You might have heard that Canva made $500 million in revenue in 2020 and since then you’ve been wondering how they manage to make so much money! Is there an industry secret only they know about? Or is it actual magic? Naturally, it’s neither.
Canva makes money through its subscriptions, printing service, venture capital financing, and acquisitions of other companies.
Canva has 2 different business models that it actively uses to earn its revenue: the transaction model and the merger & acquisition (M&A) model.
In this article, we’ll analyze different revenue business models, the business models of Canva, the revenue they’ve made in the last six years, what contributed to those amounts, and what Canva does differently from other similar platforms.
What Kind of Platform is Canva?
It’s important for us to understand what kind of platform Canva is because different platforms rely on different business models to ensure they create a profitable business.
Knowing what kind of platform Canva is will help us understand how they make their profits.
Canva is a graphic design platform.
This means their business model will naturally revolve around subscriptions and commissions, both of which are part of one business model that we’ll get to later.
They can either focus on a single artistic discipline or specialize in multiple facets of design, the choice of which heavily affects the amount of profit a graphic designer, designer platform, or designer agency makes, since one option limits the kinds of customers the company can have while the other expands the possibilities.
How Does Canva Make Money?
There are at least 7 different ways Canva makes money:
- Free material
- Canva Print
- Design Classes
- Venture Capital Funding
1. Free Material
It might sound like a bad idea at first, but it’s actually a very good marketing and business strategy.
Ideal customers can’t get hooked onto a product or service if they can never try it out for themselves, and the more free features you allow people to have, the more appealing your product/service is.
Internet entrepreneur and business coach, Stefen James, describes free stuff as the crucial base of every online business’s success because it attracts people to your brand and builds credibility and authority.
No one can deny Canva is professional.
The free subscription to Canva includes more than 250,000 free templates, more than 100 different design types for social media posts, letters, business cards, and others, 5GB of cloud storage, and hundreds of thousands of free photos and graphics for you to use.
Pretty inviting, right?
Imagine how inviting it is for freelancers and small businesses who need designs done or want to make their own.
Once they are hooked on the available features and explore the options Canva has available, it’s almost certain the casual viewers will upgrade.
So while Canva doesn’t initially make any money, in the long run, this brings Canva many conversions and profits.
2. Canva Custom Prints
After designing what you want, Canva Prints and Canva’s custom prints is a means of printing what you’ve designed with marketed high-quality.
Examples of Canva Print’s services are printing your designs onto business cards, posters, canvases, and t-shirts.
The amount they charge will vary based on where the finished work is being shipped to, what you’re printing on, how many copies you want, and the like.
You’re probably thinking that it might be cheaper to take your design and go to Office Depot or a similar service, but the benefit Canva’s printing service has is that the customer knows for sure how the design looked on Canva’s website will be how it looks as a finished product.
They also have the benefit of offering features like,
- One-click Resizing
- Real-time collaboration for those working on a design team
- One-click background remover
- And free standard shipping
Which are good incentives for customers to use their printing service vs a competitor.
Going to Office Depot, in particular, wouldn’t make any difference to Canva because they are business partners anyway.
3. Design Classes
Last, but not least, Canva offers designing courses for aspiring artists, social media, marketing and branding courses for entrepreneurs, and resources for educators and nonprofits.
They also offer tutorials on how to use Canva for recording videos, setting up a classroom, creating presentations, and more.
These tutorials and online courses are both free options unless you want in-person classes that start at $5.
They’re useful for attracting users to show potential customers the extent of what Canva has to offer.
If the tutorials do their job right, casual explorers will move on to purchase the available features the tutorials showed off.
What’s important to note as a business tactic is that these courses are also genuinely helpful to the users as much as a means to show off Canva, inevitably increasing Canva’s credibility and authority in marketing and design.
Reputation is just as much a factor of income as the product or service you offer.
In a very clever move, Canva has made it possible for those who are using the free plan to make a one-time payment for a one-time use of a design, photo, or graphic that is usually only available for those who use the subscriptions that cost money.
Whenever a graphic is purchased, Canva will take 35% of the fee for the graphic and the rest of the 65% of the fee goes to the graphic designer who made the graphic.
This way, Canva will still produce a profit even though their users use a free account.
Subscriptions are one of Canva’s effective front-end offers that place an inexpensive offer in front of the potential customers that gives them a cheap solution to their problem and turns them into conversions, or customers.
Canva offers 5 different subscription plans:
- Education (free)
- And Nonprofit (free)
The cost of these plans per month will widely range between $0 – $1500 based on the size of your team and the plan chosen.
The beauty of these different subscription plans is that Canva has clearly put in the effort to create options for various groups of audiences.
The tools, options, payment plans, and other features that are available to each subscription plan is customized to the needs of each potential customer.
By doing this, Canva hasn’t limited their client base like so many other companies have to, which creates multiple revenue streams from multiple audiences.
Since 2018, Canva has acquired several different companies and absorbed them all as extensions of Canva Inc., the parent company.
That means the revenue those companies make is part of Canva Inc.’s revenue as, financially speaking, the assets, expenses, and yes, revenues of each acquired company and parent company are combined and treated together in consolidation accounting.
To acquire another company is an expensive investment as Canva would have had to purchase most, if not all, of the stocks of each company it acquired.
However, these long-term investments have made it possible for Canva to evolve.
With each new company joining the Canva family, Canva is able to use that companies technology on their own platform.
If you look closely, you’ll notice Canva acquired very specific platforms that are very similar to its own but have features that, if Canva obtained them, would make it even better as a platform as it gives Canva access to more images and other resources they can use.
7. Venture Capital Funding
Funding is an essential part of starting and continuing a business, and Canva is no different.
