How Does Squarespace Make Money? Business Model of Squarespace

Squarespace is a popular website building and hosting company. The company has a variety of revenue streams connected to providing customers with online web presence solutions.

Squarespace primarily makes money via monthly and annual subscriptions to their online web presence solutions. The company also makes money from subscription commerce transaction tools and fixed fees.

Founded in Baltimore in 2004 by Anthony Casalena, Squarespace is known as a good web solution for creatives and bloggers. Squarespace lets its customers use pre-built website templates and drag-and-drop features to create their own websites without needing to understand how to code.

The company was founded by Casalena as a blog-hosting service for his own personal use while he was a student at the University of Maryland. Casalena quickly realized that there was a market for his product when his friends said they would pay for it. By the time Casalena graduated, the company was earning annual revenues of $1 million.^[1]

Casalena launched Squarespace to the public with $30,000 in seed funding from his father and a small grant from the state of Maryland. ^[2] The platform was initially designed solely as a blogging content management system (CMS). However, Squarespace now gives its customers every tool they need to create and manage a creative or e-commerce website.

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What is Squarespace & How Does It Work?

Squarespace is a website building and hosting platform. The company currently holds 3% of the market share for top content management systems^[3] and boasts 3.79 million users.^[4]

In September 2022, there were 2.9 million live Squarespace websites. That represents 14% of websites using hosted solution technologies.^[5] While the company is not in the top rank of website building products globally, it does hold the number one market share in:

United States
Canada
Hong Kong
UK
Australia ^[6]

Customers can create their Squarespace account with only their email address and a password. They can start with a free 14-day trial to see if they like the platform. After the two-week trial period, customers will need to purchase a subscription plan.

Once the customer has created their account, they can choose from one of the service’s pre-built templates.

Squarespace organizes their many templates according to the type of industry so that users can start from a pre-built template. Template categories include different business types, like:

Creative portfolios
Professional services
Restaurants
Online stores
Podcasts

Templates come with pre-built pages so that customers can edit their own details.

Once the user selects a template, they can give their site a name and add or remove pages. Users can add additional tools like a blog or an events calendar to their site. The Squarespace templates come prebuilt with high-quality imagery that users can replace with their own photographs, illustrations, or stock images.

Users can add their own style to their Squarespace website by editing branding elements, like fonts and colors. They can upload their own favicon, which is the browser icon that appears next to the site name in a browser tab. They can also add their own pre-made logo or create a logo using the Squarespace logo designer plugin.

Users can transfer their domain name from another service provider or purchase a domain name directly through Squarespace. When they are ready to publish their site, users simply set the site visibility to public.

One of the benefits of Squarespace is the platform’s focus on design and user experience. The sleek and modern website templates appeal to creative professionals from many industries. The prebuilt templates and What You See Is What You Get (WYSIWYG) editor may be less intimidating to beginner website creators than other platforms.

Users who don’t want to do the work of designing their own sites can hire a Squarespace expert to do that work for them. The platform also offers technical support and marketing tools for those who want a total website package.

Many notable creative people and companies use Squarespace to build their brand and e-commerce websites. These include actor and photographer Wynona Ryder, illustrator Darren Booth, Uppercase Magazine, Slow Travel magazine, and entertainment site Refinery 29.^[7]

The company has not been immune to controversy over its lifespan. In 2017, the company was sent a petition with 60,000 signatures after it said it would not remove white supremacist websites from the platform.^[8] The company did remove a group of sites after receiving the petition.

Professional designers were upset in 2014 when Squarespace launched their $10 logo creation tool.^[9] The move was seen to undercut the seriousness and price point of professional logo creation.

Business Model of Squarespace

The business model of Squarespace is the creation of a subscription model for a company’s web presence. A basic website must be purchased on a monthly or annual subscription. The company also offers comprehensive commerce and marketing solutions.

Customers can create the site that they need for their business or creative projects. Squarespace provides them with integrations and plugins to handle every aspect of an online presence or shop.

If they want to build an e-commerce site, users can add those features to their plan. Squarespace integrates with many online commerce tools. These include PayPal, Apple Pay, and Stripe, as well as shipping services like FedEx and UPS.

Squarespace appeals to many different types of customers because its basic plan provides a wide variety of advanced features. Its interface is intuitive enough for a beginner but robust enough for an intermediate user to add additional functionality.

Squarespace’s beautifully designed templates appeal to artists and creative professionals. The company’s site builder software is highly rated by software professionals.^[10]

Heavy competition likely pushed Squarespace to continue to expand on the functionality it offers its customers, like its logo creation tool. While the Squarespace subscription model has generated significant revenue, the company will need to constantly innovate to compete with new technologies that lower the costs of producing an online website.

It may need to lower its prices in the future to compete in the crowded website and e-commerce marketplace. Squarespace faces many competitors in the business of websites and e-commerce. Some of the more well-known are Wix, Webflow, WordPress, and GoDaddy. Shopify is its biggest, better-known competitor in the e-commerce business.

While Squarespace is currently considered an industry leader, newer and potentially cheaper website-building platforms launch all the time.

Squarespace has significant costs associated with various aspects of running and growing the platform. The company reported revenue costs of $98.3 million and $126.6 million in 2020 and 2021, respectively.^[11]

As a leading website building service, Squarespace spends a significant amount of money on research and product development. Marketing and sales are another significant expense.^[12] These and other administrative and operational costs can reduce the company’s potential profitability.

