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