Calm is a popular meditation and sleep app that helps people reduce stress, anxiety, and improve their mental wellbeing. The app has been gaining traction since its inception in 2012 and currently boasts over 100 million downloads on both the App Store and Google Play. However, the question remains, how does Calm make money?
In this blog post, we will dive into the various ways Calm generates revenue and explore the business model that has made Calm one of the most successful meditation apps in the world.
How Calm Works
Calm works by providing its users with access to a wide range of guided meditations, sleep stories, music tracks, and masterclasses from renowned meditation teachers. The app’s content is designed to help users reduce stress, anxiety, and improve their mental wellbeing.
When a user first downloads Calm, they are prompted to create an account and complete a brief survey about their mental state and wellness goals. This information is used to personalize the user’s experience on the app and recommend content that is tailored to their needs.
The app’s content is organized into different categories, such as “Meditate,” “Sleep,” and “Music.” Within each category, users can select from a variety of guided meditations, sleep stories, or music tracks. The content ranges from beginner-level meditations to advanced techniques, ensuring that users of all skill levels can benefit from the app’s content.
One of the app’s most popular features is the Daily Calm, which is a 10-minute guided meditation session that is updated daily. The Daily Calm provides users with a consistent practice that they can incorporate into their daily routine, helping them to develop a regular meditation habit.
Calm also offers a range of sleep stories, which are bedtime stories for adults that are designed to help users fall asleep more easily. The sleep stories are narrated by well-known actors and are designed to be calming and relaxing, helping users to unwind and drift off to sleep.
The app’s masterclasses provide users with access to in-depth courses on specific topics, such as mindfulness, anxiety, and stress reduction. The courses are taught by renowned meditation teachers and provide users with a deeper understanding of the principles behind the app’s content.
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Calm also provides users with a range of tools to track their progress and monitor their mental wellbeing. The app’s “Mood Check-in” feature allows users to record their emotional state and track their progress over time. The app also provides users with access to a library of resources on mental wellness, including articles and podcasts on topics such as anxiety, depression, and stress.
History of Calm
Calm was founded in 2012 by Michael Acton Smith and Alex Tew. Smith had previously founded the children’s entertainment company Mind Candy, which created the popular game Moshi Monsters. Tew had founded the website Million Dollar Homepage, which gained international attention for its unique approach to online advertising.
The idea for Calm came about when Smith took a sabbatical from his work at Mind Candy to travel the world and explore different forms of meditation. He found that while there were many different types of meditation practices, there was no single resource that provided a comprehensive guide to meditation.
Smith teamed up with Tew to create a meditation app that would provide users with access to a range of guided meditations, music tracks, and other tools to help them reduce stress and improve their mental wellbeing. The app was initially launched as a website in 2012 and was later released as a mobile app in 2013.
Calm quickly gained popularity and received positive reviews from users and media outlets. In 2017, the app was named Apple’s App of the Year and was featured in Time magazine’s list of the 50 Best Apps of the Year.
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Since its launch, Calm has continued to expand its offerings and has become one of the leading meditation apps in the market. In addition to its core app, the company has also launched a range of products, including the Calm Sleep Mist, a lavender-scented spray designed to promote relaxation and sleep, and the Calm Book, which provides users with a range of mindfulness exercises and practices.
In 2020, Calm raised $75 million in a funding round that valued the company at $2 billion. The funding round was led by venture capital firm TPG, and included participation from celebrities such as Ashton Kutcher, Gwyneth Paltrow, and LeBron James.
Today, Calm has over 100 million downloads and has become a leading player in the mental wellness industry. The company’s mission is to make the world a happier and healthier place, one mindful breath at a time.
How Does Calm Make Money
Subscription Model
Calm’s primary revenue stream is its subscription-based business model. The app offers a 7-day free trial to new users, after which they are required to subscribe to the app’s premium features. Calm’s premium subscription costs $69.99 annually or $14.99 monthly.
The premium features include access to over 100 guided meditations, sleep stories, music tracks, and masterclasses from world-renowned meditation teachers. In addition, subscribers gain access to exclusive content such as Daily Calm, which is a 10-minute guided meditation session that is updated daily.
Calm’s subscription model has been a significant driver of revenue for the app, with the company generating an estimated $150 million in revenue in 2020.
