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How Does Houzz Make Money? Feb 2023

HomeMake Money OnlineHow Does Houzz Make Money? Feb 2023
how does houzz make money
Image Credit: Houzz


Houzz is a platform that helps people make their homes look beautiful. You can find ideas and get advice from professionals.

This portal makes money from people who pay to use it, from fees for connecting people with professionals, and from other things like exchange rates and late payments.

Houzz was launched in 2009 and has become very popular, with over 65 million users. The company has also received a lot of money from investors—over $613 million.


How Does Houzz Work?

Houzz is a cool website where you can see lots of pictures of amazing homes and get ideas for decorating your own place. You can even find people to help you make your dream home a reality!

When you join Houzz, you can look at pictures of all kinds of rooms, like kitchens, bedrooms, living rooms, and bathrooms. You can save your favorite pictures so you can find them again later, and Houzz will even show you similar pictures that you might like. You can even make a list of your favorite ideas, called an “ideabook,” and share it with people who can help you make your ideas come to life.

And if you want to hire someone to help you decorate or remodel your home, you can find professionals on Houzz who have been certified by the website. You can find carpenters, interior designers, architects, and more.

Houzz is available in lots of countries, like the United States, Australia, Germany, Italy, Spain, and Russia. You can visit the website on your computer or download the Houzz app on your phone or tablet. 

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History of Houzz

Houzz, a home design and renovation platform, was founded in 2009 by Adi Tatarko and Alon Cohen. The couple’s inspiration for starting Houzz came from a difficult experience they had while trying to renovate their mid-century home in Palo Alto, California. 

The process of finding professionals to help with the renovation was challenging, which led the couple to start Houzz as a solution to this problem.

In the beginning, the couple introduced the platform to their friends and family, and the word quickly spread, leading to thousands of users uploading and sharing images on Houzz. 

The couple eventually quit their jobs to focus on building the company full-time. In 2010, Houzz raised $2 million in a Series A funding round, which allowed them to hire their first employees and move into an office.

Houzz continued to grow, expanding into new markets and localizing the experience for users in those countries. The company’s flat organizational structure and the personal touch from Cohen and Tatarko, who interviewed every candidate the company hired, were key to its early success. 

In 2014, Houzz raised over $165 million in funding and introduced its marketplace, allowing customers to buy furniture they saw in the pictures.

In 2015, Houzz made its first acquisition by buying GardenWeb, a garden and home community, which added even more content to its platform. 

However, not everything has been smooth sailing for Houzz. In 2018, the company faced criticism from interior designers after acquiring IvyMark, a business management tool for interior designers. 

A year later, Houzz laid off 110 employees and had a data breach, where 57 million user records were retrieved from its website.

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Despite these challenges, Houzz remains a popular platform for home design and renovation. The company’s mission to make the process of renovating and designing a home easier and more accessible to everyone continues to drive its success.


How Does Houzz Make Money?

Now comes the big question: how does this platform make money? Well, let’s delve into the various revenue streams that make Houzz a thriving business.


Subscription: Introducing Houzz Pro!

Houzz Pro is a must-have tool for professionals in the home design industry, such as architects, interior designers, and contractors. With Houzz Pro, you can promote your business, interact with clients, and take advantage of features like local advertising, a premium profile, a custom website, and performance analysis tools. To access these features, you’ll need to pay a monthly subscription fee, which starts at $55 and goes up to $999, depending on the plan you choose. And don’t worry, you can cancel at any time and even try it out for free for 30 days.


Referral Fees: Shop the Houzz Marketplace

In 2014, Houzz launched its marketplace, allowing users to shop products from hundreds of retailers right on the platform. When a product is sold, Houzz takes a 15% cut of the sales price. For example, if you buy a couch for $1,000, Houzz will receive $150. To make shopping even easier, Houzz has also introduced features like deep learning algorithms to suggest products based on images, and an augmented reality kit to preview products in your own space. With over 5 million products to choose from, it’s no wonder Houzz makes money through referral fees.


Interchange Fees: Get Rewarded with the Houzz Credit Card

In 2019, Houzz introduced its own credit card, which can be used as a Houzz-branded card or a Mastercard. Cardholders receive benefits like a $50 welcome reward, 5% cashback on Houzz purchases, and 24/7 customer support. When you make a purchase with your credit or debit card, an interchange fee is applied, which is paid by the merchant and is typically less than 1%. Mastercard charges the fee and Houzz receives a share of it in exchange for promoting the card to its users. For international transactions, Houzz also charges foreign transaction fees, but only for the Houzz-branded card.

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Interest: Don’t Miss Your Payments

If you decide to use the Houzz credit card, be aware that you’ll be charged interest (APR) on your available credit. The APR ranges from 24.99% to 26.99% and there’s a minimum charge of $2 per credit line. If you miss a payment, a late fee of up to $40 may be applied. A summary of the card’s fee structure can be found on the Houzz website.


Concluding

Houzz has raised a total of $613.6 million from eight rounds of venture capital funding, with investors like Sequoia Capital, Wellington Management, DST Global, and more. The company is currently valued at $4 billion, a valuation received during its Series E funding round in 2017. As a private company, Houzz is not required to reveal its revenue figures to the public.

In conclusion, Houzz generates income through subscriptions, referral fees, interchange fees, foreign exchange fees, late payment fees, and interest. Whether you’re a professional in the home design industry or just a fan of browsing through the endless galleries, it’s fascinating to see how this platform makes money.

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Mezhar Alee
Mezhar Alee
Mezhar Alee is a prolific author who provides commentary and analysis on business, finance, politics, sports, and current events on his website Opportuneist. With over a decade of experience in journalism and blogging, Mezhar aims to deliver well-researched insights and thought-provoking perspectives on important local and global issues in society.

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