Founded in 2012 by former Facebook employees, Calm was acquired by Apple for $1 billion in 2018. Today, Calm makes money through subscription services, advertising, and affiliate marketing.
Calm offers a free version of their service, but they charge a monthly fee for access. They offer a premium version of their service which includes guided meditations, music tracks, and sleeping sounds.
We’ll take a closer look at Calm’s unique approach to generating income and learn how they generate its revenues. At the end of this post, we hope you understand how this company operates and how they make money.
You like to read: Most Profitable Small Business Ideas in Perth
About Calm
Calm, the award-winning meditation and mindfulness app, boasts more than 150 million downloads.
It has become a popular destination for people who want to learn mindfulness techniques, with over 30 million hours of audio meditations streamed each year.
Calm’s unique approach to customer acquisition has made them a unicorn. Their current multi-revenues stream strategy allows them to be profitable even if they don’t sell any product.
The Calm app has guided meditations by some of the best meditation instructors in the world including Jack Kornfield, Sharon Salzberg, and Mark Williams.
The application also offers mindfulness meditations, breath exercises, sleep stories, and healthy lifestyle tips which link mindfulness with healthy sleeping patterns.
Business Model of Calm
Calm has a freemium (free/paid) strategy with some revenue generated from a paid service plan. It markets its sleep meditation, health, and wellbeing apps through a seven-day free trial and those who want to keep using them after the free period can pay for a premium subscription.
It also targets the business-to-business (B2B) market because healthcare and wellness are rapidly growing there too, as well as the branding sphere. Its main competitors are Headspace and Mindful.
- More than 4 million people use Calm, an app for managing anxiety.
- Over 100 million people have downloaded the app Calm.
According to our research, most users are from the United States (US), followed by the UK. We estimate that there are approximately 1 million Calm subscribers worldwide.
product/Service
Calm claims that its app can help you in these ways:
- Improving sleep quality
- Reducing stress or anxiety
- Improving focus
- Self-improvement
Calm conducted a study of its own subscribers. Users who use the app more than five times per week achieve these benefits:
- 84% reported improvements in their mental well-being after using CBD products.
- 81% reported less stress
- Over half of the respondents reported feeling better rested after using CBD oil
Marketing
As a result, a large number of new subscribers sign up for Calm’s seven-free-weekend plan because they want to try out the app. Furthermore, Calm’s sleep stories have famous people promoting the app by default.
Calm is also used at large-scale companies like Lyra Health, which uses Calm for its own internal teams and external clients.
As for Facebook ads, we’ve run several successful ads buys across different platforms. However, since Google owns Android, we’re not running any ads on Android devices. We do, however, enhance our targeting by following our audience throughout their entire purchase path.
They advertise their Sleep Stories feature by having celebrities speak out about their own experiences sleeping.
They use both Facebook and Instagram to advertise. However, they mainly focus on Facebook (80%) and Instagram (1%). Moreover, they offer special deals for subscription services.
Because of Calm’s Employee Assistance Program (EAP) approach, Calm has access to both patient populations and physician support teams, including psychiatrists, nurses, coaches, and tech support staff for its EAP platform.
Lyra Healthcare, a highly successful EHR/EAP mental healthcare company that employs licensed therapists, counselors, social workers, etc., has Calm integrated into its system. Therefore, many people who would otherwise not be aware of Calm, both patients and employees, are exposed to Calm via EHR/EAP systems such as Calm.
Expenses
All businesses incur expenses to operate their operations. From rent to payrolls, from subscription fees to utility bills, every expense needs to be paid somehow. Calm is no different than any other company.
Calming incurs these costs to run its rapidly expanding company:
- Personnel expenses include salaries, benefits, and bonus payments for executives, developers, designers, and other staff members.
- Services that help people get things done
- Marketing and promotional expenditure
- Data centers
- Office equipment
- Administrative costs
- Admin Services (to update your app, maintain user accounts, etc.)
- Infrastructure services (servers, CDN, etc.)
- IT service providers (such as Apple or Google) help maintain your apps by providing updates and fixing bugs.
- iOS and Android updates
- APIs Images data
- Data storage
- App update submissions
- Development tools, frameworks, and support for app developers
- Social & chat integrations
Profitability
After quadrupling its revenues in 2020, Calm has achieved profitability. It’s likely that its business strategy will continue to draw in new users and more revenues.
With the expansion of its influence into China and other countries, Calm will be able to attract more users.
With increasing numbers of followers, Calm will be able to expand into new markets and further boost its profits.
