Can marketplaces make money on low transaction volumes or do they always (or typically) rely on scale?


Hi, my name is Kruno. I have one SaaS application from which you can sell your services. I have investigated a couple of years ago some pricing models and my conclusion was that the only thing that can get us more money is to scale our business (get more customers which will do microtransactions over our platform).

kind regards, Kruno

Answered 5 years ago

Math is your friend.

Start with your target monthly income.

Then determine if you'd like a small number of clients, selling high ticket items... or... large number of clients, selling low ticket items.

How you generate your income is purely a personal preference. Your preference will determine which model you design your business around.

There are many examples of both models.

Tip: The small client base + high ticket items... very rarely will people share how they do this.

All my businesses follow the small client base + high ticket item model.

In fact, most of the people I work with use this model.

Many of us have no front facing Websites, so business only comes by referral.

For example, speaking in a private mastermind where people pay $25K for a ticket. This tells a speaker, people in the room have money to burn, so this is a typical selling venue for the small client base + high ticket item model.

Answered 5 years ago

The most sustainable income for any profitable marketplace is dependent on the origin of the traffic. Many marketplaces have failed after major investment because they focused their traffic acquisition on lower price points and neglected higher priced goods. Pay attention to your site architecture also. Be sure to direct shoppers to the best shopping experience by providing clear categories. Specify by skill, design and materials, so that customers who want high-level craftsmanship will connect with those goods. Shoppers seeking a low cost-driven experience can connect with those items efficiently. Avoid universal categories such as shoes, tables, bikes, necklaces...

Answered 5 years ago

There are many ways you can make a low transaction volume marketplace profitable. For instance you can charge not a transaction fee of the low volume transaction, but an exclusive membership fee to join the community, or a lead generation fee, or partner with a strategic partner that sells desired products for your users, etc.

Happy to give you more examples if still interested.

Answered 5 years ago

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