How Does Wix Make Money? Business Model of Wix


How Does Wix Make Money

Wix is a popular cloud-based web development service that helps customers build HTML5 websites and mobile applications. The company has a variety of revenue streams.

Wix primarily makes money via subscription plans that provide increased bandwidth and other benefits. The company also makes money from ads on free sites and from selling one-time purchases like domain name registrations and other business solutions.

Founded in Israel in 2006 by developers Avishai Abrahami, Nadav Abrahami, and Giora Kaplan, Wix is known as an easy-to-use drag-and-drop interface for building websites. Users don’t need to understand how to code to create a website with Wix.

The company had its initial public offering on the NASDAQ in 2013.[1] Since going public, Wix has consistently sought out new markets and partnerships for the brand.

For example, the company launched booking engine WixHotels in 2014 to help hotels manage their own inventory.[2] In 2015, the company then launched WixMusic, a platform for indie musicians to market and sell their music online.[3]

Then, in 2016, the company launched Wix Restaurants, an extension for restaurants to manage every aspect of running their business online.[4] Finally, in 2019, Wix introduced a service for fitness entrepreneurs called Wix Fitness.[5]

What is Wix & How Does It Work?

Wix is a cloud-based web development service for web and mobile applications. The website builder is available in 17 languages. According to the company, Wix has over 200 million users in 190 countries.[6]

Wix is used by 2.3% of all websites.[7] As of 2021, over 22 million mobile sites used Wix, and the content management system powered over 600,000 e-commerce stores. [8]

In addition to building a website, Wix users can use applications for creating social media, e-commerce, online marketing, contact forms, e-mail marketing, and community forums. They simply add these to their websites from Wix’s website options.[9]

Wix clients have two methods of creating their websites. They can either use the Wix Editor or the Wix ADI (Artificial Intelligent Design). The Editor offers more freedom and ability to customize but the ADI is marketed as being easy to use.

Customers can create their Wix account with only their email address and a password. They decide whether they want to use the Wix Editor or the Wix ADI, then they specify what type of website they want to build. Customers could also hire a professional to build their site.

Most popular site type options include:

  • eCommerce website
  • Business website
  • Blog website
  • Portfolio website
  • Event website
  • Personal website
  • Membership website
  • Nonprofit website
  • Informational website
  • Online forum

After selecting the website type, customers can choose their website name. Customers who want to use the Wix Editor select a pre-made template. The company encourages users to conceptualize their website goals before planning what type of site and template they need.

Wix has over 900 templates, organized by category and design preference.[10] After selecting a template, users will be taken straight to the editor mode.

Users who are comfortable with design can also start from a blank page and use Wix’s drag-and-drop interface to place elements where they want them on the page. Whether using a blank page or a template, users can easily modify the layout, colors, and functionalities of their page.

Wix has a plugin called Velo that lets users build custom functionality on their site. Velo lets them add CSS or databases into their sites or add Javascript to customize their site’s interactivity. Once the template and plugins are set up, users can add and edit pages to their sites.

Wix aims to be user-friendly. The company offers free site building and design courses to help users build their skills with the system.[11] Users can use a free Wix, non-customizable domain or purchase a custom domain through Wix.

Free web hosting is included through a Wix package. When they are ready to publish their site, users simply hit the publish button.

One of the benefits of Wix is the platform’s focus on making it easy for people to create websites without having to understand design or coding. The service provides all the tools a user needs to get up and running online.

Most website-building platforms have customizable templates, but Wix goes a step further with their Wix ADI (Artificial Intelligent Design).[12] Wix was the first website design company to launch an artificial intelligence solution.[13]

Wix ADI uses customer answers and preferences and artificial intelligence to create an automated, customized website. Users can then transition to the Wix Editor to customize the AI-created site.

In 2020, there were 5.5 million paid subscribers using Wix, and the company provided over 500 templates to its users.[14]

Many notable creative people and companies use Wix to build their brand and e-commerce websites. These include model Karlie Kloss, singer Jennifer Lopez, and the musician collective Animal Music.[15] Enterprise clients include Deloitte, CBS, Hilton, and Lyft.[16]

The company has had a few controversies in recent years. In 2016, there was controversy over Wix using a WordPress code to create their mobile app editor, in violation of the code’s license terms.[17] And in 2021, the company was criticized for removing an activist website at the request of Hong Kong police. The site was later reinstated.[18]

 

Business Model of Wix

The business model of Wix is a freemium model. Users can create a website for free, but they need to upgrade to a paid plan to connect a custom domain, remove ads, and enhance their site’s functionality.

