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How Does Tinder Make Money? The Tinder Business Model In A Nutshell

Tinder is among the most popular dating apps. Initially named MatchBox, it leveraged a “double opt-in” mechanism that helped remove the initial friction of having to meet strangers. Later on, the product was renamed Tinder. The company (now parts of the Match Group) makes money via its main subscription plans and premium features like boosts and super likes.

Origin Story

Tinder is a North American online networking and dating application.

The prototype for the app, named MatchBox, was created at start-up incubator Hatch Labs by Sean Rad and Justin Mateen. Rad had identified an absence of platforms allowing users to meet each other and noted that a “double opt-in” system could alleviate the stress of interacting with strangers.

Six months after creation, the prototype was renamed Tinder to match the flame logo designed by eventual CCO Chris Gulczynski. Then began an aggressive marketing campaign, which involved launching the app at multiple college campuses. By 2014, there were over 1 billion swipes per day equating to 12 million matches.

Tinder became a part of Match Group in 2017, a portfolio of popular online dating services including OkCupid, Meetic, Match.com, and PlentyOfFish. As of Q4 2020, Tinder had 6.7 million paid subscribers, with almost 1 in 5 adults in the United States having used the service.

Tinder revenue generation

Tinder operates on a freemium model of revenue generation.

The app is free to use, but Tinder subscribers can pay for a variety of added features and functionality. Let’s take a look at them below.

Subscription tiers

In addition to the free “plan”, users can upgrade to one of three paid plans:

  1. Tinder Plus – starting at $9.99/month, users get unlimited likes and rewards with 5 super likes per day. Location can also be changed for those using the service while on vacation.
  2. Tinder Gold – starting at $29.99/month, users get all Tinder Plus features in addition to top picks and the ability to see who likes them.
  3. Tinder Platinum – a relatively new plan starting at around $39.99/month. Platinum users can message others before they match and see prioritized likes.

Prices for each plan vary according to geographic location and market, particularly if the company is beta-testing new features. Like many subscription services, a cheaper price can be obtained by paying six-monthly or annually. For example, the cost of the Tinder Plus plan drops from $9.99 to $4.17 per month if paying yearly.

Prices are also dependent on age, which has attracted some controversy. Users over 30 years of age are generally charged much more for equivalent service than those under 30. Anecdotal evidence suggests that price is also dependent on geographic location and sexual orientation.

Tinder argues that its dynamic pricing allows the more budget-conscious younger generation to access paid subscriptions.

Premium features

For users who want extra functionality without signing up for a plan, they can pay for premium features on a once-off basis including:

  • Boosts – which increase visibility.
  • Super Likes – which provide extra social signals of profile popularity.

Again, prices are dependent on the abovementioned factors and cheaper prices can be had if purchased in bulk.

Key takeaways

  • Tinder is an American online dating and networking application. It was created by Sean Rad and Justin Mateen at start-up incubator Hatch Labs. Originally called MatchBox, the name was changed in 2012 to reflect a previously designed logo.
  • Tinder operates on the freemium model with three paid plans for extra functionality. Prices are highly variable and are dependent on age, geographic location, and whether plan features are being tested in new markets.
  • Tinder also gives free users a chance to enhance their experience by purchasing Boosts and Super Likes.

Read Also: How Does Bumble Make Money.

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Related Business Model Types

Platform Business Model

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A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success.

Marketplace Business Model

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A marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.

Network Effects

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A network effect is a phenomenon in which as more people or users join a platform, the more the value of the service offered by the platform improves for those joining afterward.

Asymmetric Business Models

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In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.

Attention Merchant Business Model

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In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.

Wholesale Business Model

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The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.

Retail Business Model

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A retail business model follows a direct-to-consumer approach, also called B2C, where the company sells directly to final customers a processed/finished product. This implies a business model that is mostly local-based, it carries higher margins, but also higher costs and distribution risks.

B2B2C

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A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.

Crowdsourcing Business Model

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The term “crowdsourcing” was first coined by Wired Magazine editor Jeff Howe in a 2006 article titled Rise of Crowdsourcing. Though the practice has existed in some form or another for centuries, it rose to prominence when eCommerce, social media, and smartphone culture began to emerge. Crowdsourcing is the act of obtaining knowledge, goods, services, or opinions from a group of people. These people submit information via social media, smartphone apps, or dedicated crowdsourcing platforms.

Open-Core Business Model

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While the term has been coined by Andrew Lampitt, open-core is an evolution of open-source. Where a core part of the software/platform is offered for free, while on top of it are built premium features or add-ons, which get monetized by the corporation who developed the software/platform. An example of the GitLab open core model, where the hosted service is free and open, while the software is closed.

Open Source vs. Freemium

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Open source is licensed and usually developed and maintained by a community of independent developers. While the freemium is developed in-house. Thus the freemium give the company that developed it, full control over its distribution. In an open-source model, the for-profit company has to distribute its premium version per its open-source licensing model.

Freemium Business Model

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The freemium – unless the whole organization is aligned around it – is a growth strategy rather than a business model. A free service is provided to a majority of users, while a small percentage of those users convert into paying customers through the sales funnel. Free users will help spread the brand through word of mouth.

Freeterprise Business Model

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A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.

Franchising Business Model

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In a franchained business model (a short-term chain, long-term franchise) model, the company deliberately launched its operations by keeping tight ownership on the main assets, while those are established, thus choosing a chain model. Once operations are running and established, the company divests its ownership and opts instead for a franchising model.

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