When you look at 1Password, you see a remarkable organization that delivers industry-leading password management solutions. As an entrepreneur, you may be particularly impressed with the amount of innovation found in their offerings. But how does 1Password make Money? Here, we’ll take a look at the business model behind one of the best password managers available on the market.
1Password operates on a freemium SaaS (Software as a Service) business model. It makes money through paid subscriptions which come in 5 packages: [1] One-Person Access, [2] Family, [3] Teams Starter Pack, [4] Business, [5] Enterprise.
You could argue that the freemium model is the future of all software development, and 1Password has done an incredible job at growing its core product lines.
About 1password
1password is a password management service that has managed to capitalize on the disruptions caused by the COVID-19 pandemic. Its business model and revenue streams are not unique, but, within its 1.3 billion dollar industry, are perfectly suited to the demands of a post-pandemic world.
1Password remembers all your passwords for you, and keeps them safe and secure behind the one password that only you know. 1Password will generate strong, unique passwords for all your online accounts, organize them into categories, automatically fill them in when you visit websites or use your favourite apps, then magically hide them when you need to enter your super-secure password.
It offers the best password management experience on all major platforms: Mac, Windows PC, iPhone, iPad, Android phone and tablet, Apple Watch.
Business Model of 1password
The business model of 1password is that of a freemium SaaS, in particular, a password management service. Its competitors include:
- LastPass
- Keeper Password Manager
- RoboForm
- KeePass
- Dashlane Business
- Bitwarden
- Enpass
- Kaspersky Password Manager
Product/Service
As a password management service and a SaaS, 1password has helped many businesses adapt to the COVID-19 pandemic. As CEO Jeff Shiner explained to VentureBeat, “Businesses — both large and small — were forced overnight to adopt a remote way of working.”
Before the pandemic, many of these companies had been used to a centralized office. Suddenly, they needed to support employees that were using their own devices at home on their own potentially insecure networks. As a result of this remote-hybrid reset, a proliferation of SaaS tools to help keep people and teams productive hit the market.
With the remote-hybrid shift came a proliferation of SaaS tools to help keep people and teams productive. Many of these SaaS tools were incorporated to help specific teams solve specific problems. This meant that across an organization, there could potentially be hundreds of different software products, all requiring unique logins and access.
The reset from brick-and-mortar to remote enterprise has made companies even more vulnerable to phishing attacks and password breaches. Fortuitously, 1Password offers a lot of benefits for businesses ranging from small teams to large Fortune 100 companies.
To keep up with this growing security challenge in an ever-expanding remote world, 1Password has embraced various forms of passwordless authentication:
- tight integration with touch ID to enable macOS and iOS users to unlock 1Password
- tight integration with face ID to enable macOS and iOS users to unlock 1Password
- a new API that lets companies integrate 1Password into security information and event management tools like Splunk
Marketing
1password markets to both the B2C and B2B sectors. However, the B2B sector was hit much harder by the COVID-19 pandemic than individual consumers.
Therefore, businesses struggling to transition from a centralized office to a remote work/WFH model would be an ideal niche for 1password. This is especially the case for businesses that are having trouble managing the security concerns that come from the drastic increase in remote work/WFH activity.
1password’s investors include some high-ranking executives from high-profile companies like Shopify. That brings notoriety. Furthermore, 1password also markets through its blog.
Expenses
Because 1password is not really a brick-and-mortar business, they save on a lot of costs. As with any SaaS, 1password needs to pay for technically skilled staff, their energy expenses, and the maintenance of their equipment.
In addition, 1password has the expenses of any other SaaS:
- Hosting
- Payroll
- Sales
- Marketing
Plan for Profit
Due to the current trend as a result of the pandemic reset, CEO Jeff Shiner and the other leadership at 1password have a very clear plan for continued profitability. They know that this shift to WFH (work from home) has created a demand for SaaS products.
This demand, however, has created a massive security problem and a massive password management problem. Phishing expeditions are rampant and 1password plans take the lion’s share of the $1.3 billion password management industry and passwordless space.
How Does 1password Make Money?
1password makes money through its subscription packages which usually have a free trial period. 1password has up to 5 different subscription packages:
- 1Password
- 1Password Families
- Teams Starter Pack
- Business
- Enterprise
1Password Personal Package
The 1Password package has a 14-day free trial period. After that, the price is $2.99 per month. It features include:
- Apps for Mac, iOS, Windows, Android, Linux, and Chrome OS
- Unlimited passwords, items, and 1 GB of document storage
- 24/7 email support
- 365 day item history to restore deleted passwords
- Travel mode to safely cross borders
- Two-factor authentication for an extra layer of protection
- The ability to share your sensitive information, securely, with anyone
1Password Family Package
The 1Password Families package has a 14-day free trial period. After that, the price is $4.99 per month per family of 5. You can invite more household family members for $1 each.
