Thumbtack – it's here. The online marketplace for service professionals. Thumbtack's lead fee model has helped them grow past $2 billion in revenue!
How?
Think of Thumbtack as the ultimate commission salesperson. No, not the sleazy kind that's waltzing around with free lunches, gimmick closes and the suit from Walmart!
Think of Thumbtack as the ultimate commission salesperson. No, not the sleazy kind that's waltzing around with free lunches, gimmick closes and the suit from Walmart!
Instead, Thumbtack's the ultimate professional salesperson! Quick responses, detailed quotes, and a variety of selections.
Thumbtack's users can request quotes for a wide range of services. Including things like:
- Home improvement
- Wedding planning (even wedding planning, yes)
- Tutoring
- Personal training
Service professionals who receive that quote request can choose to send the following:
- The quote to the customer
- A personalized message (why pick me!)
- Any relevant information about their service
Then, Thumbtack charges professionals a fee for the ability to send a quote to the customer. This fee can depend on the service type and the customer's location (think New York, muchos more dollars).
Thumbtack's discovered a lead fee model that ensures professionals are serious about their services and maintains the platform by qualifying professionals.
Fiverr is similar to Thumbtack.
Fiverr is a global online marketplace offering a fee-based platform for freelancers. Fiverr provides a user-friendly interface that enables freelancers to create and promote their gigs (services) to potential buyers.
One of the ways Fiverr helps freelancers promote their services is through its "Promoted Gigs" feature (again, gigs mean work, you likely well know).
One of the ways Fiverr helps freelancers promote their services is through its "Promoted Gigs" feature (again, gigs mean work, you likely well know).
Promoted Gigs allow freelancers to showcase their gigs:
- At the top of search results
- In a dedicated section on the homepage
Promoted Gigs allow freelancers to stand out in a crowded marketplace.
By featuring their services, top-earning freelancers can leverage:
- Fiverr's user base to attract more clients
- Fiverr's user base to build their brand
- Promoted Gigs to test different pricing strategies
- Promoted Gigs to test market demand for their services
What about your online marketplace? Want to use listing fees, lead fees, or featured listings in your online marketplace? How would you pick?
- Understanding listing fees, lead fees, or featured listings can help you choose the best revenue model options
- Sharing advantages of featured listings can help your sellers stand out from the competition and reward your best sellers
Create Your Own Marketplace Fast
- Launch your own marketplace niche fast
- Easily connect your own domain name
- Create your own categories quickly
- Create custom fields specific to your requirements
For Online Marketplaces with Pay to Play, Quality is What Stays
One of the main reasons for using a listing fee in your online marketplace is for better quality listings.
By charging a listing fee, you encourage sellers to:
- Put more thought and effort into their listings
- Ensure they are detailed and informative
- Think twice before posting items that fail to meet customer demand
What might you anticipate in your online marketplace?
- Your listings may be more visually appealing and informative
- Your sellers may provide better-quality products
Now I know what you might be thinking!
- I'm worried that charging a fee will discourage sellers from listing their items
- I'm concerned that buyers will react negatively to the introduction of fees!
- What if they leave negative feedback (oh no, not the nasty comments)?
While there is room for free listing platforms, consider that the user experience is paramount in any online marketplace.
Your users want to shop on a platform that offers:
- High-quality items
- And a great user experience
Isn't it worth considering if listing fees can help you achieve that?
What kind of listing fees are charged by other online marketplaces?
- $0.20 for each item for four months is the listing fee Etsy charges for vintage items (20 years or older). (Etsy)
- $0.35 per listing is the insertion or listing fee charged by eBay for high-volume sellers (beyond 250 items). (eBay)
- $10 to $75 is the posting fee Craigslist charges for jobs in selected cities in the United States. (Craigslist)
In 2018, Craigslist (yes, the squint your eyes to see the categories, Craigslist) implemented a listing fee for job postings.
Craiglist did this in ten major US cities to:
- Reduce spam
- Improve the quality of job listings
At the same time, the listing fees helped Craigslist generate revenue.
By charging a nominal fee, Craigslist improved the user experience for job seekers and employers while generating additional revenue for the platform.
By charging a nominal fee, Craigslist improved the user experience for job seekers and employers while generating additional revenue for the platform.
Want to implement listing fees in your online marketplace?
- Research your competitors for an appropriate fee structure
- Determine if you want pricing tiers
- Communicate the benefits of the listing fees to sellers (quality/exposure)
- Test, monitor, and adjust listing fees as necessary
- Support customers during the transition to the new fee structure
Get Users to Pay for Trusted Listings and Eliminate Fraudulent Transactions
One of the main reasons for implementing a lead fee in your platform is to deter scammers or fraudulent transactions.
Lead fees can also help deter bad actors on your platform, such as scammers or fraudulent sellers.
