How Does Asana Make Money? Business Model of Asana


How Does Asana Make Money

If you are wondering how Asana makes money, you’ve landed on the right page. The goal of this blog post is to understand how Asana makes money and to study its business model in detail.

So how does Asana make money? Asana operates on a subscription-based freemium business model. Asana makes money via paid monthly subscriptions categorized in three tiers: premium, business, and enterprise. Each tier offers a unique range of features and customizations.

About Asana

Asana is one of the most popular project management applications on the market. Businesses use it to help teams organize, prioritize, and get things done. It’s becoming a favorite tool for startups to collaborate and organize their work.

The recent years have seen businesses face unique challenges to the way in which they manage employees. These challenges have led to an unprecedented rise in remote working.

Asana’s project management platform has become increasingly relevant to managers and business leaders looking to drive productivity and gain the best results from a disparate workforce.

 

Business Model of Asana

We reviewed Asana’s business model and have broken down what they offer their users, how they remain competitive in an increasingly crowded marketplace and the factors which drive the company’s profitability.

Asana’s business model is centered around providing workflow solutions for project management, enabling teams to plan and coordinate work on a day-to-day basis. By bringing a team’s work into a shared space, tasks can be assigned and scheduled, then tracked on boards to ensure progress and alignment.

Digital solutions geared towards remote or hybrid workforces have become essential for businesses looking to adapt to the events of 2020, which TIME magazine called “the world’s largest work-from-home experiment”.

Asana is well positioned in this competitive emerging market with a comprehensive platform designed to help businesses plan, schedule, and achieve their goals.

Developed by Facebook veterans Dustin Moskovitz and Justin Rosenstein, Asana’s value proposition focuses on the core Work Graph feature which facilitates team coordination.

Asana’s platform can be used in companies ranging from small start-ups with a skeleton crew of employees, to full-fledged corporations with staff numbering in the thousands.

 

Asana’s Work Graph

Asana’s Work Graph feature allows users to break down a variety of units of work, including tasks, ideas, clients, goals, and agenda items.

Information about these units, how they fit together, and the members of staff responsible are then included in the Work Graph.

Asana’s software then allows users to:

  • Establish tasks (which Asana refers to as “atomic units of work”) that can be set to owners with due dates. Relevant documentation can be attached along with additional information in custom fields. These custom fields offer metadata that helps explain the task elements.
  • Collate tasks into projects. Regular projects can be turned into a workflow or template which allows teams to replicate processes and learn from previous experience.
  • Collect projects into a portfolio. Giving team leaders and company executives the ability to track projects and see how they are being managed.
  • Set goals – for instance, objectives and key results (OKRs) can be established and linked to relevant projects and portfolios, with the option to make these visible throughout the organization.

The platform allows individuals to maximize their effectiveness, while also giving team leaders and executives the means to track progress and gain real-time insights into performance.

Additional automation tools mean that routine work can be set up through templates and scheduled, saving additional valuable time.

Asana offers increased versatility through its extensive range of third-party applications which users can easily integrate into the platform. These applications include G-suite apps (Gmail, Chrome, Sheets, Drive), Microsoft apps including Teams, Outlook, and Sharepoint, as well as Adobe Creative Cloud, Slack, and Dropbox.

Such third-party applications can be added to the platform via Asana Connect.

 

Cost of Running Asana

Asana’s subscription-based model means that expenses lie primarily in the cost of running the platform for the free users. Personnel-related expenses, marketing costs, and additional third-party hosting fees are additional running costs that Asana faces.

Research and development expenses ensure that Asana’s product offerings continue to grow and maintain the platform’s competitive edge.

Asana has developed its strategy in order to expand its user base, combined with a growth approach built around continual product development, data analysis, and marketing.

A mixture of self-serving accounts and direct sales efforts allows Asana to gain a larger market share.

 

How Does Asana Make Money?

Asana’s core Work Graph feature drives the freeterprise business model, as free account holders are channeled through marketing funnels ultimately to be converted into paying accounts.

The principal revenue stream for Asana derives from three subscription tiers: premium, business, and enterprise.

These subscription packages stack additional features on top of those found in the basic (free to use) package, which includes task management, a selection of viewing options such as list or board, and allows for collaboration with up to 15 teammates.

 

Premium Subscription Fees

Asana’s premium-level subscription builds on the options covered in the basic package to deliver more comprehensive tools without the restrictions on team sizes.

Unlimited dashboards and projects make this ideal for larger businesses with multiple teams.

