Houzz Business Model | How Does Houzz Make Money?

Houzz Inc.’s platforms connect homeowners, home design enthusiasts, and professionals worldwide.

Houzz is an online home remodeling and interior design website. It is similar to Zillow in the interior design sector.

The platform allows local companies and national brands to advertise, while professionals can use a professional profile to increase their online presence.

This platform aims to connect users with designers, artists, and service providers in one location.

Houzz generates most of its revenue on the backend through manufacturing, while the rest comes from retail customers. Houzz’s business model generates income from a variety of sources.

Houzz business model is based on products ads, and premium listings picked and purchased by experts. Its revenue streams are diverse, which bodes well for its future.

With Houzz, you can find designers, people looking for ideas, and e-commerce, which helps speed up the renovation process.

The platform allows users to offer home goods to consumers and professionals actively involved in designing and remodeling homes.

What Is Houzz?

Houzz is a website that provides users with ideas for enhancing and designing their houses and contacting experts in the industry.

Houzz earns money from subscriptions, referral fees, interchange fees, foreign currency costs, late payment fees, and interest.

Houzz Business Model

Houzz is one of the best sites for finding inspiration for home improvement and remodeling projects. Houzz is the LinkedIn of the home improvement industry.

It provides you with the opportunity to showcase your work, services, and contact information in an easily accessible online portfolio.

Houzz has accumulated more than 65 million users since founded in 2009. The company has also raised nearly $613 million in venture capital.

Company NameHouzz
Company TypePrivate
FoundersAdi Tatarko & Alon Cohen
ProductCommunity and software for architects and interior designers
Founded DateJune 2, 2008
HeadquarterPalo Alto, CA
WebsiteVisit Website

How Does Houzz Work?

Houzz.com is one of the most popular websites for home improvement professionals.

The platform is built around a photo-sharing feature akin to that of Pinterest. You can submit and share images of your interior design projects and get inspiration from others’ examples.

Houzz has a dedicated editorial team that covers all things design and architecture.

There are various rooms to explore, including the kitchen, dining room, bedroom, bathroom, living room, and backyard.

You can save your favorite designs on Houzz as well as share them with friends. Houzz’s machine learning system suggests more designs based on these findings.

Alternatively, users can create so-called “ideabooks,” which they can then share with their contractors.

After being sufficiently inspired, the user can work with a professional (accredited by Houzz) or buy furniture directly from the platform.

You can hire several professionals, including interior designers, architects, and home stagers.

There are numerous nations where Houzz is available, including Australia, Germany, Italy, the United States, and Russia.

You can access Houzz via a web browser on mobile and tablet devices for Android and iOS.

How Did Houzz Start?

Houzz was founded in Palo Alto, California, by Adi Tatarko and Alon Cohen in 2008.

They bought a 1950s country house in Palo Alto in 2009 with Alon Cohen and Adi Tatarko, their spouses.

The two creators had the concept for the game while working on their home renovations.

They had big plans for it, and they couldn’t wait to start working on it. However, they did note that the process was quite frustrating for them.

The company came up with the idea of creating a platform for home renovations because there was a need for a better solution.

They had a slew of home improvement publications at their disposal, but they were having trouble uncovering resources that would allow them to realize their vision of a dream home.

Houzz began as a Pinterest board design, offering gathering inspiration for your house in a more official approach.

They had trouble finding the best professionals to execute their vision despite recommendations from friends.

The process of altering and designing your home can be frustrating and time-consuming for many people.

The two came up with the idea of creating a website that would allow property owners in a similar situation to seek advice, access helpful resources, and find information about trusted professionals.

Houzz is all about that. Houzz is an excellent source of inspiration when it comes to interior design.

The neighbors (mostly the parents of their children’s classmates) listened eagerly to the plan they had devised.

They also reached out to local professionals such as architects and designers, equally enthusiastic.

They developed the website together. It didn’t take them long to gain an eager audience.

