Will New Fees Send Craigslist Revenue over $1 Billion?

(The full version of the is article originally appeared in the Jan. 26, 2017, edition of Classified Intelligence Report.)

Is this the year Craigslist hits $1 billion in revenue?

Perhaps. Or maybe next year.

The site that’s synonymous with “free classifieds” has quietly added fees in hundreds of markets and several categories. The new fees took effect late last year. They will add tens of millions of dollars in new revenue this year, and will push Craigslist closer to the $1 billion mark in revenue.

The AIM Group estimated Craigslist’s revenue in 2016 at $693.7 million. The new fees in recruitment, boating and the “stuff” category are almost certain to generate more than $10 million in additional revenue.

Will they make up a 45 percent increase and push revenues past the billion-dollar mark for Craigslist --- which proudly proclaims its “relatively non-commercial nature, public-service mission and non-corporate culture?”

It’s tough to determine Craigslist’s 2017 revenue total yet --- we’ll do our annual ad count later in the year --- but some “back of the envelope” calculations indicate huge growth is in the works, again, for Craigslist.

Ironically, as we’ve pointed out several times in the past, adding fees at Craigslist frequently improves the quality of the experience for both users and advertisers, while advertisers pay just a nominal amount for listings.

New fees we’ve found so far:

--- $5 for boats.

--- $3 for “stuff” ads posted by dealers. A furniture dealer, for example, has to pay $3 for each post. Previously, they were free. Private-party ads are still free.

--- $7 to $10 for recruitment ads in several hundred markets in the U.S. and Canada. All of the markets in the U.S. where job listings were previously free are now paid. Prices went up in some markets, as well, such as Orlando, Fla., where job listings went from $25 to $35. Several markets in Canada also went to paid listings, including
Montreal ($7 CAD); Toronto, $10, and Victoria ($7), B.C. Previously, the only market in Canada where Craigslist charged for listings was Vancouver, where job listings were $25 CAD. (We reported on some of these new fees in CIR 17.20, Oct. 31.)

Because Craigslist doesn’t announce price increases or new fees, we’re not sure these are the only ones. We did a quick scan of other categories and didn’t find any others, but short of trying to post ads in each category and seeing which pop up with new fees, we only find out when we hear about them from advertisers or other sources. We asked Craigslist directly, of course. No response, as usual.

Back of the envelope calculations

Craigslist CEO Jim Buckmaster once accused us of making “back of the envelope” calculations to determine the company’s annual revenue. That’s not true, of course; we spend hours and hours counting ads, multiplying and calculating the company’s revenue for our annual projections. But in this case, let’s make some back-of-the- envelope guesstimates.

Take about 230 markets in the U.S. and Canada where Craigslist has added $7 to $10 fees for recruitment listings.

Assume just 400 ad posts per month, average, per market --- an extremely low guesstimate. We randomly checked Quad Cities, Iowa / Ill. and counted 516 posts in less than four weeks; Farmington, N.M., and found 174; Ottawa, Ont., and counted 511. (Job listings in Ottawa are still free.) That adds roughly $41,000 per market, per year, based on an average of $8.50 per post. (Some markets are $7, some are $10.) That’s about $9.4 million a year in new revenue.

Assume 10,000 dealer boat posts a month nationally --- again, an extremely conservative guess, especially in spring and summer. That’s $600,000 per year.

And assume 5,000 dealer posts in the for- sale category per week; again, an extremely low guesstimate. Multiply by $3, and you get $780,000 per year.

Another $10 million-plus doesn’t put Craigslist over $1 billion --- not even close. But those guesses are very conservative, and we also believe the additional revenue from growing numbers of listings, price increases and added categories with fees will take Craigslist a lot closer to $1 billion.