In just over a decade and a half, Craigslist has become one of the most sought after websites wherein, sellers can post their ads and buyers can search for products and services under different categories. Today, there are around 700 unique Craigslist sites that cater to postings the world over and that too in French, German, Dutch, Spanish, Italian and Portuguese besides English. Glancing at the site, one can't fail to notice the absence of ads in any form. Looking at the impressive figures and boasting an employee strength of only 32, I am sure any person would wonder how does Craigslist run its business.
Unbelievable, Yet True
According to the website, Craigslist makes money by charging a $10 fee for brokered apartment listings in New York City, $75 for job listings in San Francisco and charges $25 for job postings in six of its largest U.S. markets.
This website also charges $10 (in the US) for an ad that comes under the category therapeutic services. Craigslist charges $5 for re-posting an ad that is live. Other than these the organization doesn't have any other means of earning money.
For most companies offering classified ads, Craigslist has become a so-called "thorn in the flesh," as most of the ads posted in there are free of cost. Because they are free, people prefer posting their ads in Craigslist rather than traditional companies who charge people for ads, thereby eating into the profits of these large companies.
The most affected are newspapers and they have criticized Craigslist on several occasions. They were misinterpreted and efforts were made to connect the organization to allegedly illegal activities. For example, there were ads in Craigslist to sell puppies. The San Francisco Chronicle filed a lawsuit against Craigslist; the newspaper charged that it supports people who illegally bred puppies of outlawed breeds. However, this lawsuit was not entertained by the court of law.
From the above example we see that Craigslist seriously undercuts the competitiveness of newspapers publishing classified ads. Say, if you want to rent your house (surely, not in New York) or sell your car, in the past, you had to buy classified space in leading newspapers, but today, you can post it for free and that too, covering a wider audience compared to newspapers.
It was registered as a for-profit organization in 1999. In Mar 2011, the founder made headway in the non-profit and public service sector with Craigconnects.
If you are thinking of how they determine the price to be charged, you are in for another surprise. Unlike other service providers which determine the prices of their own service, Craigslist asks for input from the users to make a final decision. Before they started charging for brokered apartment listings, they started a public discussion board, where common people like you and me, discussed whether there should be any charge for the services provided by the website.
With more than 20 billion page views per a month, the website can easily generate a lot of revenue, but according to the founders of the company they want to run the company as a no profit no gain company. They can easily earn a lot of money by advertising and equity investment, but that's simply not their model. All in all, Craigslist is an excellent option if someone wants to post ads for free.