Marketplace Pricing Model – “Subscription Vs Commission” Marketplace is a brilliant post commerce sales strategy and almost any big online commerce site is a marketplace from Amazon to eBay and from Etsy to Asos.
As a startup marketplace owner, the pricing model for the marketplace is a huge subject of discussion. There is various kind of pricing model that exists for the marketplace we will go through all of them one by one.
Commission Based pricing model for marketplaces
This is THE MOST and very POPULAR pricing model for the marketplaces almost every site earns profit and revenue using the commission model.
Ok, no commission is ok but how it does work? as in the marketplace, there are tons of categories, products different kinds of sellers, or vendors how do these commission things work? well, it depends upon the marketplace owner how they want to implement it out. we may categorize on following topics –
Global commission type – Here despite anything like whatever the category is or what kind of vendor is selling the product on every transaction of any item marketplace owners will get their fixed commission.
E.G let’s say there are three products p1,p2, and p3 respective price is 100, 200, and 300, and let’s say the marketplace owner set the global commission as 10% so on every transaction of those items marketplace owner will get 10, 20 and 30$ as commission.
Instead of a percentage marketplace, the owner can set the price on fixed value let’s say 20$ on each transaction which means whatever is the product price marketplace will get 20$ on every purchase.
Category Commission Type – Global commission type is fine for all types of marketplace shops but for a more sophisticated commission structure marketplace owners can set the commission based on the categories e.g to let’s say there is a cloth marketplace and categories are pants, shirt, jeans and many more.
Now marketplace can apply 10% commission on pants, 20% commission on shirts, and 30% commission on jeans so any purchases on those categories will lead to that kind of commission revenue for the marketplace owner
Seller / Vendor Commission type – This is another set of commission structures for the marketplace where the store owner can set a different kinds of commission structures for different kinds of vendors e.g let’s say there are three vendors A, B, and C so the marketplace owner can set x% commission for vendor A, Y% commission for vendor B and z% commission for vendor C
Product Commission type – This kind of commission structure will be used for something lets say the marketplace has a very popular product “ABC” and the marketplace owner want to generate more revenue on the sales of that item so x% / fixed price can be applied on that particular product
The subscription-based pricing model for marketplaces –
This is another very popular pricing model for marketplaces, the marketplace may charge sellers/vendors based on their product count or period.
Although there are pros and cons of this model as many times sellers don’t want to pay for the membership fee so generally marketplace owner provides the subscription in terms of groups e.g let’s say marketplace created three kinds of membership profiles basic, silver and gold where basic will be kind of free so that marketplace may attract sellers and then if sellers are getting traffic and revenue marketplace can ask them to update their membership group to gold or silver or platinum
The mix of commission and subscription –
As per our view, I think the best way to manage the pricing structure for marketplaces is commission + membership. The marketplace can set up a free kind of membership with a little high on commission and then based on high volume seller traffic commission structure may get changed as well.
That’s all for Marketplace Pricing Model – “Subscription Vs Commission” still have any issues feel free to add a ticket and let us know your views to make the module better contact us.