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Business Operations Business Models

How Does Headspace Make Money (Business and Revenue Model)

The Headspace business model

Headspace logo
Here’s what you should know:
  • What is Headspace, and how does Headspace work?
  • How does Headspace make money?
  • Subscription Revenue
  • Headspace for Work (B2B)
  • Headspace subsidiaries, acquisitions, and exits
  • Headspace profit and revenue
  • What is the Headspace business and revenue model?
  • Headspace funding, net worth, and valuation

How does Headspace make money and how is it free to use? Well, here is a full, in depth, breakdown of their two (2) revenue streams and the different products and services they offer, as well as the Headspace business and revenue model, how much Headspace makes per year, and how Headspace works.

What is Headspace, and how does Headspace work?

Headspace is a service that specializes in helping its users with guided meditations and sleep wellness.

Founded in 2010 by Andy Puddicombe and Richard Pierson, the Headspace app has now had more than 70 million downloads across all platforms since its founding back in 2010.

So, how does Headspace work? To use Headspace, users can download their mobile app from the Apple App Store or Google Play store.

Once downloaded, users can simply browse the app for things like guided meditations that last between 1 to 10 minutes, sleep experiences to improve sleep, mood-boosting music for workouts and yoga, and more. With the option of upgrading to a paid plan for additional features.

Some of Headspace’s competitors include Calm, and other sleep / mediation apps.

Headspace App in Apple App Store | Headspace Business Model | How Does Headspace Make Money? | How Does Headspace Work?
Source: Apple App Store | Headspace

How does Headspace make money?

According to Headspace, the Headspace app has more than 70 million downloads across all platforms.

So how does Headspace make money off of all those customers and app downloads?

Below is a breakdown of how much money Headspace makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 2 ways of how Headspace makes money in 2022

Headspace has a revenue model that makes money in two (2) ways; subscription revenue and B2B revenue.

#1. Subscription Revenue

Though Headspace is free to use, Headspace makes most of its money by upselling its users to its paid subscription plan.

For a subscription fee of $12.99 USD per month, members unlock access to additional content such as the full Headspace experience, new meditations daily, Move Mode for mind and body fitness, and more.

How much does Headspace cost?

  • $12.99 USD per month or;
  • $69.99 USD per year (annual plan)

Note: Of Headspace’s more than 70 million app downloads, it’s unclear how many of those users upgraded to Headspace’s paid subscription plan.

#2. Headspace for Work (B2B)

Headspace also makes money on the B2B (business to business) side of things with Headspace for Work.

The way it works is Headspace partners with organizations so they can offer Headspace’s services to their employees as an employee benefit (a perk of working for them). Some of the organizations include companies such as Adobe, Bed, Bath & Beyond, HelloFresh, and more.

Note: Companies partner with Headspace so they can offer Headspace’s services to their employees as an employee benefit.

Headspace subsidiaries, acquisitions, and exits

To date, Headspace has made a total of 3 acquisitions.

Mergers and acquisitions business model
Source: Crunchbase | Headspace

Headspace profit and revenue

Headspace’s last reported earnings came in 2019 when they brought in $100 million in revenue. Since then, Headspace has not released any official reports in regards to company earnings.

Note: Because Headspace is a privately held company, they are not required to make their annual reporting, such as Form 10-K’s, pubic.

What is the Headspace business and revenue model?

Headspace makes money through a few revenue models that they combine within their company, they are:

  • Freemium business model
  • Subscription business model
  • Business to business (B2B) business model
  • B2B2C (partnerships) business model
  • Mergers and acquisitions (M&A) business model

Headspace funding, net worth, and valuation

According to Headspace’s Crunchbase profile, Headspace has raised $215.9 million over 12 rounds and has a post-money valuation of $500 billion to $1 billion as of June 11, 2020.