How Does Craigslist Make Money—Explained

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On the surface, there doesn’t seem to be much way for Craigslist to make a profit. Sellers create a classified ad for free, buyers browse the posts, then email the seller directly. No subscription, no posting fees, no paying commission, no third-party ads. The company doesn’t even get money from outside investors. Even so, the site somehow raked in almost $700 million in revenue in 2016. Which begs the question: How does Craigslist make money?

For one thing, while everyday sellers won’t face fees when selling an old table or other physical items, Craigslist does make money from other types of posts. Certain listings, such as job openings, New York City apartments, cars from automobile dealers, and massages, do cost money, ranging anywhere from $7 to $75. And when you’re the top classified site and the 14th most popular website overall in the United States, that money can add up fast.

What’s more, the company can stretch that revenue far. Craigslist is estimated to be worth about $3 billion, but it doesn’t have as many overhead costs as most other big companies do. It only has about 50 employees, and its other major bills just go toward server and legal expenses. Goodness knows it hasn’t been working on a fancy, cutting-edge look for its site. And don’t let its .org URL and peace sign logo fool you—Craigslist is not a nonprofit, so it’s free to use its earnings however it wants. Don’t miss these 10 ways to protect yourself from online scammers.

Still, that doesn’t mean the company is looking to up its profits without thinking about its users. While it’s been tacking fees onto more and more types of posts, most casual sellers won’t need to deal with those. Plus, it’s one of the few websites that’s clear of banner ads. So … how does Craigslist make money? By keeping costs—both yours and its own—low. Just make sure you steer clear these things you should never buy online.

[Sources: Forbes, smallbusiness.chron.com]