Why is Zoho so cheap?

Zoho is cheap mainly because it has never taken outside investment, builds most of its software and infrastructure itself, and does much of its engineering in India. That keeps costs low and removes investor pressure for fast profit. It makes money from software subscriptions, not advertising.

Zoho states that it has never taken money from investors. Without venture capital or public shareholders, it does not need to show rapid growth or high margins each quarter, so it can price for the long term. Many of its rivals are listed companies or venture-backed firms that spend heavily on sales and marketing and pass that cost on in their licence fees.

Zoho's cost base is also lower. Its headquarters and much of its engineering are in Chennai, and it has deliberately opened offices in smaller towns such as Tenkasi in Tamil Nadu. Zoho also builds most of its own technology stack and says it runs its own data centres, so it pays less to third-party cloud and software vendors.

How does Zoho make money? From paid subscriptions to its apps, sold per user or per organisation, and from its ManageEngine division, which sells IT management software. Zoho's privacy policy says it does not make money from advertising, even on free editions. Free plans act as a funnel: some free users upgrade, and customers who buy one app often add more.

Is Zoho cheaper than Salesforce? On published list prices, Zoho CRM's editions generally cost less than comparable Salesforce editions, and Zoho One bundles many apps for less than buying several separate tools. But low licence cost is not the full picture. Budget for setup, data migration and training, because a poorly configured cheap system can cost more in lost time than it saves.

Written by Flowpeak, a Zoho implementation partner. Zoho pricing and features change, so confirm current details on the official Zoho site. Free checklists | Ask us a question