The business and growth model of Tinder is based on a freemium approach, meaning core aspects of the app can be accessed at no cost while premium features require payment.
Tinder makes money from monthly or yearly subscriptions, in-app purchases, and advertising displayed within the app.
First of All: What Is Tinder?
Tinder, founded in 2012 by Sean Rad, Justin Mateen, and Jonathan Badeen, is the world’s biggest dating app.
It is most notably known for introducing the swipe mechanic. By swiping right, you indicate that you like that person while a left swipe indicates a dislike.
If the person on the other side of the screen swiped right on you as well, then it leads to a match, thus allowing both parties to communicate with each other.
Additionally, users can make themselves stand out through so-called ‘super likes’, which allows other users to actually see that you liked them.
Users can also ‘boost’ their profiles, thus allowing them to temporarily increase their visibility. Apart from popularity boosts, premium features furthermore enable users to see who liked them, thus forgoing the need to swipe through countless profiles to find a match.
In order to use Tinder, one needs to set up an account via its desktop version or mobile app (available on both Android and iOS).
During the signup process, users are prompted to add relevant information such as their age, gender, occupation, sexual orientation, social (Instagram) or music (Spotify) profiles, and photos of them.
Once there’s a match, either party can make the first move. You can communicate on Tinder via text, emojis, and even video. Additionally, Tinder allows its users to report unwanted and inappropriate behavior.
Lastly, the app has since introduced a more social section called ‘Explore’ where users can meet for specific occasions such as coffee, gaming, walking their dogs, or simply being friends.
The Business Model of Tinder
Tinder effectively operates under a freemium business model, meaning the app can be accessed at no cost while users wanting to access premium features will have to pay for them.
The first wave of dating websites, such as Match.com (which is coincidentally the owner of Tinder now), have traditionally forced members to pay for access to their platforms.
However, the smartphone caused a tectonic shift in how people met each other. The phone’s GPS system helped facilitate more local connections instead of forcing people to drive dozens of miles.
On top of that, carrying a device with you at all times would increase the touchpoints people would have with dating platforms as they did not require a computer to be accessed.
The freemium model played right into that notion. By allowing people to use Tinder right away and not forcing them to pay, Tinder was able to exponentially increase its user base in a short amount of time.
This ensured that it offered a sufficient supply of potential mates in each location, thus increasing the number of dates people would be able to go on. Those people would then tell their friends about the app, which would prompt more of them to join Tinder.
Simultaneously, this also caused the negative stigma that online dating previously had to slowly diminish over time.
Tinder then amplified the feeling of having many potential matches at your disposal through a variety of psychological hacks. For instance, the app normally shows the most attractive and popular profiles first, thus creating the feeling of a platform filled with high-quality people.
Consequently, the second profile that users would be presented with would normally be a match, which created an immediate reward and dopamine hit. Author Nir Eyal calls this the Hook Model.
A trigger, normally a notification, would initiate a behavior by the user. Tinder, for example, forwards push notifications to the user, telling them that they received a like they should check out.
The trigger is then followed by an action, in this case opening the app and swiping on profiles. Said action is then met with a reward. In Tinder’s case, this would be the match that’s immediately presented to the user.
The last phase of the hook prompts the user to invest, namely to continue putting in an effort. With Tinder, this could be anything from continuing to swipe all the way to engaging in a chat with your match.
These growth hacks and the perception of many potential mates are not only helping Tinder to drive growth but to monetize users. For example, the app blurs out the profiles that have previously liked you and only makes them accessible when opting into a premium subscription (more on that in the next chapter).
Those potential likes may or may not actually be in proximity to the user. However, by creating the feeling of possibly having many matches, it incentivizes users to find out who’s behind those profiles.
However, the firm’s practices haven’t always been kosha either. In 2019, Tinder owner Match was sued by U.S. regulators after it used fake profiles in marketing emails to prompt them to become subscribers.
Another reason why Tinder adopted the freemium model is the usage of machine learning. Traditional dating websites required users to input dozens of data points before they would be able to chat with someone. This likely frustrated many users and severely halted adoption.
Tinder, on the other hand, barely requires you to add anything apart from basic things like your gender or photos. By making it easier to sign up, it can maximize user growth and thus present people with more potential matches.
This consequently fuels Tinder’s match-making engine as well. The platform utilizes machine learning to automatically tag billions of photos with personality markers. For example, a person with a guitar would be labeled a ‘musician’ or ‘creative’ and consequently be shown more profiles that match these characteristics.
Another important aspect of Tinder’s growth engine is localization. For example, the company hires dedicated country managers in many of the markets it operates in.
This is particularly important because dating can vary significantly by country. In Japan, for example, the government enforces the verification of one’s age to be able to access dating platforms.
Silicon Valley’s approach of ‘move fast and break things’ simply wouldn’t work and severely impede Tinder’s growth.
Tinder has even developed a smaller version of its app called Lite to cope with slower internet speeds in some regions.
Apart from localizing the app, Tinder also tries to adapt the user experience to accommodate younger generations such as Gen Z. In 2019, it established an internal division called the Z Team, which constantly engages with its younger users to figure out what makes them tick.
The answers that those users have given heavily inform product decisions at the company. This most notably manifested in the launch of Tinder’s Explore section, which extends beyond the app’s simple swiping mechanism.
One of Explore’s flagship features is the launch of ‘Swipe Night’, an interactive choose-your-own-adventure format similar to the Black Mirror episode Bandersnatch.
The feature was such a success that it brought in 20 million additional users while leading to 26 percent more matches.
