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

Squarespace is a North American hosting and website building company. Founded in 2004 by college student Anthony Casalena as a blog hosting service, it grew to become among the most successful website building companies. The company mostly makes money via its subscription plans. It also makes money via customizations on top of its subscription plans. And in part also as transaction fees for the website where it processes the sales.

Origin Story

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The Squarespace Timeline (Image Source: Squarespace Financial Prospectus).

Squarespace is a North American hosting and website building company.

Squarespace was founded in 2004 by college student Anthony Casalena as a blog hosting service. Although Casalena developed the service for his personal use, he began to share it with friends and family while taking business programs at the University of Maryland.

After launching as a DIY website builder, Casalena worked as the company’s only employee for the next two years. When he graduated in 2007, Squarespace had attained $1 million in revenue and began to attract significant sums of venture capital.

The platform now offers a range of tools including eCommerce functionality, domain name services, and user analytics. By 2020, Squarespace surpassed 1,200 employees and $665 millions in bookings.

Squarespace revenue generation

Squarespace revenue model moves around two main streams: presence and commerce, with the presence revenue stream representing more than 76% of the company’s revenues in 2020. Presence revenue increased $73.7 million (18.2%) by 2020 compared compared to 2019. The “presence” consists of the subscription plans offered by Squarespace. The “commerce” revenue increased $62.7 million (77.8%) by 2020 compared to 2019, based on the increased volume of transactions processed via the platform.

The majority of Squarespace revenue generation comes from subscription plans that allow users to build their own websites using integrated tools.

These plans include:

  1. Personal ($12/month) – the cheapest plan that will satisfy the majority of users. It offers a free custom domain, SSL security, unlimited bandwidth, site templates, and SEO features to increase site visibility.
  2. Business ($18/month) – containing features from the Personal plan plus business tools such as a professional Google email, advanced website analytics, promotional banners, and $100 in Google Ads credit. Squarespace also charges customers a 3% transaction fee on every sale made on the Business plan.
  3. Basic Commerce ($26/month) – a fully integrated commerce solution allowing businesses to sell unlimited products and accept donations with a dedicated point of sale system. The 3% transaction fee is waived for Basic Commerce customers.
  4. Advanced Commerce ($40/month) – including all Basic Commerce features plus functions such as abandoned cart recovery, advanced shipping and discounts, commerce APIs, and limited availability labels.

For each plan, Squarespace offers a discount if the plan is purchased for a year in advance.

Custom domains

Customers who sign up for an annual plan get their domain name free.

For monthly users, Squarespace charges $20 every year to maintain one domain. While cheaper deals on domain names can be had elsewhere, this price includes the connection of the domain name to Squarespace hosting and management of necessary annual renewals.

Squarespace Select

Squarespace Select allows users to access the most advanced Squarespace features with dedicated support.

This entails personalized account management and SEO advice, as well as guidance on how to match website design with brand vision. Experts also help site owners optimize site performance and maintain site integrity and security.

For this package, Squarespace charges $4,900 annually.

Key takeaways:

  • Squarespace is a North American website builder platform founded by Anthony Casalena in 2004. Casalena developed the platform for his own purposes while studying at the University of Maryland.
  • Squarespace derives the bulk of its revenue via the subscription model. Four plans with various levels of functionality are designed for individuals and businesses of all sizes.
  • Squarespace also makes money from the somewhat boutique Squarespace Select service. This premium feature gives business owners personalized support and advice around best practices and site optimization.

Read Also: WordPress Business Model, Shopify Business Model, Wix Business Model.

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Related Business Model Types

Platform Business Model

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A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success.

Marketplace Business Model

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A marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.

Network Effects

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A network effect is a phenomenon in which as more people or users join a platform, the more the value of the service offered by the platform improves for those joining afterward.

Asymmetric Business Models

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In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.

Attention Merchant Business Model

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In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.

Wholesale Business Model

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The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.

Retail Business Model

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A retail business model follows a direct-to-consumer approach, also called B2C, where the company sells directly to final customers a processed/finished product. This implies a business model that is mostly local-based, it carries higher margins, but also higher costs and distribution risks.

B2B2C

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A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.

Crowdsourcing Business Model

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Open-Core Business Model

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While the term has been coined by Andrew Lampitt, open-core is an evolution of open-source. Where a core part of the software/platform is offered for free, while on top of it are built premium features or add-ons, which get monetized by the corporation who developed the software/platform. An example of the GitLab open core model, where the hosted service is free and open, while the software is closed.

Open Source vs. Freemium

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Open source is licensed and usually developed and maintained by a community of independent developers. While the freemium is developed in-house. Thus the freemium give the company that developed it, full control over its distribution. In an open-source model, the for-profit company has to distribute its premium version per its open-source licensing model.

Freemium Business Model

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The freemium – unless the whole organization is aligned around it – is a growth strategy rather than a business model. A free service is provided to a majority of users, while a small percentage of those users convert into paying customers through the sales funnel. Free users will help spread the brand through word of mouth.

Freeterprise Business Model

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Franchising Business Model

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