By charging a fee for each lead:
- You can discourage scammers from using your platform
- Create a safer and more secure environment for buyers and sellers.
In addition, lead fees can act as a screening mechanism. Fraudulent sellers are less likely to be willing to pay for leads! They know that they won't be able to profit from their fraud!
With the implementation of lead fees, your potentially frustrating online marketplace may be transformed by:
- More quality listings
- An absence of spammy messages
- Newly engaged buyers and sellers that are more productive
Posting a trusted classified listing can be like fishing with "a strong net on the internet."
Posting a trusted classified listing can be like fishing with "a strong net on the internet."
A good fisherman uses a robust and reliable net to catch much fish. Similarly, a seller must have a robust listing when posting.
Sellers with featured listings often give accurate information, good pictures, and a clear description of the item for sale. Doing this helps attract serious buyers (fish) who will feel confident buying the item (the hook or net).
Getting users to pay for postings can help with cleaning up your marketplace.
Upwork uses a similar fee-based model. "Connects" is one of the sources of Upwork's 226.7 million dollar freelancer revenue. (Backlinko)
Upwork uses a similar fee-based model. "Connects" is one of the sources of Upwork's 226.7 million dollar freelancer revenue. (Backlinko)
Upwork implemented lead fees in the form of Connects. Connects are virtual tokens freelancers use on the website to apply for jobs.
Implementing Connects within the Upwork platform also serves as a deterrent for fraudulent transactions. Freelancers get free Connects each month, but if they want more Connects to apply to more jobs, they can purchase more for $0.15 each.
Want to deter bad actors and get better-quality listings?
- Analyze to identify areas where bad actors are prevalent
- Determine your desired lead fee structure
- Communicate the new policy to users (reasons and benefits)
- Monitor and adjust the policy
- Offer support to help users navigate the new system
Featured Listings Allow Your Best Sellers to Succeed
One primary reason for an online marketplace to implement Featured Listings in its platform is to reward top sellers with increased visibility.
Featured Listings are usually displayed at the top of search results. This increased visibility leads to higher click-through rates (somewhat obvious, but buyers are likely to click on the featured products in prominent locations).
By offering featured listings, you can charge sellers an extra fee. But it also helps your best sellers get additional sales.
By offering featured listings, you can charge sellers an extra fee. But it also helps your best sellers get additional sales.
Now imagine you are in the shoes of your seller (not literally, but you know what I mean). You're browsing through an online marketplace for a specific product.
As you scroll through the search results, your attention is drawn to the featured items.
The featured listings stand out from the rest of the search results. Bold and eye-catching graphics! You're taken to a page with detailed product information and high-quality images as you click.
The featured listings stand out from the rest of the search results. Bold and eye-catching graphics! You're taken to a page with detailed product information and high-quality images as you click.
You can practically feel the product's smooth texture in your hands as you browse through the listing (let's say it's your favorite sweater in cashmere)!
- The seller has provided clear and concise information (an invested seller)
- You see that the seller is highly rated and trusted (it's one of the better sellers)
You confidently make a purchase and eagerly await your new product's arrival!
Featured listings provide benefits for both the vendor and the platform.
- ~50% is how much featured listings can improve click-throughs (Your Move)
- 113% is how many more views featured listings get (Street Easy)
- Promoted listings support 310 million plus listings on eBay
- 1.2 million sellers use promoted listings on eBay (Web Interpret)
Featured listings are a staple for eBay. eBay's Promoted Listings feature allows sellers to pay for increased visibility of their listings in search results.
Promoted listings on eBay charge on a cost-per-sale basis. Sellers only pay when a buyer clicks on their promoted listing and … the buyer makes a purchase.
Promoted listings on eBay charge on a cost-per-sale basis. Sellers only pay when a buyer clicks on their promoted listing and … the buyer makes a purchase.
It's essentially a commission based promoted listing!
Promoted Listings on eBay also allow sellers to target:
- Search terms
- Groups of buyers
Targeting specific keywords allows sellers to create more effective and targeted advertising campaigns. Can you hear higher conversion rates and more sales?
Want to implement featured listings?
- Determine the placement and frequency of featured listings
- Ensure you have a marketplace platform that supports featured listings
- Set pricing for featured listings that will incentivize sellers to participate
- Implement reporting and analytics tools to track featured listings performance
- Continuously optimize featured listings' placement and pricing
CLOSING SUMMARY
Implementing listing fees, featured listings, and lead fees in your online marketplace can benefit sellers, buyers and online marketplace operators.
- Listing fees can result in better-quality listings
- Featured listings can increase visibility and lead to more sales
- Lead fees can deter fraudulent transactions (higher quality platform)
Interested? Take action to implement these strategies.
- Which of the three revenue models are you more likely to implement?
- If you were a seller, would you be willing to pay listing fees?
- Would you use eBay's higher commission structure for promoted listings?