It has to be noted that, despite their differences, competitors like Bumble have adopted a very similar growth strategy.
Going forward, Tinder will likely focus on expanding its Explore section to accommodate a varying number of different users – whether that’s to find true love or just a warm body.
How Does Tinder Make Money?
Now that we’ve established what business model strategy Tinder operates under, it’s time to dissect how exactly it monetizes its users.
More precisely, Tinder makes money from monthly or yearly subscriptions, in-app purchases, and advertising displayed within the app.
Let’s take a closer look at each of those in the section below.
The vast majority of the revenue that Tinder generates comes from the fees it charges for its premium subscriptions.
Right now, the platform offers three different subscription tiers that are called Tinder+, Tinder Gold, and Tinder Platinum.
These different plans grant customers access to a variety of premium features including unlimited likes and rewinds, being able to change their location to any place in the world (Passport), hiding advertisements, seeing who liked them, the option to rewind, and so much more.
Tinder has consistently added new premium features throughout its existence, which is the reason why it now offers three different subscription tiers. For example, Platinum was only launched in August 2020 after Gold had already been available for over 3 years.
As a result, each new premium feature that Tinder introduces enhances the attractiveness of its subscription offering, thus increasing the ability to drive sales.
Another key factor in maximizing subscription revenue is dynamic pricing. Tinder adapts its pricing to local spending power, among other factors. Therefore, a subscription in Thailand is substantially cheaper compared to one in the United States.
Similarly, Tinder also offers discounts for longer-term subscriptions. A yearly package is substantially cheaper than a monthly one (on a per-month basis).
However, the firm’s pricing tactics haven’t always been met with warm reception. In 2018, a California-based court ruled that the firm’s age-based pricing was in violation of the state’s Unruh Civil Rights Act and the Unfair Competition Law.
The company even paid a fine of $17.3 million to settle the case. Years later, research from consumer watchdog Which? showed that users over 30 were being charged almost 50 percent more.
Somewhat to Tinder’s credit, the company eventually responded and said that it would eliminate age-based pricing in Q2 2022.
The subscription revenue that Tinder generates was, for the longest time, impaired by the fees that Apple and Google impose via their respective app stores. In 2021, Tinder owner Match has said that it pays almost $500 million in fees to those app stores, which represents its largest expense by far.
Match Group remains in a legal battle with both app store providers to be able to forgo paying those fees (or at least have them significantly reduced), a move that would significantly boost the firm’s margins.
Luckily, users don’t have to pay a monthly or yearly subscription fee to access Tinder’s premium features.
Instead, they can purchase á la carte packages for individual features. A list of all of the premium features that Tinder offers can be found here.
Once again, the pricing of each of those is dependent on the volume that a user purchases, his or her location, and so forth.
For example, a Boost, which enhances the user’s visibility for 30 minutes, costs $6.99. If said user purchases a package of ten, then each Boost costs less than $5.
Volume-based discounting is a common monetization strategy among many firms in both the online and offline domains. However, digital platforms in particular derive substantial benefits from it.
This is because the marginal cost of delivering an additional unit is essentially zero. For example, a supermarket discounting fruits will have to pay for shipment and storage fees to get that product to you.
On the other side, an app like Tinder just moves a few megabytes between different servers to sell you that additional unit, which in times of cloud computing means near-zero marginal cost.
According to company representatives, Boost, Super Boost, and Super Like remain Tinder’s most prominent á la carte purchases.
Lastly, Tinder also generates revenue through advertising. The ads normally appear natively and in between the swiping.
Much like user profiles, ads can even be interacted with, meaning if you swipe right on it, then it normally takes you to the advertiser’s page.
Advertisers normally purchase the ad space through the Match Media Group or via Google’s and Facebook’s Ad Networks.
Match Group offers a variety of different ad formats such as branded profiles, display or video cards, full-screen interstitials, and even quizzes.
Those ads are only shown to users who have not upgraded to any of the premium subscriptions we outlined above.
Advertising on Tinder and Match Group’s other apps, which include Hinge, OkCupid, PlentyofFish, and more, offers a variety of benefits.
First of all, advertisers can tap into a young and engaged audience that are the future earners of tomorrow.
Second, many traditional companies are normally staying away from advertising on platforms like Tinder due to their association with hook-up culture. This allows smaller players to carve out a niche for themselves.
Lastly, the ad formats themselves allow for some creative promotions. For example, the studio behind Alex Garland’s Ex Machina created a fake profile of Ava, the movie’s main character.
Tinder respectively Match can also tap into user data from Google and Facebook (due to the ability to use one’s FB or Gmail account when signing up), which allows advertisers to better target users.
The ads themselves are monetized on a cost-per-click (CPC) basis, meaning advertisers are charged a small fee whenever the user clicks on the ad and is redirected to their page.
So, How Much Revenue Does Tinder Generate?
The above-mentioned monetization channels have translated to some serious revenue for Tinder, which is now one of the highest-grossing apps out there.
According to filings from the Match Group, Tinder’s owner, the company generated $1.65 billion in annual revenue during the fiscal year 2021.
Below are Tinder’s revenue figures and subscriber counts since Match started to monetize the platform:
|2015||$47 million||0.3 million|
|2016||$169 million||1.1 million|
|2017||$403 million||2 million|
|2018||$805 million||3.7 million|
|2019||$1.15 billion||7 million|
|2020||$1.41 billion||8.2 million|
|2021||$1.65 billion||9.6 million|
Going forward, it can be expected that Tinder’s focus remains on driving subscriber growth through the introduction of more premium features as well as market expansion.