HubSpot is an American company that deals in developing and marketing software productions. These products cater to the needs of the business. Their product range includes inbound marketing, customer service, and sales software. HubSpot provides many different tools for businesses through which they can easily manage their online presence.
The company itself got founded by Dharmesh Shah and Brian Halligan at MIT. The company has organically grown over the years. It increased its revenues to millions in the first few years of its business. After that, the company has gotten into various stores and grew its product range. In 2021, the company reported revenues of $1 billion.
Currently, HubSpot is the leading company when it comes to marketing and automation solutions in the US. The company captured 29.3% of the overall market. The next company on the list is Adobe Experience Cloud, with only 11.99%. Other companies also exist in the market. However, none of them is close to the overall control that HubSpot has over the market.
Although HubSpot makes money through its paid products, it also provides businesses with free online tools. On top of that, the company started an online training platform, HubSpot Academy, in 2016. The company has also been active in the acquisitions market. Over the years, HubSpot has acquired various companies to gain their expertise and bolster its business.
At the start, the company catered to the needs of smaller clients. However, it boosted its product range to capture the market for larger businesses as well. As a result, its product range grew over the years. Currently, it offers tools for social media marketing, content management, web analytics, landing pages, SEO, and customer support.
HubSpot also went public in 2014. The company, through its unique products and services, has gained the attention of many users. HubSpot recently reported over 114,000 customers spread across the globe. Overall, the company has grown significantly over the years.
How Does HubSpot Work?
HubSpot provides its customers with an all-in-one marketing and sales package. The company’s products help businesses drive traffic, grow their customers, increase their sales and convert leads into sales. It also offers users inbound marketing products. For that purpose, they provide tools that help users with things like social media management, landing pages, search engine optimization, etc.
Apart from these, HubSpot also provides customers with any specific solutions. Users do not need to get all its products and services at the same time. Instead, they can benefit from the tools they need. The wide array of tools available through the platform can help businesses significantly bolster their revenues and customer base.
HubSpot brings a variety of functionalities under the same roof. It allows marketing and sales departments to manage their activities through a single platform. For businesses that crave online platforms, HubSpot’s inbound marketing tools can be significantly beneficial. On top of that, they also include tools for content creation, workflow automation, lead capture, CRM, etc., to provide users with complete solutions.
The products that HubSpot offers are not unique. There are several other platforms that provide similar services. However, users generally have to get their solutions from different tools. HubSpot aims to solve that issue by bringing everything together. Instead of having to try various platforms, users can simply get all those features through HubSpot.
Simply put, HubSpot is a software platform that provides users with tools for their inbound marketing needs. The company also has an inbound sales dashboard to help users convert their leads into sales effortlessly. During the process, it also provides them with CRM tools to help them connect better with customers. HubSpot also has CMS tools to help users build, host, and optimize their websites through the platform.
What is HubSpot Business Model?
In essence, HubSpot uses an e-commerce business model to connect with its users. More specifically, it is a B2B business model that allows the company to reach other businesses. However, it also further classifies its business model to a subscription-based business model. Through this model, HubSpot charges its users a regular fee and allows them to use its tools.
However, HubSpot does not limit its services to this business model. It also provides users with various professional services, which are a part of its business model. Overall, HubSpot uses a complex business model that combines several models into one. By doing so, the company significantly increases its customer base and its revenues.
On top of that, HubSpot also uses a multi-product business model. As mentioned, the company has a wide variety of tools from which users can choose. The company offers marketing, sales, CRM, CMS, service, etc., solutions. It also categorizes these products into separate packages. Customers need to subscribe to each service separately to use them.
Overall, the HubSpot business model has allowed the company to attract customers and increase its revenues. This is because the combination of business models that the company uses works well together. However, the primary focus for the company remains its subscription-based business model.
How Does HubSpot Make Money?
HubSpot has over 100,000 customers worldwide. The company offers multiple products, which allows it to attract customers from different sectors. Overall, HubSpot divides its revenues into two categories. These include the subscription revenues and professional services and other revenues. Overall, the companies net sales have increased over the years.
According to the company’s latest annual report filings, HubSpot generated $883 million in revenues in 2020. This revenue increased by 31%, or $208 million, over the $674 million it made in 2019. The company has also experienced significant increases in revenues in 2018 and 2017. Furthermore, HubSpot reported its revenues to have exceeded $1 billion in 2021.
As mentioned, these revenues come from two categories. These include subscription services and professional services and others. A detailed analysis of each segment is below.
Subscription
The primary source of income for HubSpot has always been the subscription segment. As mentioned, the company offers various tools that allow users the best services. The company categorizes these tools under several headings, known as “Hubs”. These include marketing hub, sales hub, service hub, and CMS hub.
For each hub, the company has three different subscription prices. These include starter, professional, and enterprise packages. The starter subscription packages are the most inexpensive maxing at about $50 per package. The professional and enterprise packages are more expensive and can be from $300-$1,200 per month. The CMS hub does not have a starter package and only offers the other two.
The subscription category accounts for more than 95% of the company’s total revenues each year. In 2020, the company made $853 million from this category. It increased by $32% over the $646 million the company generated in this category in 2019. The cost for this category is also significantly low, with only a 15% cost to revenue ratio.
Professional services and other
HubSpot also provides its users with various professional services. These include customer onboarding and training services. These services are loss-making because the cost exceeds the revenues for both of the mentioned years. Its cost to revenue ratio is over 110%. However, providing these services is essential to attracting more subscription revenues.
In 2020, HubSpot generated $30 million from professional services and other categories. This revenue increased by $1.5 million from the $28.6 million the company generated in 2019. This increase amounts to 4.9% growth. Overall, this segment only accounts for less than 5% of the company’s overall revenues.
Conclusion
HubSpot is an American company that specializes in inbound marketing software. The company provides users with various tools they can use to promote their business. HubSpot primarily uses a subscription-based business model. However, it also uses a combination of several other models. HubSpot makes money from two segments, the majority of which comes from the subscription segment.