Additional features available include:

  • Timeline
  • Custom fields
  • Forms and rules
  • Admin console

 

Business Subscription Fees

Asana introduced the business subscription in November 2018 and is designed for teams and companies which need to manage work across a range of initiatives.

The features included in Premium are bolstered by additional tools including:

  • Portfolios
  • Workload
  • Approvals
  • Proofing
  • Salesforce, Tableau, Power Bi, and Adobe Creative Cloud advanced integrations

 

Enterprise Subscription Fees

Asana’s enterprise subscription represents the complete product suite and is tailored for businesses looking for full control with additional security and support.

This subscription tier includes:

  • SAML
  • User provisioning and de-provisioning (SCIM)
  • Data export and deletion
  • Block native integrations
  • Custom branding
  • Priority support

 

In early 2020, Asana reported that business and enterprise subscriptions made up 42% of revenues. Accounts spending over $5k per year made up more than 54% of Asana’s revenues, with the majority of these subscribers paying on an annual basis.

 

Asana Funding, Valuation & Revenue

Asana’s report for investors from March 2021 announced strong performance for the fiscal year ending January 31st, 2021. Asana’s co-founder and chief executive, Dustin Moskovitz, explained the factors driving this growth:

The most relevant of these included a year-over-year increase in new customers, great increases in business from existing customers, and improvement of relationships with some of Asana’s largest enterprise clients.

Asana now has over 93,000 paying customers and over 1.5 million paid users who trust Asana to provide the real-time clarity their teams need to do their best work.

Additional financial highlights for Asana’s performance from 2020 to 2021 include:

 20202021
Revenue$143 million$227 million
Gross profit$123 million$198 million
Operating expenses$121 million$90 million
Operating loss$175.6 million$119.6 million
Net loss$118.6 million$211.7 million

Asana has experienced growth across a range of metrics and has received a number of industry awards, including being ranked as a Best Workplace by Glassdoor and Fortune, Inc.

Customer spending has also seen growth, with customer spending at the $5,000 and $50,000 annual range increasing 55% and 92% year over year respectively.

Asana’s growth is further expressed in its rising stock value. Asana was valued at $5.5 billion following its direct listing debut in September 2020. As of August 11th, 2021 this market value has increased to $11.84 billion.

Asana has received funding from 37 investors contributing a total funding amount of $453.2 million. Investors include Sebastien Breteau, Manhattan Venture Partners, Silicon Valley Bank, and Founders Fund, partnered with Peter Thiel.

 

Is Asana Profitable?

Asana is not profitable yet and has a long way to go before profitability. It reported a net loss of $118.6 million in 2020 and $211.7 million in 2021. The company has been able to successfully generate revenues by investing heavily in sales and marketing.

Asana spends a lot on sales and marketing, which is the cost of bringing in new customers and getting them to use the product. It also spends a lot on product development (R&D), which is the cost of developing new features for the product.

Asana’s continual revenue growth combined with a consistent rise in the value of shares places the company in a strong position when compared to other companies within the same industry.

Asana is set to experience additional growth moving into 2022, with forecasters anticipating revenue growth of 49.20%, while Asana’s internal expectations place revenue growth between 36% to 38% (or $309 million to $314 million).

The project management software market remains hugely competitive, but Asana’s track record and revenue expectations suggest the company is well-positioned to rise to the challenges faced by the industry.

Asana’s continual revenue growth combined with current business and marketplace projections indicate a strong future for the company. Cloud and computing technology sector growth, combined with the rapidly changing economy should serve to strengthen Asana’s profitability moving forwards.

While Asana’s net losses have been substantial as the customer base continues to grow, it has built valuable technology over the years which satisfies an increasing demand for digital project management solutions.

Asana’s large customer base at the basic subscription tier level means that the company has great potential scope to funnel users into paid subscriptions.

 

Conclusion: How Does Asana Make Money?

To sum up, Asana is working on a freemium business model. With its free and paid product combination, Asana consumes the lion’s share of its revenue from its enterprise subscription offering, along with a minor contribution from its premium and business offerings.

Users are free to use the basic version, but they will be limited to a certain number of users and projects. For a mid-size business, the monthly fee is likely to be less than the cost of a full-time employee.

With a lot of IT giants and venture capital firms using Asana, it’s easy to see why users are signing up in large numbers.

Asana is growing extremely fast by using word of mouth and focusing on the user experience. The future is looking bright for this company as it continues to gather investment funding, add innovative products, and, most importantly, attract new users. 

We have reached the end of this post, and we hope it has been particularly helpful for you in understanding how Asana makes money.

Thanks for reading this article. If you found it useful, please share it with anyone looking for info on Asana.

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