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All You Need to Know About How Does Waze Work and Its Essential Features

11493 Views | 1 min | Published On: December 5, 2019 Last Updated: April 1, 2022
How Does Waze Work

How Does Waze Work? How Is Waze Business Model Designed? Let’s find out!

Whenever we insert the key in the ignition engine, the first thing which crosses our mind is TRAFFIC. We all wonder what if we could have all the traffic information before we start our drive. Well, the tech world has nothing left to only dream about. 

The truth of the matter is that there is already a mobile application called Waze, which can help users reach their destination well in time and without much hassle.

It is a community-based traffic and navigation app that helps users by providing turn-by-turn navigation information on their smartphones. By notifying its users about the busiest and fastest possible routes, Waze is giving its users a smart traveling solution.

As per Statista, Waze is the second most popular mapping app in the US, in terms of number of monthly users. 

waze revenue model

Such an impressive number of monthly unique users make the case study of “Waze” worth-studying. Especially, if you are planning to build a navigation app like Waze, you must know how popular navigation apps like Google Maps or Waze work and make money to go and succeed on similar lines.

So, let’s dig in and find everything about Waze Business Model.

Waze Stats and Facts: Funding and Major Milestones

  • Waze was started as a community project by Ehud Shabtai in the year 2006, with the name FreeMap Israel. 
  • In 2008,  FreeMap Israel raised $12 million in the Series A funding round.
  • In 2009, the venture was officially renamed as Waze Mobile Ltd.
  • In 2010, Waze was successful in raising $25 million in Series B funding.
  • The company raised another $30 million in Series C financing, the next year.
  • In the year 2013 when the Waze app accounted for over 36 million users, Google bought Waze for a whopping $1.3 billion.
  • At present, Waze has over 110 million monthly active users and its estimated annual revenue is over $37.7M.

Such an impressive growth story is worth studying for not only the new entrants in the category but also the established businesses around the world. So, let’s now find out how Waze works and provides value to its users.

How Does Waze Work: Waze Business Model Canvas

Waze is a community driven navigation and traffic mobile app. Drivers all around the globe utilize Waze to help each other in navigation by sharing real-time information about the road conditions and traffic details. Utilizing Waze, users can advise drivers about police traps, mishaps, blocked streets, climate conditions, and much more. 

The application promptly analyzes all this data to guarantee that others take the most ideal route to reach their destinations. Also, Waze is the official navigation app for a number of taxi booking applications out there like Lyft, Easy taxi and My taxi. 

What differentiates Waze from other navigation apps is its community-driven factor. It works as a social network for drivers by gathering data from each user to provide the most optimal route to other users. This data collection happens whenever the app is running and used by the users. 

Let’s understand the working of Waze using Waze Business Model Canvas:

  • The Waze app stores all the collected information and GPS data on the user’s device itself.
  • The application updates a user’s location on the map at regular intervals, and if the app loses the data connection, it assumes that the user is moving at a similar speed and along a similar route until it gets updated information. 
  • Whenever a user enters data about roadwork or police presence, this is shown on the map for the rest of the app’s users. For road work, the app will show drivers the affected areas. 
  • The Waze application mostly depends on financial support from organizations they promote. This helps in-app monetization, however, it also results in a conflicting situation when people aren’t shown all the restaurants and gas stations en-route, but just the sponsored ones in the application. 
  • The app also guides drivers by using voice navigation so that they can keep their eyes on the roads and avoid mishaps.

So, that was all about how does Waze work and what differentiates it from other navigation apps. Now, let’s see How Does Waze Make Money.

How Does Waze Make Money: Waze Revenue Model

Waze is a free to use traffic and navigation app. Still, it manages to generate an impressive annual revenue of about $37.7 Million. This generates curiosity among budding entrepreneurs to know how does Waze make money.  To answer this, let’s put the spotlight on different revenue sources that Waze uses:

1. Local Advertising

Local brand advertising is considered as the primary revenue source for Waze. Local businesses can use the Waze platform to advertise their brands to Waze users along their routes. 

To get a priority listing on the Waze app, local brands of coffee shops, car washing service, gas stations, etc can pay a commission to the app owners. This can vary from $2 per day to $ 100 per day, depending upon the size of the local business. The business owners can show their ads regarding new deals or discounts depending upon the app user’s location and time. 

Waze gives the local business owners the following options to showcase their brands to the Waze community.

  • Branded Pins – The branded pins become visible on the Waze Map when the user is driving on a particular route and a brand outlet comes. This helps local businesses in raising their brand awareness and thus drawing in on-route customers to their stores.
  • Zero-Speed Takeovers – These are like a digital billboard that pops up on a user’s smartphone screen when he/she stops somewhere en-route for at least 3 seconds. This gives users a thought of visiting nearby outlets if they want and in turn increases brand visibility and sales.
  • Promoted Search Ads – These pop-ups come when a Waze user is searching for a nearby restaurant, shopping malls, gas station, etc. Local businesses can pay an extra amount to get more visibility when a Waze user searches for a particular service which the business can offer.

