headspace-business-model

How Does Headspace Make Money? The Headspace Business Model In A Nutshell

  • Headspace is an online mediation company founded by Andy Puddicombe and Richard Pierson in 2010. Puddicombe got the idea for the company after seeing the value of mindfulness meditation during a ten-year stint as a monk.
  • The Headspace app is free to use for those desiring basic lessons and functionality. However, there are two subscription plans for those who want to delve deeper into mindfulness as a meditation practice. 
  • Headspace also makes money through various and sometimes high-profile partnerships with corporate clients. Furthermore, the company is hoping to monetize its Headspace Health product. If approved, it would be one of the first such products to offer mindfulness as a therapeutic digital medicine.

History of Headspace

Headspace is an online mediation company founded by Andy Puddicombe and Richard Pierson in 2010. The platform provides guided meditation sessions to registered users to increase mindfulness. 

The story of how Headspace came to be is rather interesting. When Puddicombe was 22, he was standing outside a London pub when a drunk driver hit a group of his friends – killing two of them. A few months later, a stepsister died in a cycling accident and an ex-partner passed away during a surgical procedure.

Suffering intense grief, Puddicombe decided to travel to the Himalayas and become a Buddhist monk. There, he spent the next decade meditating for sixteen hours a day. This he credits with helping him deal with his multiple losses.

In 2005, Puddicombe returned to England and opened a small mediation practice. Richard Pierson was one of his first customers, and the two decided to go into business together after Pierson saw the value of meditation in relieving his social anxiety.

Puddicombe and Pierson spent the next few years spreading the word about meditation, which at the time was less understood in the West. In 2010, the Headspace app was launched and was funded entirely by donations or favors from friends. Four years later, the business was moved to Los Angeles which coincided with more significant investment funding.

Today, Headspace is more than a consumer app. The company now acts as a corporate consultant, with firms such as Google, General Electric, and Unilever employing its services. Benefitting from pandemic-induced anxiety and stress, recent figures put the Headspace user base at around 65 million people.

Headspace revenue generation

Headspace operates in a relatively unique industry and has a business model to match.

Let’s delve into how the company makes its money below.

Headspace consumer app

Although users get access to basic lessons and features for free, Headspace offers two subscription plans for increased functionality and advanced meditation lessons.

Prices vary by country, but in the United Kingdom users can select between:

  • An annual subscription – billed each year for £49.99 with a 14-day free trial.
  • A monthly subscription – billed each month for £9.99 with a 7-day free trial.

B2B

As mentioned in the previous section, Headspace offers mediation services to corporate clients to improve employee mental health. This is otherwise referred to as Headspace for Work.

There are three packages to choose from:

  1. Foundational – featuring an employee dashboard, monthly well-being resources, live virtual events, engagement reporting, and 24/7 technical support.
  2. Guided – incorporating a more bespoke employee engagement plan, partner success manager, regular check-in meetings, and executive reviews.
  3. Advanced – similar to the Guided plan, with additional access to features allowing the organization to consult with Headspace leadership and identify joint venture or internal marketing opportunities.

Prices are not disclosed and vary according to the particular needs of each client, in any case. The total price is likely reliant upon the number of employees undertaking the training and the enterprise package selected.

Headspace Health

Headspace Health is a digital health subsidiary of Headspace seeking to pioneer new ways to incorporate mindfulness into digital medicine. 

In this context, Headspace mindfulness programs are being specifically designed for those suffering from a broad range of chronic diseases. 

At the time of writing, the company was still awaiting FDA approval of its meditation tools. To date, the company has invested millions in rigorous clinical trials to validate its product and bring it to the market.

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