Marketplace businesses are long-term initiatives. To build a sustainable and successful marketplace, you need to find a business model with revenue streams that will finance its operations.
(Full article: https://www.sharetribe.com/academy/how-to-choose-the-right-business-model-for-your-marketplace/)
Here are the most common business models for online marketplaces:
Transaction fee (also called "commission" or "take rate").
Whenever a sale happens on your site, you charge either a percentage of the total size of the sale or a fixed fee. This is the most popular model for modern marketplaces and platforms like Airbnb, Etsy, eBay and Uber. You are able to extract more value per transaction by offering more value in the process. Use the other models only if this model doesn't fit your particular idea.
Membership or subscription fee.
If you can't act as a middleman of the transaction, you can consider charging your providers or all your users a monthly or a yearly fee. This is a good choice if your users are getting a lot of value from your marketplace but charging a transaction fee is impossible for some reason. Home exchange sites like Love Home Swap are examples of marketplaces using this model.
Instead of charging per transaction, you can charge your providers for listing on your site. Many classifieds sites like Craigslist use this model (quite often some categories are free and others are paid). Etsy also uses this as an additional source of revenue. The downside is that you need a huge amount of listings for this model to generate meaningful revenue.
If your marketplace's main function is to generate leads for businesses, you might consider charging the providers for getting access to customers. Thumbtack uses this model. It's too difficult for them to be a middleman in the recurring transactions between providers and customers, so they focus on providing the initial lead instead.
You could have a free base offering for most of your users and some paid features for your power users. These could include things like delivery, insurance, or providing more visibility. Etsy offers premium services like direct checkout to their power sellers for an extra fee.
Featured listings and ads.
The good old ads aren't the most common business model for marketplaces, as there are so many other potential revenue streams available, but in some cases they still make sense. A popular way to deal with marketplace ads is to allow the providers to pay to get their listings featured on your marketplace. This is another common strategy for classifieds marketplaces. Etsy also uses this model as an additional source of income.
Finding the right business model is mostly trial and error.
- Start with one, to avoid diverting focus.
- Be prepared to change it.
- Once growing, combine multiple revenue streams.