How does HomeHero make money?

Take the on-demand model and apply it to senior caregiving, charging by the hour or day

With the rise of on-demand services in the sharing economy, it’s no surprise that we’re starting to see more and more companies in the healthcare industry adapting to this model.

HomeHero is one such company, providing senior home care through an online marketplace. To date, the Santa Monica company has raised $23 million from Graham Holdings Company, Social+Capital Partnership, Tencent Holdings, and the Launch Fund.

So how does HomeHero make money? Much in the same way that Instacart, Uber, and many other on-demand companies make money: by charging customers to use the service. And in the same way that Instacart charges more if you want more groceries picked up and Uber charges more the longer the ride, HomeHero charges more the longer you need the service.

The company is transparent about its pricing right on its homepage. The standard rates (for customers in Los Angeles, San Diego, and Orange County) are as follows:

• $19 per hour (for shifts lasting 1-22 hours) and an additional $1 per hour for special skills
• $400 per day (for longer periods) and an additional $10 per day for special skills

If you happen to be unlucky enough to be using HomeHero in San Francisco, however, the prices are a little higher:

• $23 per hour (for shifts lasting 1-22 hours) and an additional $1 per hour for special skills
• $500 per day (for longer periods) and an additional $10 per day for special skills

It’s important to remember that, so far, HomeHero has operated under a model of employing independent contractors as its caregivers. So the company only keeps (on average) a 20 percent cut of the fees listed above, with the rest going to ones providing the caregiving service.

Since HomeHero says it has provided over a million hours of care since its launch in 2014, we can do some quick math (using the base $19 per hour rate) to conclude that the company has generated at least $19 million since launch. Of that, about $3.8 million has gone directly to the company’s coffers, while the other $15.2 million has been paid out to the company’s caregivers.

Remember, these are conservative figures using the lowest rate charged by HomeHero and the minimum number of hours provided (one million). Also, it’s important to note that earlier this week we reported that HomeHero has pledged to convert all of its 1,500-plus caregivers from independent contractors to company employees.

The move will make HomeHero more similar (and not just in name) to New York-based rival Hometeam, which already employs its caregivers full-time.