In addition to all of the features for the 1Password package, the 1Password Families features include:
- The ability to invite up to 5 guests for limited sharing
- The ability to share passwords, credit cards, secure notes, and more
- The ability to manage what family members can see and do
- The ability to recover accounts for locked out family members
Teams Starter Pack
The Teams Starter Pack package is $19.95 per month for up to 10 team members after a free trial period. Its features include:
- Apps for Mac, iOS, Windows, Android, Linux, and Chrome OS
- Unlimited shared vaults and item storage
- Admin controls to view and manage positions
- Two-factor authentication for an extra layer of protection
- Duo integration for business-wide multi-factor authentication
- The ability to share your sensitive information, securely, with anyone
- 24/7 email support
- 1 GB document storage per person
- 5 guest accounts for limited sharing
Business Package
The Business package is $7.99 per user per month after a free trial period. Its features include:
- Apps for Mac, iOS, Windows, Android, Linux, and Chrome OS
- Unlimited shared vaults and item storage
- Admin controls to view and manage positions
- Two-factor authentication for an extra layer of protection
- Duo integration for business-wide multi-factor authentication
- The ability to share your sensitive information, securely, with anyone
- VIP Support
- 5 GB document storage per person
- 20 guest accounts for limited sharing
- Custom security controls with Advanced Protection
- Fine-grained access control for each vault
- Activity Log for tracking changes to vaults and items
- Custom roles to design and integrate responsibility
- Usage reports for creating an audit trail
- Custom groups to organize teams
- Provisioning with Active Directory, Okta, and One-Login
Enterprise Package
The Enterprise package has all of the features of the business package. The pricing is customized to each individual business. Additional features not included in the Business package that are included in the Enterprise package are:
- Dedicated account manager
- Tailor-made setup training
- Onboard engineer
In addition to the features listed above, all 1password accounts include the following bonus features:
- Unlimited Devices
- 1Password Watchtower
- Digital Wallet
- Unrivaled support
- Travel Mode
- Advanced Encryption
- Total privacy
The Unlimited Devices feature allows the user to use 1password on a variety of computers and devices with the same subscription. This feature applies regardless of whether the user is at home or at work.
The 1Password Watchtower feature allows the user to receive alerts for compromised websites and vulnerable passwords. This allows the user to take action to stay secure.
The Digital Wallet feature allows the user to securely store credit and debit cards, online banking information, and PayPal logins. This enables the user to fill them from any device.
The Unrivaled support feature allows the user to obtain help from 1password’s global team whenever he or she needs it. This support is free and one-to-one.
The Travel Mode feature allows the user to remove sensitive data from devices when crossing borders. The user can also restore access with a click when arriving.
The Advanced Encryption feature allows the user to employ AES-256 bit encryption. This encryption is a 1Password security recipe that uses multiple techniques to protect user data at rest and in transit.
The Total privacy feature allows the user to ensure that only the user has access to his or her data. 1Password’s exact quote regarding data is basically a reaction to Facebook/Meta:
We don’t use it, we don’t share it, and we don’t sell it. You’re our customer, not our product.
Funding, Valuation, and Revenue of 1password
Even though 1pasword only raised half as much in its Series B round as it had in its Series A round two years prior, its funding is still significant.
| Date | Funding |
|---|---|
| Nov 14, 2019 | $200 M |
| July 27, 2021 | $100 M |
It investors include:
- Mike Cannon-Brookes
- Tobias Lutke
- Accel
- Stewart Butterfield
- Jay Parikh
- Scott Farquar
- Robert Vis
- Skip Capital
- Sound Ventures
- Kevin Hartz
1password’s valuation has doubled in the past two years. Therefore, the value of the company and its future growth appears to be promising.
| Year | Valuation |
|---|---|
| 2019 | $1 B |
| 2021 | $2 B |
While the yearly revenue statistics are not available at this time, 1Password has recently crossed the $120 million in ARR (annual recurring revenue) mark, according to CEO Jeff Shiner.
In addition, over 90,000 businesses use its SaaS platform. That is up from 50,000 customers at the time of its November 2019 raise.
Included in this client list are many renowned companies, such as:
- Under Armour
- Shopify
- the PGA
- IBM
- GitLab
- Slack
- PagerDuty
Is 1password Profitable?
The one question we always get asked is, is 1Password profitable? The short answer is yes. And here’s why.
1Password, the password manager used by over 15 million people, has hauled in $120 million in annual recurring revenue (ARR) for its parent company AgileBits. CEO Jeff Shiner claims that 1Password has been profitable from day one.
Conclusion: How Does 1password Make Money?
To sum up, 1password is a password manager that operates on a freemium model. They offer subscription options for those who want to use advanced features. This makes it ideal for anyone – from the individual user to the business owner – as it will likely fit within your budget and ensure that you have a locked-down system that is safe.
So, there you have it. We’ve covered the entirety of 1password’s business model in this guide. We are certain that the content above has enlightened you on how 1password generates revenue.
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