The Patreon Business Model: How Does Patreon Make Money

Patreon is a web service that enables creators to raise funds from their fans. The abundance of creators choosing to use Patreon to fund their next project is a prime example of the platform’s popularity. Patreon has over $1.5 million creators. By providing the tools and resources that creators need, they’ve made it possible to spend less time and energy on Patreon and more time and energy on developing projects. This post will explore how does Patreon make money.

Patreon is becoming one of the hottest new business models. It’s a subscription-based membership service that allows individuals, musicians, content creators, artists, and other artists to get paid by the patrons of the content they create. While there are many ways that they make money, they primarily rely on their services. The following article will go through Patreon, the specifics of their model, and their future plans.

How Does Patreon Make Money

What is Patreon?

Patreon is the world’s most powerful platform for supporting creators. It is a web-based platform that allows artists to sustain their work regularly. It helps creators get paid for their work, build audiences, and engage directly with their supporters. With over 10,000 patrons and 30,000 creators supporting them, Patreon is the world’s largest decentralized support network. They make money by taking a percentage of their creators’ revenue from the subscriptions. Then they turn that support into a subscription-based membership service.

Patreon was founded in May 2013 by Sam Yam and musician Jack Conte and is headquartered in San Francisco, California. Their offices are located in San Francisco and New York City. They have offices in London, Sydney, and Berlin. 

Patreon’s mission is to help artists make a living by supporting them directly through subscriptions. They want to empower creators to spend more time on their art while they continue to focus on their other jobs.

What is the Difference Between a Patron and a Member?

Patreon allows creators to create an account that will enable them to collect money from their fans. The creator can choose to use the funds for their own personal use or use the funds to fund the project they are working on. The funds collected by a creator can be in the form of monthly subscriptions or one-time donations. The abundance of creators choosing to use Patreon to fund their next project is a prime example of the platform’s popularity.

How does Patreon Work?

Patreon has made it possible for artists to build sustainable businesses by providing them with the necessary tools to get paid. With Patreon, creators can raise funds from their fans and turn them into supporters. As their fans pledge money, they get rewards in return. These rewards can be anything from exclusive rewards to direct access to their content. Creators can make either charge for access to their content or keep it free.

Patreon operates on a monthly subscription model, in which creators are paid monthly by their supporters (or patrons) to continue creating on an ongoing basis rather than once per project. In exchange, patrons receive exclusive patron-only paid benefits such as additional access, exclusivity, and engaging experiences, among other things.

Let’s take a look at the tier/perk structure that one receives for vowing their patron.

Patreon Rewards

Patreon’s rewards are the perks that creators get for being a patron of their project. They are usually provided by the creators themselves or the companies they work with. Some perks are listed below:

  • Monthly or one-time reward: Creators can choose to offer patrons a monthly or one-time reward. These rewards are usually related to the project that the creator is working on.
  • Exclusive content access – Videos, Music, etc.
  • Priority access to content.
  • Contact with the Creator.
  • Discounts

Never before has an operating model been offered in which the creator can create his community and ask for the money he believes he is due. Platforms like YouTube, Netflix, Spotify, and others operate on their own terms, and they have the right to remove your work or demonetize creators at any time. Patreon provides them with a reliable and long-term revenue stream.

How Does Patreon Make Money: Business Model

Patreon’s business model is straightforward. It makes money by taking a percentage of creators’ funds from their patrons. Patreon makes money by taking a percentage of creators’ revenue from their patrons.

Patreon makes money from three different revenue streams:

Subscription fees: This is the core of Patreon’s business model. Patreon takes a cut of the subscription fees that creators receive from their patrons.

Donations: Patreon offers patrons the option to donate to their favorite creators. Patrons can donate a one-time or monthly amount. Creators can use the amount that patrons donate to fund their projects.

Sponsorships: Patrons can sponsor their favorite creators to help them fund their projects.

Subscription Fee

Patreon generates revenue by charging creators a varying fee. The firm’s fee structure is divided into three different plans: Lite, Pro, and Premium.

Patreon’s subscription fees are charged at the following rates:

  • Lite Plan: $5 monthly
  • Pro Plan: $8 monthly
  • Premium Plan: $12 monthly

The amount of money that creators receive depends on their plan. A creator who signs up for the Lite plan will receive a monthly fee of $5. The amount that creators receive increases by $8 per month as they move up to the Pro plan. Finally, creators who choose the Premium plan will receive a monthly fee of $12.