Each Wix site initially receives a wix.com subdomain. However, customers are encouraged to upgrade to a paid subscription plan if they want a more professional custom domain. The company also offers a dedicated CRM tool for business customers.

Customers can create the unique site that they need for their business or creative projects. Wix provides them with integrations and plugins to handle point of sale. The company offers customized solutions for restaurants, online services, and fitness professionals.

Wix provides four basic plans for a professional site and three business and e-commerce plans. The platform also offers a plan for enterprise customers. Business plans allow Wix customers to receive secure online payments using Visa, Mastercard, or American Express. Wix supports payment processing for these companies.

Users appreciate Wix’s intuitive user interface, numerous widget and template options, and good customer service support. In 2022, the platform was given a rating of 4.5 out of 5 or Outstanding, by PCMag.[19]

While the Wix subscription model has generated significant revenue, the company will need to innovate to compete with new technologies that lower the costs of producing an online website. In addition, Wix has had a negative reputation for poor SEO.[20] It’s been accused of slow load times and bloated code. [21]

The company will likely need to adapt and improve its platform to compete in the crowded website and e-commerce marketplace. Wix faces many competitors in the website and e-commerce marketplace. Some of the more well-known include Weebly, Squarespace, WordPress, and GoDaddy. Shopify is a competitor in the e-commerce space.

Wix has significant costs associated with various aspects of running and growing the platform. Over the past three years, the company and its subsidiaries have spent between $194.8 million and $488.6 million on cost of revenue.[22]

Wix spends a significant amount of money on research and development, selling and marketing, and operating expenses. Total operating expenses in 2021 were $1.1 billion. That greatly reduced the company’s potential profitability.[23] However, the company is likely using those funds to expand their product and services options.

 

How Does Wix Make Money?

Wix makes money in several different ways. These primarily include subscription plans. The company also makes money through shared revenue from ads and third party apps in its App Market and one-time purchases.

Subscriptions

Wix primarily makes money through its Premium subscription plans. These are sold on a monthly, yearly, and multi-year basis.

The company offers Creative and Business Subscription Plans, and an enterprise plan for corporate use.

Wix breaks down its revenue into Creative Subscriptions and Business Subscriptions. Creative Subscriptions represented 79.6% and 74.8% in 2020 and 2021.[24]

Creative subscriptions

Wix offers several different plan options based on customer need. There are four plans for personal and creative use.

The Combo Plan is Wix’s most basic website plan. It’s marketed as for personal use. The Combo Plan costs $16 per month.[25] This plan provides users with:

  • Custom domain
  • Free domain for one year
  • Ad-free sites
  • Free SSL certificate
  • 2GB of storage
  • 30 minutes of video
  • 24/7 customer care

The Unlimited Plan is meant for entrepreneurs and freelancers. This plan costs $22 per month. Customers signing on to this plan receive all the benefits of the Combo Plan, plus:

  • 5GB storage
  • 1 hour of video
  • Ad vouchers
  • Site Booster App free for one year
  • Visitor Analytics App free for one year

The Pro Plan provides its users with complete online branding options. This plan costs $27 per month. Customers receive all the benefits of the Unlimited Plan, plus:

  • 50GB storage
  • 2 hours of video
  • Events Calendar App free for one year
  • Professional logo
  • Social media logo files

The VIP Plan is the deluxe plan for creative use. It’s marketed as providing First Priority Support. VIP customers pay $45 per month. In addition to the benefits of the Pro Plan, they receive:

  • 100GB storage
  • 5 hours of video
  • Priority customer care

In 2021, the company earned $950.3 million in revenue from their creative subscription offerings.[26]

 

Business subscriptions

Wix offers its clients three options for a business subscription plan.

