How Does Craigslist Make Money Without Charging Any Fee?

No commissions! No subscription!

But still a successfully running business. How is that possible?

I am talking about Craigslist which was ranked as one of the topmost revenue generating platforms in 2016. Wondering how it makes money?

Today, I will talk about Craigslist, and how it became a high-earning classified website despite its seemingly free offer of advertisement postings.

I will also guide you on how to post ads easily on Craigslist, and how to navigate the site, so you can also post ads for free.

Online classified ads are website modern versions of the classified advertisement section of a newspaper or a magazine. Most digital websites are divided into different categories like housing, services, jobs, for sale, etc. 

Putting an advertisement online these days is way cheaper and more convenient than placing it in the classified section of a newspaper. Easy access via the internet provides a better way for people to buy and sell online. This is the reason why Craigslist and other digital websites are the top picks when it comes to online advertisements.

What is Craigslist?

Craigslist is an online advertising business that was established in 1995. It started as an email dissemination source that eventually graduated as an online classified ad. The business model of Craigslist, in the beginning, was non-profit. However, in 1999 this was changed into a for-profit enterprise.

Currently, Craigslist dominates the market for online and digital advertisements. The site’s profitability and popularity are due to its “growth first, revenue later” business scheme. As a private company, Craigslist never obtained money from stakeholders. Ads posting on Craigslist is mostly free. But some advertisements in selected regions are charged with fees, depending on the advertisement that will be published.

Many of us may have used Craigslist at one time or another. The online form needed to post an ad is simple and easy to navigate. And the website itself is unassuming. The following are some important facts about Craigslist.

How does Craigslist operate?

Similar to any other normal classified website, Craigslist conducts its business by itemizing advertisements in various sections. It is presented in regional specific locations that make online searching easier. Each region’s website is made up of categories like services, jobs, housing, gigs, plus much more.

How to post ads in Craigslist

Anybody with or without an account in Craigslist can post an advertisement on the website. The advantage of having an account is that the postings can easily be retrieved, revised, or deleted. Posting without an account will require links via email in order to modify the ad. Here are the steps on how to post ads:

Go to the Craigslist website.Click on create a posting (located at the upper left-side)A new window will open, click on the type of posting you prefer, then click continue.Click your chosen category.Fill up the ads posting form.Add images to the next window that would pop-up.Click “done”, and then click “publish”. 

How to browse Craigslist ads?

The ads in Craigslist are arranged by columns and divided into different categories. Each category has a sub-category that you need to click on before you can view the ads. This is how to browse ads on Craigslist:

Choose the nearest city that is on the Craigslist page. Click on any category to be able to view the posted ads. The ads are arranged from the most recent date to the oldest.

There is no middle man on Craigslist. All transactions are made directly between the buyer and the seller. Clicking the reply button located in the upper left corner of a Craigslist ad will provide the means of communication that is given by the advertiser. Messages or replies are forwarded automatically to the poster’s email address. 

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The evolution of hard copy classified ads into digital ad websites has certainly advanced through the years. Now, people across the globe can easily find what they are searching for by going online and clicking the mouse. What’s more, ads through Craigslist are generally free, and could easily be customized.

What are Craigslist’s income streams?

It may seem that Craigslist does not require any payment for ads posting. This may be true for the majority of its classified ads sections. But technically, the site levies fees for a small number of its classified segments. 

Craigslist charges $25 in six main cities in the United States for posting a job. It also charges $75 for a job posting in San Francisco and $10 for an apartment rental listing in New York. The said earnings are only enough to cover the operational expenditures of the site, without any profit since 1995. According to Jim Buckmaster, Craigslist’s President, the quality of the user’s experience is their top priority instead of generating profits.

Craigslist is contemplating suggestions on having Google ads text and banner advertising on the site. However, this is not yet being considered in the near future since the revenue from the ads might overshadow the site’s efficient service in helping users find what they need.

How does Craigslist earn money?

All ads placement in Craigslist is free of charge since the owners are more for a quality experience than profit, and here is how the company earns money through its classified ads. Below are the advertisements that provide earnings for Craigslist. 

Most advertisements are free with the exclusion of the following: 

Job postings in certain areas – $7 to $75 (fee differs by location)Apartment rentals in New York City – $10Different dealers across the United States – $3 to $5Cars or truck dealer in the United States and Vancouver, British Columbia – $5Furniture dealers in the United States, Vancouver, British Columbia – $3Therapeutic Services within the United States – $10Live advertisement reposts – $5

Accounts that are post-paid have many payment options including Visa, Master Card, and American Express. Repost rates/fees are lesser than the posting cost in the majority of the lists. 

Craigslist really does not make any money through most of its classified listings. 

The money it makes from certain job ads, New York rental apartments, auto dealers, and others are meager. But the meager amounts can rapidly accumulate into a hefty sum because of the millions of users posting ads that require a fee on the site.

Craigslist is assessed to have a net worth of $3 billion, and it does not have a high overhead expenditure. Its current employees are approximately 40 to 50, and its major expenses are to legal and server maintenance. 

The company even does not maintain an elaborate webpage, plus it is a non-profit entity. Thus, it can use its earnings however it deems suitable. So, the $7 to $75 fee from its minor classified listings will certainly go a long way.

Relevant: Read How does Snapchat make money?

How does Craigslist affect newspaper revenue?

The earnings of various classified ads in newspapers considerably declined when Craigslist was established in 1995. Profits from the year 2000 to the year 2010 fell from $19.6 billion to $6 billion as per research made by the Newspaper Association of America. That was a 70% decline within the aforementioned period and seemed to have not slowed down.

Newspapers in the United States experienced a major setback in its classified ads earnings when Craigslist and other online classified ads companies came into the picture, however, there is no proof.

Reasons why Craigslist is blamed for the newspapers’ revenue loss

They theorize that whenever Craigslist adds a new market segment to its site, the decline for US newspapers classified ads is instantaneous. The Craigslist effect caused a whopping loss of $50 million for the newspapers’ classified revenue in 2004. Craigslist entry into the media ads led to job losses and a downfall in the stock prices of major newspapers in the United States.

In consideration of the above, others believe that times have simply changed. People nowadays are more inclined to use the internet, along with the digital services offered therein. More and more people are going for the “paperless” amenities, which printed newspaper ads cannot outdo.

Summing up!

While there may have been a lot of reasons that caused the newspapers’ decrease in earnings, the Newspaper Association of America is certain that online sites similar to Craigslist had a part in reducing the newspapers’ profits. This may be true because placing ads in newspapers is quite expensive but posting on Craigslist is generally free.

Although it is convenient to use online classified ads like Craigslist, it is also essential to protect your personal information. Remember that all transactions online are made with strangers, so extra precautions are needed even when replying to advertisements. It is always better to be safe than sorry.

Like this article? Read these articles on how to maximize your online business:

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