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Figma Business Model Case Study

At the time Figma was started, in 2012, IBM employed one designer for every 72 engineers. By 2019, IBM had eight engineers to every designer, and the ratio went to 3:1 on mobile. And it wasn’t just IBM that became more serious about design — the entire tech industry switched to the design-heavy product development approach.

Atlassian went from 1 designer : 25 engineers in 2012 to 1 designer : 9 developers in 2017. 

LinkedIn went from 1 designer : 11 engineers in 2012 to 1 designer : 8 developers in 2017. 

Dropbox went from 1 designer : 10 engineers in 2012 to 1 designer : 6 developers in 2017. 

The effect of this shift to a design-heavy tech ecosystem was that product presentation began to get just as much as, if not more weight, than the product function. This new way of thinking about product development led to better product design and changed customer design expectations, elevating the tech industry’s design game as a whole. 

Based on the data shared above and the product design improvement we, as end-users, have witnessed — one could very well argue that the decade that 2010s was the decade of design, just as the 2000s were the decade of code. 

Figma’s 2012 founding was well-timed to take advantage of the forthcoming shift. To add to it, Figma’s forward-looking product strategy helped it become the preferred tool for fast-growing startups and even the broader corporate community.

As a case study, Figma’s journey not only gives insight into the paradigm shift in design but also the technological developments that enabled the change, making it worthy to be studied. 

To establish better context, let’s begin from the start; learn about Figma’s founding story, trace down major product developments as it grew, and finally; see how it makes money.  

Figma’s Founding & Growth Story

Countless startup success stories begin with a young founder with a big vision dropping out of college. Figma’s tale has a similar trajectory. 

Dylan Field, Figma CEO, was a Brown University dropout. His original startup idea was revolved around drones though, not even remotely to design. And since he got selected for the ‘Theil Fellowship‘ meant that he would have $100,00 in funds and enviable connections as a headstart.

But he changed his mind after working as an intern in a product role in Flipboard. At the time, most design tools were desktop applications. 

If a designer were to share a design with someone, say, from the product team, they’d have to download the file and share it. The product guy would have to download the file on their system to go through it and share feedback, elongating the design cycle.

If designers and other teams were able to collaborate in real-time as two team members working on Google docs do, the design cycle would get shortened. So, Dylan designed Figma to work on Google Docs but for designers, keeping the collaborative element at the center of the product by moving away from the desktop application era to a browser-first web app approach.

By the time Figma launched in 2015, after three years of work, it had already raised $4 million in seed funding from Index and a $14 million Series A round. In case you’re wondering why did Figma take three years until launch, it was because they were going up against industry giants like Adobe who were also moving to the cloud, so it wouldn’t be as easy.

From the time it launched until the time of writing, Figma’s customer and revenue graph trended upwards, facilitating a shift in how the designing loop functioned. Once real-time collaboration became possible, non-designers in the product and engineering teams also became more involved in the design process, bringing fresh perspectives. Figma transitioned from becoming a design tool for designers to a design tool for teams. 

Once Figma had become a preferred platform among startups, it needed to build a moat to shield itself from competitors, which Figma has attempted to do by launching Figma Plugins and Figma Community

Plugins help add an extra army of developers apart from Figma’s employees that work to make increase the tool’s utility, also transforming it from a platform to an ecosystem.   

On the other hand, the community helps strengthen the moat by creating a repository where users can upload Figma files for anyone to inspect, reuse, and remix. Users can browse and search through thousands of files published by the community: design systems, icon packs, wireframes, illustrations, and much more.

Figma Business Model

Figma currently makes money by only selling its core product, its collaborative design tool, but is also poised to generate revenue from Figjam, a whiteboarding tool that will be out of its free beta in 2022.

Figma sells its core product using a freemium model, with the free ‘Starter’ plan being free for up to three editors. If corporations require more than three people to collaborate using Figma, they can opt for the ‘Professional plan’ billed annually at $12 per editor/month or $15 month-to-month. For enterprise clients that need an extra level of security and content control, Figma offers an organization plan billed annually at $45 per editor/month. 

Pricing for Figma's Free, Professional, and Organization plans
Source: Figma

Similar to Figma’s core offering, Figjam’s pricing will also follow a freemium pricing strategy having both free and paid plans ($8 & $15 per editor/month). 

Figma Revenue from 2015 to 2021
Source: Latka

In 2020, Figma generated a revenue of $35.1M. Having raised a total of $332.9M in funding over six rounds, the company was last valued at $10 billion after it raised $200 million in July 2021. 

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Summary
Figma Business Model: How Figma Makes Money [ 2021 ]
Article Name
Figma Business Model: How Figma Makes Money [ 2021 ]
Description
Figma currently makes money by only selling its core product, its collaborative design tool, but is also poised to generate revenue from Figjam, a whiteboarding tool that will be out of its free beta in 2022.
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WhatIsTheBusinessModelOf
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Muaaz Qadri
A Proud Computer Engineer turned Digital Marketer
Summary
Figma Business Model: How Figma Makes Money [ 2021 ]
Article Name
Figma Business Model: How Figma Makes Money [ 2021 ]
Description
Figma currently makes money by only selling its core product, its collaborative design tool, but is also poised to generate revenue from Figjam, a whiteboarding tool that will be out of its free beta in 2022.
Author
Publisher Name
WhatIsTheBusinessModelOf
Publisher Logo