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Marketplace Pricing Model – “Subscription Vs Commission”

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 , pricing model for marketplace is huge subject of discussion . There are various kind of pricing model exist for the marketplace we will go through all of them one by one .

– This is THE MOST and very POPULAR pricing model for the marketplaces almost every site earn the profit and revenue using the commission model  . Ok no commission is ok but how it does work ? as in marketplace there are tons of categories , product different kind of sellers or vendors how does this commission things work ? well it totally depend upon the marketplace owner how they want to implement it out . we may categorise on following topics –

Global commission type – Here despite of anything like whatever the category is or what kind of vendor are selling the product on every transaction of any item marketplace owner will get their fixed commission . E.G lets say there are three product p1 ,p2 and p3 respective price are 100 , 200 and 300 and lets say 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 percentage marketplace owner can set the price on fixed value lets say 20$ on each transaction that means whatever is the product price marketplace will get 20$ on every purchase .

Category Commission TypeGlobal commission type is fine for all type of marketplace shops but for more sophisticated commission structure marketplace owner can set the the commission based on the categories e.g lets say there is cloth marketplace and categories are pant , shirt , jeans and many more . Now marketplace can apply 10% commission on pants , 20% commission on shirt and 30% commission on jeans so on any purchases on those categories will lead to those kind of commission revenue for the marketplace owner

Seller / Vendor Commission type This is another set of commission structure for the marketplace where store owner can set different kind of commission structure for different kind of vendors e.g lets say there are three vendors A , B and C so 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 marketplace have a very popular product “ABC” and marketplace owner want to generate more revenue on the sales of that item so x% / fixed price can be applied on that particular product

This is another very popular pricing model for marketplaces , marketplace may charge sellers / vendor based on their product count or time 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 lets say marketplace created three kind 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

As per our view i think the best way to manage the pricing structure for marketplaces are commission + membership . Marketplace can setup free kind of membership with little high on commission and then based on high volume seller traffic commission structure may get changed as well .

This advertisement is not like displaying google ads or any java script ads , at various places of the marketplace lets say on landing page of the marketplace , marketplace owner can display some places where he may ask sellers to purchase that space obviously  it will leads to more conversion for any seller if their products appears on the marketplace home page .

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  • Johnson Nathan
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