nav
Business Operations Business Models

How Does HubSpot Make Money (Business and Revenue Model)

The HubSpot business model

How Does HubSpot Make Money?
Here’s what you should know:
  • What is HubSpot, and how does HubSpot work?
  • How does HubSpot make money?
  • Subscriptions
  • Professional Services And Other
  • HubSpot’s Subsidiaries, Acquisitions, and Exits
  • HubSpot’s profit and revenue
  • What is the HubSpot business and revenue model?
  • HubSpot’s funding and market cap

How does HubSpot make money? 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 HubSpot business model, their year-over-year revenue, and how HubSpot works.

What is HubSpot, and how does HubSpot work?

HubSpot is a customer relationship management (“CRM”) platform that offers services like marketing, sales, customer service, CMS, and operations to mid-market business-to-business (“B2B”) companies that have between 2 and 2,000 employees.

Founded in 2006 by Brian Halligan and Dharmesh Shah, HubSpot began trading on the New York Stock Exchange (NYSE) on October 9, 2014, under the ticker symbol “HUBS”. Since that time, HubSpot now has more than 121,000 customers paying for its services.

How HubSpot works is: Business customers can choose from a range of CRM tools like marketing, sales, customer service, CMS, operations, or a bundle package using HubSpot’s à la carte business model. Once picked, they will be billed on a monthly or yearly basis.

Some of HubSpot’s competitors include Salesforce, Pipedrive, Mailchimp, and other customer relationship management (“CRM”) companies.

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

How does HubSpot make money?

According to HubSpot’s homepage, the company has more than 121,000 paying business customers of various sizes. Focusing on mid-market business-to-business (“B2B”) companies, which HubSpot defines as companies that have between 2 and 2,000 employees.

So how does HubSpot make money off of all those mid-market B2B customers?

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

Here are the 2 ways of how HubSpot makes money (in 2021):

HubSpot has a revenue model that makes money in two (2) ways – subscriptions and professional services offered.

#1. Subscriptions

HubSpot makes the majority of its money from subscription fees. In fact, $853 million or 96.6% of HubSpot’s total revenue came from subscription fees in 2020.

HubSpot’s subscription business model works off an à la carte business model. Offering a plan for whichever CRM service the customers business needs: marketing, sales, customer service, CMS, operations, or a bundle package.

As mentioned above, HubSpot has more than 121,000 paying customers with an average subscription revenue per customer of $9,528 per year.

HubSpot Pricing:

  • $50 to $4,000 per month (depending on the type of plan and tier)

Note: 96.6% of HubSpot’s total revenue came from subscription fees in 2020.

#2. Professional Services And Other

In addition to the subscription revenue, HubSpot makes the remaining 3.4% of its money from other professional services offered.

According to page 41 of HubSpot’s 2020 Form 10-K, HubSpot describes professional services and other revenue as revenue “generated primarily from customer on-boarding and training service fees.”

HubSpot’s Subsidiaries, Acquisitions, and Exits

To date, HubSpot Inc has made a total of 13 acquisitions, 12 investments, 1 lead investment, and 2 successful exits.

HubSpot Acquisitions
Source: Crunchbase

HubSpot’s profit and revenue

In 2020, HubSpot reported $883 million in revenue.

Note: Because HubSpot Inc is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of HubSpot’s publicly released financial reports, including annual reports, through HubSpot’s investor section on their website.

What is the HubSpot business and revenue model?

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

  • Subscription based business model
  • À la carte revenue model
  • Fee-for-service (FFS) business model
  • Mergers & acquisitions (M&A) business model

HubSpot’s funding and market cap

According to HubSpot’s Crunchbase profile, HubSpot has raised $100.5 million over 6 rounds and has a market cap of $33.1 billion as of September 2021.