Choose the right revenue model for your Marketplace Business
How do you measure the success of any online business? Is it by the number of users registered in your platform or amount of money you invested ? Nope, it is purely based on your generated revenue. And it is no different in the case of online marketplace platforms. To generate revenue, one of the most important decisions you need to make is to identify the right online marketplace revenue model. In order to make the right choice, you should know about all the revenue models and which one would be a right fit for your marketplace platform.
The Revenue model of a freelance marketplace aims to connect two entities: service providers or service seekers. Following are the revenue models, you can choose according to your business needs:
The marketplace charges a percentage of the fee on each transaction. In this model, there is no upfront cost of listing and encourages more suppliers to join the platform, thus increasing the marketplace’ supply. This strategy is lucrative as the marketplace owners receive funds from every activity passing through the marketplace website and are able to start earning money right from the earliest stages of your project’s functioning.
The marketplace offers a range of subscription plans at different price points based on the frequency of use or the number of products/services listed..Here, the marketplace can enable subscription both at the service seekers or service providers, where they are billed on a recurring basis and receive their services at the same time on a preset basis or as per their convenience.
In a lead-based model, service providers pay-per-quote for matching with the right service seekers. The model of having service providers pay to bid on a project results in more qualified options and the best way for the service seekers to find the right providers.It is a good choice when it comes to rendering services that can’t be thoroughly tracked by the marketplace owner: some repairing works, freelance projects etc. Various service finder sites like Thumbtack, TechieFriends.
In Bidding-Based companies post about job responsibilities and services required. Service providers bid for the projects they are more interested in, this increases the chance for service seekers to find the best partner to complete the projects.
In this model, service providers pay for listing their products or services on a platform. This model is most commonly used when the service provider has to use the platform to sell the product or services occasionally. Additionally, listing fees may be regular and premium ones. The latter are more visible to site’s visitors — they are usually larger, brighter and are located in the most visited areas of the website. Such ads are called featured ones.
Such monetization method is justified when service providers don’t need a long-term subscription but want to sell services occasionally. The fee for listing an ad should be affordable since providers would hardly want to pay a pretty penny for something that is not even profitable yet.
What are the options to monetize an online marketplace on which the majority of service providers share free or inexpensive items? In this model, service providers can pay subscription fees for the basic plan and have basic features to start selling. Later, if needed providers can upgrade the plan for premium features.
It is recommended to start with one core model and concentrate fully on it during the initial stages. Later, when business demonstrates a successful growth, try to reconcile several monetizing approaches. The marketplace platform should provide capability to switch between different models hassle free. IdyaFlow is a SaaS based platform enabling its clients to fully customize their online marketplace platform the way they like. It is easier to set up any revenue model for your business with full features required for your marketplace.