Brand Partnerships
Calm has also been able to monetize its platform through brand partnerships. The app has collaborated with several well-known brands, including American Airlines, Bose, and HBO, to offer branded content to its users.
For instance, American Airlines partnered with Calm to provide passengers with access to the app’s meditation and sleep content during flights. Bose also collaborated with Calm to offer users a curated collection of audio tracks specifically designed for the Bose Sleepbuds II.
Brand partnerships have been a significant source of revenue for Calm, as companies are willing to pay a premium to have their products and services featured on the app.
B2B Partnerships
Calm has also ventured into the B2B space by partnering with companies to offer its meditation and mindfulness content to employees. The app’s B2B partnerships include collaborations with companies such as LinkedIn, Uber, and WeWork.
Under the B2B partnerships, Calm offers corporate subscriptions to companies, which allow their employees to access the app’s premium content. The corporate subscriptions also provide companies with access to analytics and reporting tools, which help them track their employees’ usage and engagement with the app.
Calm’s B2B partnerships have been a significant growth area for the company, with revenue from the partnerships increasing by over 250% in 2020.
Retail Partnerships
Calm has also partnered with retailers to offer its products to a broader audience. The app has collaborated with retailers such as Target, Sephora, and Nordstrom to sell its subscription gift cards and merchandise.
Calm’s subscription gift cards are available in three different pricing tiers, with the lowest priced card costing $70 for a year’s subscription. The gift cards are popular gift items, particularly during the holiday season.
In addition to gift cards, Calm also sells merchandise, including sleep masks, essential oils, and books. The merchandise is available on the app’s website and in select retail stores.
Advertising
Finally, Calm has been able to generate revenue through advertising. The app offers a limited number of advertising spots to select advertisers, which are displayed to users during specific moments in the app, such as when a user completes a meditation session.
However, Calm’s advertising strategy is unique in that the company only works with advertisers that align with its brand and mission. For example, the app has partnered with brands such as Lululemon and the American Heart Association to promote healthy living and mindfulness.
Calm Funding, Valuation, and Revenue
Since its founding in 2012, Calm has raised $218 million in funding from investors. The company’s most recent funding round, completed in 2020, raised $75 million and valued the company at $2 billion.
The funding round was led by TPG, a global investment firm that has also invested in companies such as Airbnb and Uber. Other participants in the round included celebrities such as Ashton Kutcher, Gwyneth Paltrow, and LeBron James.
Calm’s valuation of $2 billion is a testament to the company’s rapid growth and success in the mental wellness industry. The company has achieved this valuation through its ability to attract and retain a large user base, as well as its ability to monetize its products and services.
Calm generates revenue through a subscription-based model, where users pay a monthly or annual fee to access the app’s content. The company offers several subscription options, including a free trial, a monthly subscription, and an annual subscription.
The app’s subscription-based model has been highly successful, with the company reporting over $150 million in annual revenue in 2020. The company has also been profitable since 2016, demonstrating its ability to generate revenue and maintain a sustainable business model.
Calm has also entered into several partnerships with companies such as American Express and Kaiser Permanente, which have helped to increase the app’s visibility and expand its reach. The company has also launched several new products, such as the Calm Sleep Mist and the Calm Book, which have helped to diversify its revenue streams and expand its product offerings.
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Overall, Calm’s funding, valuation, and revenue demonstrate the company’s ability to achieve rapid growth and success in the highly competitive mental wellness industry. Through its innovative products and services, as well as its strong partnerships and revenue model, Calm is well-positioned to continue its growth and maintain its position as a leading player in the industry.
Conclusion
Calm has built a successful business model that has enabled the company to generate revenue from multiple sources. The app’s primary revenue stream is its subscription-based model, which offers users access to premium content such as guided meditations, sleep stories, and music tracks.
Calm has also been able to monetize its platform through brand partnerships, B2B partnerships, retail partnerships, and advertising. These partnerships have allowed Calm to offer its content to a broader audience and generate revenue from different sources.
Overall, Calm’s success can be attributed to its ability to offer a range of products and services that cater to the growing demand for mental wellness and mindfulness. The company has been able to leverage technology to create a platform that is accessible to users around the world, while also creating revenue streams that are sustainable and scalable.
As the demand for mental wellness continues to grow, it is likely that Calm will continue to be a leading player in the industry and expand its offerings to meet the needs of its users.