Anton KovalFounder with big love for marketplaces

Founder @ Braincode a marketplace agency. Experience in building/ planning online marketplaces and kicking off growth.

Recent Answers

There is a great article about this written by Bill Gurley.

Basically price is a friction factor in a marketplace. So you need to balance it in a way that creates less friction (lower prices) and at the same time keep your business profitable.

Basically there are several factors that determine the business model:
- Who pays. Generally the side that gets the most value should be charged, however some platforms split the payments between both sides.
- Marginal costs. If producing a good or service for your supply takes a lot of time or effort it will be hard to charge a high percentage for this. Think Etsy, suppliers need to buy material and craft a product.

At the same time if a product can be easily reproduced or resold, you can charge a higher percentage (e.g. ilustrations, templates, songs, apps). If you add to this a platform with big power percentage can be really high ( Apple appstore: 30%, Shutterstock: 70%. This is also why music creators hate Spotify as you need 336 842 plays to earn US minimum wage.

- Frequency and size of transactions
Typically the frequency and size of transactions are correlated. The larger the size of the transaction the lower the frequency.

Uber, for instance, has a huge frequency however each transaction is small. Airbnb, on the other hand, has a much lower frequency yet the size of the transaction is larger.

- Other revenue streams
You may also lower your transaction cost by implementing additional revenue streams like listing fees in case of Etsy.

- Market Position
Generally the stronger the market position of your marketplace the higher fee you can charge for this. However, this inevitably attracts competition.

Generally, there is no set rule for pricing you need to "figure it our" by experimenting or use a product like Priceintelligently that can help you out.

You should not do it simultaneously. If you do you will waste a lot of precious resources.

The general rule is that you should start with a supply in your case with the list of experts. The best practice here is to start with experts in some niche field (for instance not finance experts but rather financial controllers that help startups in pre-seed stage) and also in a specific area (city or even neighbourhood).

To attract the supply side there are a couple of proven strategies:
- Job offers. You advertise this as a part-time job on job sites and leverage the traffic from job sites to yours. Its a fairly cheap way.
- Calculators. You build salary/gig calculators that help supply side to calculate how much can they earn/or how much should they earn and convert them on your website.
- Create the content on the niche subject and post it like a mad person on relevant groups in FB, Linkedin, Twitter etc.
- Scrape your competitor's websites for contact data to your supply. Airbnb did this with Craiglist.
- Create referrals for your supply to invite more supply. Uber did this at the beginning of their operations.

Once you have a couple of them you can start offering their services to a niche customer (demand side).

Once there is enough demand you refocus on supply again to either add more experts in the same niche or add another niche.

Marketplaces are like production lines you always need to focus on bottlenecks, once you figure out one you need to move to the next one.

There are however strategies when companies start with the demand. Its called it "Fake it until you make it". Nobody speaks about it however the majority of startups use it. Basically, you set up fake profiles and advertise it to the demand side of the marketplace. Once there is a request you start looking for supply.

Oh and you don't need code for this. Designer, Google sheets, zapier, typeform or Wordpress (Airbnb started on Wordpress). You should not spend more than 200 $/month for a subscription to these tools. You can use also platforms like Sharetribe that have all the basic marketplace functions built in.

Good luck!

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