2. Waze Carpooling

Carpooling is another source of revenue for the Waze app. While ride-hailing apps like Lyft and Uber connect riders with drivers, Waze Carpool lets the regular day drivers do the carpooling. The app verifies the user’s workplace using emails and allows every driver two carpools a day. In such a manner, it has collaborated with a number of schools and businesses like Amazon to promote this feature.

The riders are charged 54 cents for each mile. Also, there are different variables that decide the cost of each ride like base price, number of rides, subsidies and service fee.

So, that was all about the revenue sources of Waze using which it brings money to the table. Now, if you are planning to create a navigation app like Waze to replicate its success, there are a few must-have features that you must incorporate into your Waze-like app to provide the same value to your users. Let’s see what these crucial features are.

3. Data Collection and Deals

The Waze app gathers a lot of location-based data to improve its operations and provide its users with a seamless experience on the roads.

Thus, Waze can sell this data to other companies for marketing or other purposes. That’s is said to be the main reason why Google purchased Waze. The internet giant was impressed by the data collection of Waze and wanted to master location-based advertising using the data collected.

Also Read: How To Validate an App Idea?

5 Must-Have Features of a Navigation App Like Waze

Since Google has acquired Waze in the year 2013 for around $1.3 billion, there are a number of questions popping in the mind of entrepreneurs like What Does Waze have that forced a company like Google to acquire it. Why does Google Need an app like Waze? How does Waze work?

Google, being the world’s leader when it comes to maps, didn’t just find Waze’s navigation system fascinating for making such strong purchases, the real essence lies in the expanding popularity of Waze application. Additionally, the social data of millions of individuals as well as the real-time traffic information possessed by Waze forced Google to secure the deal.

Because of the amazing features of the app and strategic business model, it gathered immense popularity. So, if you are planning to make something big in the mobile app ecosystem, you must pay heed to your app’s features with which your users are going to interact.

Let’s see what are the must-have features of a navigation app like Waze:

how does the waze app work

1. Authorization

Personal accounts provide app users a space to leave reviews and notes about what they observe and experience while using the app. It also helps them in communicating with other drivers. In applications where users need the suggestions of others, a feeling of trust is simpler to develop if users see who is behind the tips and reviews they’re going to follow.

So, having a personal account for each user who is going to use the app is mandatory in a navigation app like Waze.

2. Geolocation

This is one of the most essential features of an app like Waze since it helps detect the location of a device. All modern smartphones are equipped with GPS chips that gather data about the timing and location that satellites send from space. A cell phone needs data from at least four satellites to decide its location inside around 60 feet.

If a GPS signal is inaccessible, data from cell towers can be utilized. For this situation, the device gets cell ID information and decides the location of the device-dependent on the station database. This technique is utilized if GPS is inaccessible and that’s why it comes in the list of must-have features of an app like Waze.

3. Voice Directions

Developers can utilize the directions API of Google Maps to provide detailed turn-by-turn voice guidelines into their applications. This API is given free for a few requests, however gradually (after 2,500+ requests) you’ll have to pay for it.

Embedding the voice direction feature in your navigation app is crucial to ensure the safety of your users. Using it, they can keep all eyes on the road while just listening to the guidelines given by the app.

4. Rerouting

It’s crucial for your application to have the option to reroute drivers rapidly if they make a wrong turn because of any reason to avoid any mishap.

5. Social integration

Social components have become more crucial in recent years. You can enable users to share content dependent on locations in applications like Facebook and Instagram. You can also give the ability to write comments about traffic issues or chat with different users while they are stuck in the traffic.

Another way to communicate is with likes. Drivers can utilize likes to confirm reported issues from different users or just to express thankfulness toward them. To give real-time communication, you can utilize WebSockets. This cutting edge innovation makes it possible to open an intuitive communication session between a server and a client. With WebSockets, you can send messages to a server and get event-driven reactions without surveying the server for a reply.

Along with outstanding features, the credit of Waze’s success goes to a number of components: its comic-like intuitive design that adjusts valuable and engaging content efficiently, its robust tech stack, and its solid community that makes drivers return to the application each time they hit the roads.

Building an application like Waze represents various business and technology-related challenges, however, you can succeed if you prioritize building a community first as the beginning point of your journey. While keeping this amazing tip in mind, let’s now find out how much it will cost you to make an app like Waze.

Also Read: How Much Does It Cost to Make an App Like Uber or Careem?

How Much Will it Cost to Make an App Like Waze?

The cost of developing a navigation app depends on a number of factors and that includes features you want to add in it, the complexity of your project, the tech stack you plan to use and the rates of your development company. If you want to go in this direction, we recommend you to take baby steps by building an MVP first with just the must-have features. It will not just help you lessen the cost of development, but will also allow you to test your idea while spending less time and money.

To give you a rough estimate, all we can say is, building an app like Waze will cost you somewhere around $30K-$40k if you plan to add just the must-have features in it. The cost can go up if you add some advanced features in your app.

waze business model

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