Canva’s owners will go through funding “rounds,” where a business will receive financing specifically from private equity investors or, most notably, venture capitalists.
Rounds are the second stage of financing.
Venture Capital Funding, specifically, is a pooled investment from several willing investors who receive private equity stakes in return.
These stakes, like the acquisition stocks, allow the investors to buy a portion of the company and be given the power to restructure it.
Unlike the other revenue business models, venture capital funding is labeled as high risk/high reward because it’s used for start-up enterprises.
In other words, the investors risk a significant amount of money in the hopes that their investment makes an even larger return.
This was how Canva got on its feet in the beginning, but Canva still relies on funding today at considerably less risk to its investors if its annual revenue is any proof.
In September of 2021, Canva went through another round of funding where they were given $200 million with the expectation that the return valuation would be near $40 billion.
The main downside to this method of earning money is that as investors purchase more stake in Canva, the original owners have less of a say in the direction the company goes.
Nevertheless, it is one of the largest, if not the largest methods of earning money Canva has at its disposal.
Typical Designer Business Models
A business model is a plan that addresses how the company is going to create, deliver, and make profits economically, socially, and more.
It should always be flexible enough so that when the company sees something that doesn’t work, it’s possible to revisit the business model and make adjustments.
While nearly every company has one form of business model, each type of business will have nuances that distinguish them from the rest.
A quick search engine result will show you the various kinds of business models based on the kind of business a company is.
Business revenue model types include:
- The Advertising Model
- The Affiliate Model
- The Commision Model
- The Donation-based Model
- The Freemium Model
- The Interest or Investment Model
- The Licensing Model
- The Markup Model
- The Merger and Acquisition Model
- The Production Model
- The Subscription Model
- The Transaction-Based Model
That’s a lot of choices to choose from, but only a few are feasible or even useful for design agencies and platforms.
The Production Model, for example, is where the company produces a new product, or products, to sell in order to earn revenue when consumers purchase it.
This model wouldn’t suit Canva very well because creating new products that consumers can’t customize is against Canva’s theme.
Even if the product was their own designer software, that would mean fewer customers would use Canva’s platform.
Designer Platform Business Models
The model designing companies take is always a business-to-business (B-2-B) model. They sell their services to other businesses as a transaction between their business and another business, making their
model a fee-for-service (FFS) model, commission-based model, and/or a transaction-based model.
Their focus is as designers (and often marketers) for hire until they’re large enough that they might sell merchandise or courses to teach other people their skills.
Canva’s Business Model
Canva has two main business models, based on their streams of revenue: Transaction-based and merger and acquisition.
When it comes to venture capital, that is most likely a limited partnership.
Canva is a bit different from the design agencies and freelancers who strictly follow the B-2-B model.
The first difference is that in addition to selling their services to other businesses, there are additional services and products that they sell to individual consumers, meaning they also use a business-to-consumer (B-2-C) model.
Instead of just offering to create the designs for their clients, Canva offers a much cheaper option for customers, with less risk of unhappy clients by miscommunication since they make the designs themselves.
What was usually sold as a service became a series of products as customers could choose the graphics they wanted and pay for the graphics either one at a time or through a subscription plan.
Whether as a service or as products, they are both facets of the transaction-based business model.
Canva has made sure they have every form of transaction-based model conceivable.
The free “subscription” is called freemium upselling, where you can access their main design platform and features, but the rest of the features and options will cost you.
Additionally, their subscription plans and pay-per-use marketplace are part of the transaction-based model.
Mergers and Aquisitions
As we explained earlier, acquisitions are when one company owns the bulk of the stock of another, effectively claiming ownership and being able to make important decisions about the company.
A merger is where two companies become one and is usually done in conjunction with an acquisition since they both essentially consolidate the two companies.
The difference between the two is that mergers are voluntary partnerships, whereas acquisitions have the parent company purchasing or “buying out” the second company.
Either way, they are great ways to reduce the costs of operating while expanding influence and territory.
To date, Canva has not made any merger deals, but they have made five acquisitions:
- Zeetings in 2018
- Pexels in 2019
- Pixabay in 2019
- Kaleido in 2021
- Smartmockups in 2021
Making all five of these companies a part of Canva Inc.
Since being founded in 2012 in Sydney Australia, Canva has made a huge name for itself by its exponential growth in the last 6 years.
It wasn’t difficult to get a good start thanks to the fact they solved several critical problems in the graphics design industry:
- the software was too expensive
- Online collaboration with teams was virtually impossible
- And achieving a basic function was a complicated process
By designing and offering something simpler and initially free to use, the founders saw 50,000 users sign up the first month when they made the platform available in 2013.
In the next year, it was 600,000 users.
Canva had clearly started with a successful business plan and funding.
By 2016, their yearly revenue was beginning to grow exponentially, as the chart below shows.
And the trend continues as, by the end of 2021, Canva and their acquisitions made $1 Billion in revenue.
When a company can see growth like this consistently, year after year, it’s not by luck or accident.
In addition to having a desirable solution to common designing problems, Canva wisely experimented with their business models and added to their business plan with effective marketing strategies and adapting to the appeal of local markets with easy modifications like font types locally used in the United States, China, etc.
Canva makes the millions, and now billions, of dollars, that it does because of constant adaptation and improvement of these methods, strategies, and their own platforms.
Like all start-ups, Canva’s founders didn’t know exactly what would work and what wouldn’t in the beginning.
Actively searching for problems and underperforming assets and experimenting with solutions is gold to their success and expansion.
If the trend of Canva’s growth is anything to judge by, we can expect Canva to be around, monopolizing itself, and being continually relevant for many years to come.
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