One morning you wake up inspired and in the toilet, as could not be elsewhere, you come up with the best idea in the world to create a Marketplace that no one has ever thought before. Before you run off and explain it to your mother or partner, remember that they are going to ask you the following question: How will you make money with your wonderful idea?
Although it may seem obvious, one of the reasons why Marketplaces fail most often is because they are not clear about how to earn income or because they have not taken into account the fact that the Internet is free. But don’t despair, we bring you the Marketplace business models that are most successful so that you can get ideas and not flush your idea down the toilet.
1. Commission on a Marketplace
Charging a fee for each transaction is the most common business model. When the buyer pays the seller through a Marketplace, a percentage or a previously set fee is charged. It’s one of the easiest ways to do business, and if your website has a lot of traffic, you can turn it into a gold mine. In addition, the fact that publishing an ad has no cost attracts the flow of users. However, it is essential to set an adequate commission for your Marketplace to be successful. If there are other websites with a similar business model, study their percentages and rates and put it cheaper.
It is also key to transmit security when paying for users to take the step. This is achieved by offering secure methods such as Truust, which uses escrow as a form of payment and prevents any type of fraud, something that is not guaranteed with the credit card or PayPal.
2. Subscription fee in a Marketplace
It consists of charging a fee to enter the web or a restricted part of the web. For sellers (or suppliers) is a way to find new customers, while those customers can get unique experiences. It is a complicated business model for a Marketplace that has just begun since its success is based on the value of the web and its users. It is a good option to offer free subscriptions or offers.
Some examples are found on dating sites such as Match.com, where you must pay a subscription to access their content, or employment, such as the part intended for LinkedIn companies, which have to pay to have access to users.
3. Fee for advertising on a Marketplace
It consists of charging a fee to users who want to publish a product in the Marketplace. It is usual in the webs of classified ads. In exchange for paying the fee, providers gain visibility that can help them get a higher value than the fee paid to the Marketplace.
In many cases, this is a more useful model than a subscription, as you only pay for what you publish. Even so, it is still not recommended for those sites with few visits.
4. Featured Ads
If the previous model was to charge a fee to all publications, this is to charge for the ad to appear prominently. In this way, the Marketplace allows you to publish in it for free and standard or do it paying and in a special way.
For websites with many publications is ideal, because the fact of being more visible can translate into earning money faster. However, for those with few publications, it doesn’t make much sense.
5. Fee for contacting in a Marketplace
In this case, suppliers only pay when they contact a potential customer. It is also called a lead rate and is useful when dealing with high-value businesses.
However, it loses its meaning when customers and suppliers can easily contact offline.
An example of a platform that uses that model is Thumbtack.
The Freemium business model consists of offering basic services free of charge but charging for more advanced and special services. It is key that these benefits obtained by paying are very attractive. It is a way to earn money very much to keep in mind, especially in the beginning. However, if in the long run, the percentage of users who pay is very low, the business may not be profitable.
An example of Freemium is Peerby.
Now you know which business models are available in the market and which options are available. You can use this information to decide which market model(s) is best for your case. There are dozens of ways to make money in your market.
Images of this post by Vecteezy