Then there are features like analytics reports, workshops, priority support, dedicated account managers, and unlimited third-party app integrations that come with each plan.

 The Premium tier, in particular, allows creators to find new ways to monetize their work. For example, they can start selling branded merchandise (a feature that came as a result of Patreon’s June 2018 acquisition of Kit), with fulfillment handled by Patreon’s backend.

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Donations

Patreon’s donation model is pretty simple. Patrons can either donate a one-time or monthly amount to their favorite creators. Patrons can also choose to sponsor their favorite creators to help them fund their projects.

Every time a patron makes a contribution, Patreon collects payment processing fees. It charges 5% plus $0.10 for micropayments under $3. The firm charges 2.9 percent plus $0.30 for payments over $3.

Mastercard, Visa, American Express, and PayPal are examples of payment processing partners. The fees are almost certainly charged at cost, which means Patreon does not profit from them.

The company is still developing its revenue model and is looking for ways to reduce the payout model’s 90% payout.

There are currently no contracts between the company and the creator. And the creator retains complete ownership of their work and has complete control over and promotion of their brand. Patreon intends to provide new “value services” to creators, lowering the 90 percent payout model to a percentage where Patreon can make more money.

What Impact Has Patreon Had On The Market?

Formerly known as Patreon Creator Studio, the company has been around since 2009. Its name was changed in June 2018 to reflect its new focus on creators and the creators’ businesses.

Patreon is a good option for content creators who want to create a separate business and create a sustainable income. The company has been able to develop a very strong community and support its creators with very useful tools.

Patreon puts the power of control back in the hands of the creators and the people who use it. It provides the creators with more flexibility.

The corporation decides whether its content is suitable for publication. It also implies that it could be demonetized at any point in the future. Sites like YouTube, for example, have their own set of rules and regulations. There’s also the possibility that they’ll have to close their doors.

Creators are attempting to diversify their revenue streams and not rely solely on one platform. Patreon assists them in establishing a reliable revenue stream.

Patreon came into the market at the right time, with the right mindset, and with the right audience in mind. With the help of its disruptive business model, the company was able to change the trend. All of this allowed Patreon to grow and become a reliable source of revenue for creators’ work.

Frequently Asked Questions

What Are Some Of The Challenges Of Running A Patreon Account?

Patreon is an easy way to start, but maintaining an active account can be a challenge. It’s hard to build a following when you’re starting out, and if you’re a new creator, you have to learn how to make a video or post something that gets people to notice you.

How do I know if I qualify as a Patreon creator?

There are three requirements for being a Patreon creator:

  • You must be at least 13 years old.
  • An account is a must-have.
  • You must have at least 1 patron.

What is Patreon?

Patreon is a crowdfunding platform that helps creators earn a living by sharing their content with the world. Patrons pay a monthly fee to support creators, and creators get to keep 100% of their income.

How much does Patreon cost?

The basic membership is $5 a month. It includes a unique link that patrons can use to support your content. You can upgrade to the Pro membership for $8 a month. It consists of a few extra features, including access to a private group, exclusive rewards, etc.

How can I become a Patreon creator?

It’s easy to become a creator. All you have to do is:

  • Make a profile.
  • Create a video.
  • Create a campaign.

How do I start with Patreon?

The best way to start is to join the community.

Final Verdict

We hope you enjoyed reading our blog post about the Patreon platform, “how does Patreon make money?”. Patreon makes money with its three-tier subscription plan. We feel this is a great place to start if you want to learn more about this platform and its benefits.

Many people are looking for a platform that allows them to create a community of supporters for their work, which Patreon does. We also found that this platform is an excellent idea for artists who may not have a large audience. Thank you for reading. We would love to hear from you!

Christian
Christian Thomas is a die-hard business enthusiast who loves to share his ideas and experiences with other people. He writes for many websites including Christianthut.com, Entrepreneur Business Blog, and How To Start A Small Business. His passion for writing and his ability to analyze the current trends in the business industry have made him a sought-after expert. In brief, he's a marketing expert, a writer, and a small business consultant. He is working for over 10 years in the field of marketing and business development and has helped hundreds of people start their own businesses.