Business Basic allows its customers to accept online payments. This plan costs $27 per month. In addition to basic website building options provided to creative premium subscribers, customers receive:

  • Ability to take secure online payments
  • Customer plans and recurring payments
  • Customer accounts
  • Custom domain
  • Free domain for one year
  • Ad-free sites
  • 50GB storage space
  • 5 hours of video
  • Ad vouchers
  • 24/7 customer care

Business Unlimited plans are marketed to customers who want to grow their business. This plan costs $32 per month. In addition to the benefits of a Business Basic plan, customers receive:

  • 100GB storage
  • 10 hours of video

Business VIP is the deluxe business subscription option. Customers pay $59 per month for this plan. In addition to the benefits of a Business Unlimited Plan, customers receive:

  • Unlimited storage
  • Unlimited video hours
  • Customized reports
  • Priority customer care

In 2021, Wix earned $319.4 million on its Business Solutions, which represents 25% of its subscription revenue.[27]

 

Enterprise Solutions

Wix provides enterprise website solutions that are custom tailored to individual corporate need. Clients must connect with Wix to receive custom solutions and pricing information.

Benefits of an enterprise plan may include:

  • Personalized website plans
  • A dedicated support team
  • Enterprise-grade security
  • Custom storage
  • Professional consulting
  • Custom code and API integration
  • Scalable business solutions

The company does not publicly disclose the revenue it receives from enterprise clients.

 

Advertising

As a company with a freemium business mode, Wix monetizes its free websites by running ads on them. Subscription plans include an upgrade that removes ads from the sites. However, the company makes money on the ads they host on their site.

It’s unclear if Wix has their own ad network or if they leverage another ad network like Google Ads to host advertising on these sites.

 

Revenue Sharing and One-Time Purchases

Wix earns fixed fees on revenue share arrangements with third party apps.

They also earn fixed fees one-time purchases like domain name registrations, selling logos through its Logo Maker, helping companies with social media advertising through solutions like Facebook Ads by Wix, and by offering a dedicated CRM called Ascend by Wix.

The company does not break down the revenue it earns from these purchases.

 

Wix Funding, Valuation & Revenue

Wix is currently a public company trading on the NASDAQ. It had a valuation as of September 2022 of $4.16 billion.[28]

Prior to going public, Wix raised $58.5 million in venture capital funding during six funding rounds.[29] Notable investors include Starboard Value and Mangrove Capital Partners.[30]

The company has acquired ten other organizations. Most recently the company bought the dropshipping platform Modalyst in June 2021.[31]

Wix has significantly increased its revenue in recent years. They have gone from $757.7 million in revenue in 2019 to $1.3 billion in revenue in 2021.[32]

YearTotal RevenueNet Income
2019$757.7 million($87.7 million)
2020$984.4 million($166.69 million)
2021$1.3 billion($117.2 million)

 

Is Wix Profitable?

Wix is not yet profitable. While Wix has steadily increased its revenue, generating $1.3 billion gross revenue in 2021, the company has not yet turned a profit. While the company is likely reinvesting its income in product development, advertising, and growth, the good news is that the company’s losses decreased in 2021.

Wix has an operating loss of $166.69 million in 2020 but was able to increase their income by over $300 million year-over-year and reduce their operating loss to just $117.2 million. However, despite this positive move, the company is positioned in a highly competitive space.

It remains to be seen whether Wix will be able to achieve its goal of a free cash flow margin of 20% by 2025.[33]

 

Conclusion

Wix has been around since 2006, and it’s become one of the most popular web builders in the world—and it’s easy to see why: they’ve built an amazing platform that lets you create beautiful, professional-looking websites with ease.

As you can see, Wix is a company that has mastered their business model. They have managed to create a platform for people who are not tech-savvy and make it easy for them to create websites without having to learn HTML or CSS. In fact, they have even expanded their business model beyond just offering website development services, which is why they are able to compete with larger companies like Squarespace and Shopify. 

Wix’s future outlook looks promising as the company has managed to build a successful business model. The company’s revenue stream is diversified, and it offers a wide range of products and services that appeal to different segments of its target audience. In addition, Wix has an active user base which allows it to generate additional revenue from existing customers through cross-selling and upselling tactics.

We hope this article has helped you understand how Wix makes money and what kind of business model they have. If you have any questions or would like us to clarify anything in this article, please feel free to contact us!

If you’re interested in learning more about Wix, check out their website at Wix.com.

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