Marketplace Business Model
Learn about the various revenue models for an online marketplace
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The success of an online marketplace is measured by the right revenue model
Transaction Based Model
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 two-sided marketplace app receives funds from every transaction and is able to start earning money right from the earliest stages of your project’s functioning.
Subscription Based Model
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.
Lead Based
In a lead-based marketplace business 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.
Bidding Based Model
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.
Listing Based
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 is more visible to the site’s visitors — they are usually larger, brighter and are located in the most visited areas of the website. Such monetization method is justified when service providers don’t need a long-term subscription but want to sell services occasionally.
Freemium Services
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.
