What is LinkedIn’s business model?

LinkedIn is a website that provides professionals with a platform to connect by sending requests.  A posted profile works as a resume and allows others who have signed up to get access to professional information that includes current job, aspiration, experience and past jobs. It has over 106 million active users, professionals, and corporate who build their brand online.

  You may want to know the LinkedIn’s business model for it to stay afloat.

 It uses a freemium business model to make money from providing corporate recruiting departments in large firms with access to job candidates through recruiter product.  It also generates more revenue by best premium writing services displaying ad sales and sales of premium membership products. It is a pricing strategy by which a service or product (digital offering or an app such as media, Software, web services. Media or games) is on offer free but subscribers for premium service pay some money to get additional features, services or goods (virtual or physical).

How does LinkedIn Apply Freemium business model

LinkedIn provides a core product which is along professionals to connect free to all users but sells premium products at a fee to a fraction of the user base. The free solutions are available to all members and provide compelling professional benefits free.

Pay solutions offer functions with more enhancement with a design that simplifies all the steps of corporate services for hiring, networking, and marketing. A significant portion of the revenue is from advertizing apart from other core offerings.

An interesting feature about the freemium model is a presence of the high network effect. It implies that adding free members increases member base in quantity terms but also adds value for all other members of LinkedIn(free and premium) by growing the network. The growth can be through connection request emails or word of mouth.  It creates a potential for attracting new users and upgrading the number of satisfied free users to become premium subscribers.

A large chunk of the revenue comes from advertizing. The cost of adding new users is marginally low, but it generates additional revenue to support an increase of the expenses causing thriving of freemium model.

LinkedIn business models

Here is a summary of the categories that support the LinkedIn, business model.

 Talent solution

 Talent solutions are the access to a recruiter product that enables corporate recruiting teams to find candidates for their job positions. It contributes over 65% of total revenue as they are essential tools and services for the business model. Talent solutions include Linkedin Recruiter, recruitment media, job slots, career pages and also work with use ads.

Marketing solutions

Marketing solutions is a campaign that displays ad banners that visitors to the site see.  It contributes more than 18% of total revenue and offers features to let companies create a page that enhances the marketing efforts. They can create sponsored in Mails, content and text advertisements.

Premium subscriptions

Premium users allow access to features that free subscribers cannot access. It will enable subscribers to see someone who obtains their profile and send direct messages to other uses among other benefits.

 It caters for specific needs of users who choose these subscriptions:

  • Career
  • Sales Navigator
  • Business Plus
  • Recruiter Lite

LinkedIn is an excellent example of the way to implement the freemium business model.