According to Michael Acton Smith, co-founder, and CEO of Calm, the health and wellness market is worth $4 trillion dollars.
“We want to be one of the most valuable brands of the 21st Century.”
How Does Calm Make Money?
As an app for smartphones, Calm primarily earns its income from monthly subscription fees, but it also generates revenue from advertising and in-app purchases.
- B2B subscriptions
- B2C subscriptions
- Brand partnerships
Calm has three different ways of making money: subscription fees, advertising, and an Employee Assistance Program (EAP).
Consumer Channel (Subscriptions)
As an app designed for relaxation and mindfulness, Calm offers lots of features for its users. It begins by offering a seven-day free trial period. Once the trial ends, users have two options:
- An annual subscription plan
- Calm For Life, an unlimited subscription plan
With its freemium business plan, a lot of the basic features of the app remain unlocked even after the seven-day free trial has expired. However, most people who use the app subscribe to one of the paid plans because these plans have new features constantly added.
Such features include but aren’t limited to the below:
- Guided mindful meditation·
- Sleep music, relaxation music, and guided meditations tracks
- Sleep Stories ·
- Daily Calm
The Sleep Stories feature allows celebrities to read stories written by their fans for free. Premium subscribers get unlimited sleep stories.
These stories are also published in English, Spanish, French, and Italian. Such famous people include but are not limited to the followings:
- LeBron James
- Stephen Fry
- Harry Styles
- Matthew McConaughey
- Eva Green
Calm for Business (B2B Solutions)
Calm offers business-to-business (B2B) solutions for companies that want to distribute their services among their employees. These include:
- Calm for Team
- Calm for Business
Calm for Team is an app designed specifically for teams of five to one hundred people. As the number of team members increases, so too does the price per person. Thus, companies purchasing Calm for Teams for their employees get more value from their investment.
Calm for Business is designed for teams of up to 100 people. Some companies known to use Calm for business are Amazon, Apple, Google, Microsoft, Netflix, PayPal, Salesforce, Twitter, Uber, Walmart, Zappos, and Yelp.
- Gofundme
- Lincoln
- Universal music group
- Iterable
Brand Partnerships
Calm partners with different brands to advertise its products through its own mobile application. Such advertising can include any of the following methods:
- Content Licensing
- Marketing Campaigns
- Physical Product partnerships
Calms’ brands include the following companies:
- Uber
- American Express
- American Airlines
- Apple
EAP (Employee Assistance Program)
Calm also offers its services to large EAP (employee assistance program) platforms like LyraHealth.
Some of these organizations and governments may be able to use taxpayer dollars to buy Calm for their staff members.
Most governments offer Employee Assistance Programs (EAPs) for their employees. If these EAPs include Calm or Lyra Health, then Calm receives a portion of the money spent by the program.
Calm Funding, Valuation, & Revenue
Calm doesn’t need any outside financing, and that is an absolute understatement!
Over the past four years, Calm has raised $4 million; over the next six years, they plan to raise $20 million. They don’t lack funds.
Calm’s value has increased significantly in recent years. From 2018 to 2019, Calm’s value grew by four times. From 2018 to 2020, Calm’s growth rate was eight times. Therefore, Calm is considered a unicorn.
Calm has grown rapidly since its founding in 2015. It grew by more than three times between 2015 and 2016, and more than five times between 2016 and 2017.
From 2015 to 2017, it grew by 40 times, and from 2015 to 2019, it by 75 times.
Is Calm Profitable?
Calm, the market-leading digital wellness company has been profitable for years; however, they’re now focusing on increasing its revenue growth while investing in innovation and market expansion.
Calm was profitable from 2016 until 2018 when it quadrupled its revenue. TechCrunch reported that Calm had over forty million downloads worldwide with over one million paid subscriptions at that time.
There is an estimated $4 trillion market for healthy living products, which means Calm could potentially be worth billions of dollars.
Additionally, Facebook has reached out directly to China and, eventually (within China’s rules), Facebook will be able to enter into competition with WeChat properly.
As Calm has already spent most of its advertising budget on Facebook, once the Chinese firewalls come down, Calm will be able to reach new audiences.
Conclusion: Calm makes money by selling subscriptions.
To summarize, Calm is currently running on a freemium business model, generating revenue through its premium service. It offers both monthly and annual plans, each providing unlimited access to the application. However, the annual plan includes a discount.
Thanks for taking the time to read this blog. I hope you find it useful. Feel free to contact me via email if you have any questions.
You may like to read: The Best Small Business Ideas in Peru