How Does Squarespace Make Money?

Squarespace makes money in several different ways. These include monthly and annual subscriptions. The company breaks subscriptions down into presence and commerce revenue. The company also makes money from several other non-subscription sources.

Subscriptions

Squarespace primarily makes money through its annual and monthly subscriptions.

The company disaggregates their revenue by product type according to the following definitions:

Presence revenue

Presence revenue consists of fixed-fee subscriptions to Squarespace plans that offer core platform functionalities. These subscription offerings are branded as ‘Personal’ and ‘Business’ plans.

Customers can save 30% by signing on for an annual vs. a monthly plan.^[13]

Personal Plans

Personal plans cost $23 per month or $16 per month billed annually.^[14] Customers signing on to a personal plan receive the following core platform functionalities:

A free custom domain
SSL security certificate for their site
Unlimited bandwidth
Video storage for up to 30 minutes
Features to help improve SEO ranking
Access to curated templates
Up to two site contributors
Mobile-optimized websites
24/7 customer support
Basic website metrics
Access to third-party extensions
Limited access to four templates in the Squarespace video studio

Business Plans

These plans cost $33 per month or $23 per month billed annually.^[15] Customers signing on to a business plan receive the same functionalities as the personal plan, plus:

Unlimited rather than two contributors
Professional Google Workspace email
Premium integrations and blocks, like OpenTable restaurant booking
CSS and JavaScript customization
Advanced website analytics
Google ad credit with minimum spend
Promotional popups and banners
Full access to the Squarespace video studio
Fully integrated e-commerce with 3% transaction fees
Ability to sell unlimited products, accept donations and sell gift cards

In 2021, the company earned $554.5 million in presence revenue.^[16] Presence accounted for 70.7% of total subscription revenue.^[17]

Commerce revenue

Commerce revenue consists of fixed-fee subscriptions to plans that offer all the features of presence plans plus additional features that support end-to-end commerce transactions.

Commerce subscription offerings are branded as ‘Basic’ and ‘Advanced.’ Customers can save 25% by signing on for an annual vs. a monthly plan.^[18]

Basic Commerce Plans

These plans cost $36 monthly or $27 monthly on an annual basis.^[19] These plans provide the same functionalities as the Business plan, plus:

0%, rather than 3% transaction fees
Point-of-sale via Square integration
Collect and display product reviews
Customer accounts
Secure checkout pages
E-commerce analytics
Merchandising tools, including product waitlists and spreadsheet bulk editing
Sync with Facebook product catalog to tag products on Instagram
Limited product availability labels

Advanced Commerce Plans

These plans cost $65 monthly or $49 monthly billed annually.^[20] These plans provide the same functionalities as the Basic Commerce plan, plus:

Automated email to customers who abandon their carts
Ability to sell product and service subscriptions
Advanced real-time shipping rates
Ability to offer advanced discounts on qualifying orders
Ability to build custom integrations to third-party commerce systems

In 2021, the company earned $229.5 million in commerce revenue.^[21] Commerce accounted for 29.3% of total subscription revenue.^[22]

Non-subscription services

Squarespace earns money on a number of non-subscription revenue, but these revenue streams make up a small portion of the company’s income.

These sources include:

Ecommerce transaction tools: The company offers a number of different ecommerce tools for their customers to use, and they earn fees or percentages on their use.
Fixed fees earned on revenue share arrangements with third parties: Squarespace has a number of partnerships with third-party companies that provide services to their customers. These companies then provide Squarespace with fixed fee payments in return for their referring business to them.
Fixed fees on sales made through customers’ sites: Squarespace helps some of its customers process payments via partnerships with external payment processors. In such cases, they receive fixed fees on the transactions.

Squarespace Funding, Valuation & Revenue

Squarespace (SQSP) is currently a public company trading on the NYSE. It had a valuation as of September 2022 of $2.92 billion.^[23]

Prior to going public, Squarespace raised $578.5 million in venture capital funding during four rounds of funding.^[24] Notable investors include T. Rowe Price, and Fidelity Management and Research Company.^[25]

Squarespace has increased its revenue in recent years. They have gone from $484.8 million in revenue in 2019 to $784 million in revenue in 2021.^[26] However, the company saw a loss in 2021 of $249.1 million after earning $58.1 million in net income in 2019.

Year	Total Revenue	Net Income
2019	$484.8 million	$58.1 million
2020	$621.1 million	$30.6 million
2021	$784 million	($249.1 million)

Is Squarespace Profitable?

Squarespace is not currently profitable. While Squarespace is steadily increasing its revenue and generated $784 million in gross revenue in 2021, the company’s net profits have been declining.

Squarespace went from generating $58.1 million in net income in 2019 on $484.8 million in revenue to losing $249.1 million in 2021 on $784 million in revenue.

It’s unclear whether the company will be profitable in 2022.

Conclusion

In conclusion, we can say that Squarespace is one of the most popular and lucrative web hosting companies in the world today. Many people are using it because it is very easy to use and has a lot of features for customers.

The company is doing a lot of things right, including offering a wide range of services at affordable prices, and providing customers with a highly intuitive and user-friendly interface.

We hope that this blog post helped you understand how Squarespace makes money and their business model better. If you have any questions or comments, please feel free to let us know!

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