A key consideration for any marketplace is how (and how much) you charge your users. Your business model needs to cover the costs of running the business including customer acquisition and churn without turning off sellers or users or encouraging disintermediation. In general, successful marketplaces charge or “take” as little as they need to remain sustainable. This helps avoid users trying to find ways to go off the platform or for competition to come in and undercut prices. If your marketplace has an effective moat or provides significant value that can’t be gained elsewhere, you may be able to charge a higher rate and take extra margin above what’s sustainable. Determining your business model is an important first step as you’re building your marketplace, but remember that this can change and evolve and you test concepts and grow the business.
Different factors will go into determining what commission you want to charge, or if an alternative business model makes sense for your marketplace. You’ll want to think about things like marginal costs for sellers, your competition, network effects, provider differentiation, transaction size and volume, and quality and additional services you provide. Below are some of the common marketplace business models and how to think about them.