4 ms·

How does Hipmunk make money? Commissions on flights are extremely, extremely low. That's why sites like Kayak, Orbitz, etc. are plastered with ads - they make t

by kessler 16y ago

How does Hipmunk make money? Commissions on flights are extremely, extremely low. That's why sites like Kayak, Orbitz, etc. are plastered with ads - they make the majority of their money through advertising and upselling.

staunch 16y ago
Kayak makes around half their revenue from referrals and the other half from advertising. There's no reason Hipmunk couldn't settle for less revenue per search.
- jamn 16y ago
  I do see reasons. They have fixed costs (independent from the number of tickets bought) in the form of payments for search results to ITA plus whatever company overhead (maintenance, salaries, etc). Whether Hipmunk can afford improvements in user experience while earning thinner margins than the competition is not entirely obvious to me. I do hope they make it though. Hipmunk rocks!
  - staunch 16y ago
    Hipmunk will grow up living on whatever profit margins they end up being able to generate. Kayak at this point could not learn to live on significantly less.
arn 16y ago
As I recall they make money on Orbitz' affiliate program.
- prs 16y ago
  They received VC funding of $1mm. So that will buy those 3+ [1] developers some time. According to an Oct 2010 article by TechCrunch [2] "Orbitz pays Hipmunk the standard rate of $3 per flight sold". Hopefully they did some renegotiations recently or have some other contract in place that generates Hipmunk more income. [1] http://replicatorinc.com/blog/2010/11/alexis-ohanian-hipmunk-digital-souveniers/ http://replicatorinc.com/blog/2010/11/alexis-ohanian-hipmunk... [2] http://techcrunch.com/2010/10/06/how-hipmunk-almost-became-bouncepounce-com-and-other-strange-tales/ http://techcrunch.com/2010/10/06/how-hipmunk-almost-became-b...
fname 16y ago
I thought I remember reading somewhere that Hipmunk was pulling in close to $1mm in affiliate revenues from Orbitz, but I can't find the source to back it up. Otherwise, perhaps that's just how much in sales they're generating to Orbitz.
Timothee 16y ago
I'd be interested to know. I know these guys are smart, so I just hope it's not one of these cases where a couple of people think that some products are not well done but that they know how to do it right and clean, to realize later that the reason other sites are like this (plastered with ads for example) is because, in the long-term, there is no other way. For example, AirBnB came out to solve a problem with short-term rentals, with real people and real reviews from other real people. In my experience, the reality is that most of the offers are actually the same professionals you find in regular rental sites, with sometimes the same unclear and deceptive rates, and without many reviews from real people. (YMMV) When I realized that, I felt that they started out with an idealistic goal that couldn't be really fulfilled. Hoping the same thing wouldn't happen with HipMunk.

by kessler 16y ago

staunch 16y ago

Kayak makes around half their revenue from referrals and the other half from advertising. There's no reason Hipmunk couldn't settle for less revenue per search.

jamn 16y ago
I do see reasons. They have fixed costs (independent from the number of tickets bought) in the form of payments for search results to ITA plus whatever company overhead (maintenance, salaries, etc). Whether Hipmunk can afford improvements in user experience while earning thinner margins than the competition is not entirely obvious to me. I do hope they make it though. Hipmunk rocks!
- staunch 16y ago
  Hipmunk will grow up living on whatever profit margins they end up being able to generate. Kayak at this point could not learn to live on significantly less.

arn 16y ago

As I recall they make money on Orbitz' affiliate program.

prs 16y ago
They received VC funding of $1mm. So that will buy those 3+ [1] developers some time. According to an Oct 2010 article by TechCrunch [2] "Orbitz pays Hipmunk the standard rate of $3 per flight sold". Hopefully they did some renegotiations recently or have some other contract in place that generates Hipmunk more income. [1] http://replicatorinc.com/blog/2010/11/alexis-ohanian-hipmunk-digital-souveniers/ http://replicatorinc.com/blog/2010/11/alexis-ohanian-hipmunk... [2] http://techcrunch.com/2010/10/06/how-hipmunk-almost-became-bouncepounce-com-and-other-strange-tales/ http://techcrunch.com/2010/10/06/how-hipmunk-almost-became-b...

fname 16y ago

I thought I remember reading somewhere that Hipmunk was pulling in close to $1mm in affiliate revenues from Orbitz, but I can't find the source to back it up. Otherwise, perhaps that's just how much in sales they're generating to Orbitz.

Timothee 16y ago

I'd be interested to know. I know these guys are smart, so I just hope it's not one of these cases where a couple of people think that some products are not well done but that they know how to do it right and clean, to realize later that the reason other sites are like this (plastered with ads for example) is because, in the long-term, there is no other way. For example, AirBnB came out to solve a problem with short-term rentals, with real people and real reviews from other real people. In my experience, the reality is that most of the offers are actually the same professionals you find in regular rental sites, with sometimes the same unclear and deceptive rates, and without many reviews from real people. (YMMV) When I realized that, I felt that they started out with an idealistic goal that couldn't be really fulfilled. Hoping the same thing wouldn't happen with HipMunk.