When starting an online market place, do you think you need to make it completely free to get some momentum?


You can read about Zaarly, which was a 2-sided reverse Craigslist, and their struggles with pricing and the ultimate impact it had on their decision to change to a storefront only tool.


A better read is "If You Think 10% Is A Good Transaction Fee For Your Marketplace, Then It Will Struggle" by Sunil Rajaraman


"it would be to start your transaction fees higher than 10 percent. I understand that companies start here to deter competition and provide a better deal for suppliers. But imagine having to build a business that completes $1 billion in annual transactions within five years in order to build a $100 million top-line business. Start much higher than 10 percent. You can move down eventually, but you cannot move up"

And Bill Gurley's "All Markets are not created equal - 10 factors to consider when evaluating marketplaces"


Pricing is key to proving your revenue model.

Answered 11 years ago

I think you should absolutely not make it free to purchase through the marketplace. It might be useful to make it free to list, so you can get some inventory.

If you make it free, even if people show up, it's unclear what you've proved.

Answered 11 years ago

Free/ Freemium / Charged is a decision based on a number of factors including the domain (product), competition landscape, scale and speed of growth.Could answer better if you share details.

Answered 11 years ago

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