Tuesday, June 12, 2012

Why is Mint.com free?

Why is Mint.com free? how does Mint.com make their money?

I started thinking on these lines to try and figure out why they were offering their software for free for all the users. I mean there must be a catch right? anything that is free and good must have a catch somewhere :)

So far what I could make out from their website is that they make their money through advertising. They show different advertisements for bank credit cards, insurance policies, brokerage accounts etc in their website. Also they encourage people to utilize these offers to save more. So I am sure many of us would feel it necessary to open an account that we never thought of before. As a result, the advertiser gets a new account opened thanks to Mint and they give Mint a referral fee. They might also be giving Mint some money to show the advertisement in the first place.

Take for instance what I saw in my account. Under the tab, Savings, Mint gives advise on how I can save more  money. They basically run some analysis on my transactions through the month and the accounts that I have currently and give this advise. This is a perfect place for cross-selling and up-selling.

Mint.com advised me that I could apply to the American Express Blue Cash credit card and save money via Cashback points as the amount of money I spend on grocery every month is pretty high and this card gives 3% cashback on supermarket purchases. From my perspective, this is sane advise on how to save money. I am not looking at this advise as an advertisement which shows up on some random website I browse. This is a perfect targeted advertisement placed in nice context for the consumer to see. If i go ahead and take this card, Amercian Express is benefited. And Mint.com is benefited as they showed the advertisement and probably even get a referral fee :)

Similarly there is advise in the site about how to avail cheaper insurance policies, better brokerage accounts, savings accounts etc. All of these are placed in contextual sense to us, the users, to indicate ways to save money and invest money to increase our net worth and budgets. At the same time, they are very good advertisements for the banks. My guess is this is where Mint.com makes its money.

How good is this revenue model? With 7 million users, i think this must be a very compelling place for all companies to place their advertisement campaigns. So Mint.com must be receiving steady or maybe increasing revenue. Time will tell us if the model works out for them. If it does not, then we will definitely see some impact in our free usage of this software down the line.

lets hope not :)

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