Consumers and DIYers can now see high-quality images of designs and architectural concepts courtesy of the work of professional designers and architects.

After requests from kitchen contractors and installers, several new classes were added to the site.

They received inquiries and comments from people outside of the Bay Area, showing the site’s reach. They quit their jobs due to these recommendations, and they founded Houzz full-time in 2010.

How Does Houzz Make Money?

Houzz makes money by charging subscription fees, referral fees, currency conversion costs, interchange fees, late payment fees, and interest.

It earns money from advertising, premium listings that professionals select and purchase, and a 15% commission on the marketplace.

The company’s revenue stream is diverse, which bodes well for its success in the future. We will explore each of these revenue streams in more detail below.

Subscription Fees

Houzz Pro is virtual marketing, project management, and client communication tool that helps professionals sell their products and services to customers.

It doesn’t matter if you are an architect or general contractor; you can promote your business and reach out to clients.

You can build your website, advertise locally, or obtain reports to determine your performance.

Houzz Pro is a subscription service that charges a monthly subscription fee.

You can choose from three plans: Starter, Essential, and Ultimate. The monthly fees for some of them range from $55 to $99 and $199 to $999.

You can cancel the service at any time. The software is free for 30 days to decide if it works for you.

Interchange Fees

Houzz has launched its credit card for the first time. It was introduced in July of this year. You can use a credit card issued by Houzz or Mastercard.

These cards offer a lot of perks, such as a $50 welcome bonus, 5% cashback on Houzz purchases, and 24/7 customer service.

You pay a fee when you use your debit or credit card to pay. This is called an interchange fee. It costs the merchant money to pay for interchange fees. 

The fees are usually less than 1%. In this case, Mastercard would be the one charging the fee.

A share of the fee would be paid to Houzz as an incentive to promote the card. The share percentage remains confidential.

Houzz charges a foreign transaction fee for card transactions outside the United States. These rules apply only to Houzz-branded cards.

Referral Fees

The Marketplace product from Houzz was launched in 2014 and allowed users to shop from hundreds of retailers at once.

A 15% cut is taken from the sale price when a product is sold on Houzz. So if you buy a $1,000 couch from Houzz, Houzz will take 15%. Houzz will get $150.

The company added features to its products to help people find them in the past. You can, for example, use deep learning to find furniture from pictures and browse its store to find items that are similar to it.

Houzz Business Model

You can also use the kit to design your rooms with augmented reality. They can buy a piece from the store if they find one that fits.

Additionally, the market encourages store owners to be as active as possible on the platform. It is recommended that people post their designs on social media to promote their products.

How Does SoundCloud Make Money?

Homeowners can choose from more than five million items, including furniture, vanities, lighting, and more.

Interest

Houzz also charges a percentage interest rate (APR) when users use their credit cards to pay. Additionally, Houzz charges foreign exchange and interchange fees.

You can choose from various APRs based on the credit card you use. They range from 24.99% to 26.99%. Credit lines require a minimum charge of $2, but you can pay more.

If people fail to pay, they will be charged a late payment fee. Late payment fees can reach $40. 

What Is The Funding and Valuation of Houzz?

Houzz has raised $613.6 million in venture capital funding across eight rounds, according to Crunchbase.

Many well-known investors include GGV Capital, Sequoia Capital, New Enterprise Associates, Wellington Management, Zeev Ventures, DST Global, Kleiner Perkins, and many more.

Currently, Houzz is worth $4 billion, which was the company’s value when it raised money in June 2017 in its Series E round.

What Is The Revenue Of Houzz?

Houzz is not required to reveal how much money it makes as a private company. IncFact reports Houzz made $500 million in revenue in 2020, which is a lot.

Houzz is one of many competitors in its field, but none of them are as good as Houzz in the interior design market.

Farfetch Business Model

There are a lot of names like Pinterest and HGTV. Houzz is the only company that specializes in the field of interior design.

You May Also Like