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.
Table of Contents
Origin Story
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 surpassed1,200 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:
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.
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.
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.
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 brandvision. Experts also help site owners optimize site performance and maintain site integrity and security.
For this package, Squarespace charges $4,900 annually.
Value Proposition:
User-Friendly Website Building: Squarespace offers a user-friendly platform with integrated tools that enable users, regardless of technical expertise, to design and manage their websites.
Versatile Subscription Plans: A range of subscription plans caters to diverse user needs, from personal websites to advanced e-commerce stores, providing flexibility and scalability.
Custom Domains: Customers benefit from the convenience of obtaining, connecting, and managing custom domain names seamlessly within the platform.
Squarespace Select: Premium service, Squarespace Select, offers dedicated support and guidance to optimize website performance and align design with brandvision.
Business Model:
Subscription-Based: Squarespace generates revenue primarily through subscription plans, where users pay monthly or annually for access to the platform’s website-building tools and hosting services.
Commerce Transactions: Additional revenue is generated through transaction fees on e-commerce sales, primarily applicable to the Business plan.
Custom Domains: Users pay annual fees for domain name registration and management, which includes domain connection and renewals.
Squarespace Select: The premium service, Squarespace Select, provides advanced features and personalized support for an annual fee.
Revenue Streams:
Presence Revenue Stream: This stream encompasses subscription plans, with different tiers (Personal, Business, Basic Commerce, Advanced Commerce) offering various features and pricing levels.
Commerce Revenue Stream: Revenue from e-commerce transactions, including a 3% transaction fee on sales made through the Business plan, while Basic Commerce customers have this fee waived.
Custom Domains: Annual fees for domain name registration and management, including domain connection and renewals.
Squarespace Select: Annual fees for the premium service, offering dedicated support and advanced features.
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 subscriptionmodel. 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.
Element
Description
Value Proposition
Squarespace offers a compelling value proposition for its users, including: – Website Building: Providing an intuitive platform for creating professional websites without coding skills. – Customization: Offering a wide range of design templates and tools for personalized websites. – E-commerce: Enabling businesses to set up online stores with built-in e-commerce features. – Hosting and Domain: Providing reliable hosting and domain registration services for websites. – Mobile Optimization: Ensuring websites are responsive and optimized for mobile devices. – Analytics: Offering data analytics and insights to track website performance. – 24/7 Customer Support: Delivering responsive customer support for assistance and technical issues. – Scalability: Allowing businesses to scale their websites as they grow. – Marketing Tools: Providing marketing features, including SEO tools, email campaigns, and social media integration. – Security: Prioritizing website security and SSL encryption for safe online transactions.
Core Products/Services
Squarespace’s core products and services encompass: – Website Builder: Offering a drag-and-drop website builder with customizable templates. – E-commerce Platform: Providing tools for setting up and managing online stores, including product listings, inventory management, and payment processing. – Domain Registration: Offering domain registration and management services. – Hosting Services: Providing reliable web hosting with uptime guarantees. – Marketing Tools: Offering SEO tools, email marketing campaigns, and social media integration. – Analytics: Providing website analytics to track user engagement and performance. – Customer Support: Delivering 24/7 customer support through chat and email. – Mobile Optimization: Ensuring websites are mobile-responsive. – Security Features: Implementing SSL encryption, secure checkout, and data protection measures. – Scalability: Allowing users to upgrade plans and add features as needed.
Customer Segments
Squarespace serves a range of customer segments, including: – Individuals and Bloggers: Individuals looking to create personal blogs and portfolio websites. – Small Businesses: Small businesses seeking an online presence and e-commerce capabilities. – Artists and Creatives: Artists, photographers, designers, and creative professionals showcasing their work. – E-commerce Businesses: Online retailers and entrepreneurs running e-commerce stores. – Restaurants and Cafes: Restaurants and food establishments creating websites for menus and reservations. – Wedding and Event Planners: Event planners and organizers creating event-specific websites. – Musicians and Bands: Musicians and bands promoting their music and events. – Nonprofits: Nonprofit organizations building websites for fundraising and awareness. – Professionals: Professionals such as lawyers, doctors, and consultants creating online profiles. – Enterprises: Larger organizations and enterprises looking for scalable web solutions.
Revenue Streams
Squarespace generates revenue through various revenue streams: – Subscription Plans: Charging users on a monthly or annual basis for access to website-building features and hosting services. – E-commerce Transaction Fees: Earning a percentage of sales on e-commerce transactions processed through Squarespace. – Domain Registration Fees: Charging fees for domain registration and management services. – Additional Features: Offering premium features and add-ons for an extra fee, such as advanced marketing tools and e-commerce enhancements. – Template Sales: Selling website templates and design assets through the Squarespace Template Store. – Email Campaigns: Offering email marketing services with subscription-based pricing. – Professional Services: Providing professional web design and development services for custom projects. – Analytics Insights: Charging for advanced analytics and insights reports. – Squarespace Circle Program: Earning referral fees from web designers and agencies who bring in new customers. – Squarespace Marketplace: Charging a transaction fee on sales made through the Squarespace Marketplace by third-party developers.
Distribution Strategy
Squarespace employs a strategic distribution strategy to reach users and promote its services: – Online Platform: Operating as an online platform, allowing users to sign up and build websites from anywhere. – Marketing and Advertising: Running digital marketing campaigns and advertising to attract users. – Partnerships: Collaborating with designers, agencies, and influencers through programs like Squarespace Circle. – Search Engine Optimization (SEO): Optimizing its platform for SEO to attract organic traffic. – Social Media Presence: Maintaining a strong presence on social media platforms to engage with users and showcase websites. – Affiliate Program: Offering an affiliate program where partners can earn commissions for referring new users. – Word-of-Mouth: Leveraging positive user experiences to generate word-of-mouth referrals. – Educational Resources: Providing tutorials, guides, and webinars to educate users on website building and digital marketing. – Customer Support: Offering responsive customer support for technical assistance and inquiries. – Community Engagement: Building a community of Squarespace users through forums and events.
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.
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.
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.
In an asymmetric businessmodel, 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.
In an asymmetric businessmodel, 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.
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.
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.
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.
The term “crowdsourcing” was first coined by Wired Magazine editor Jeff Howe in a 2006 article titled Rise of Crowdsourcing. Though the practice has existed in some form or another for centuries, it rose to prominence when eCommerce, social media, and smartphone culture began to emerge. Crowdsourcing is the act of obtaining knowledge, goods, services, or opinions from a group of people. These people submit information via social media, smartphone apps, or dedicated crowdsourcing platforms.
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 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.
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.
A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.
In a franchained business model (a short-term chain, long-term franchise) model, the company deliberately launched its operations by keeping tight ownership on the main assets, while those are established, thus choosing a chain model. Once operations are running and established, the company divests its ownership and opts instead for a franchising model.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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