Service marketplaces initiate, facilitate, and conclude buying and selling of services between service providers and customers. Service marketplaces cater to a particular niche. For example, marketplaces like Thumbtack and TaskRabbit help customers get professional service workforce. They enable you to hire a person to do home chores for you. They help in matching clients needs with high-quality, independent professionals according to their pricing and availability.
The sheer popularity of these service marketplace websites has created great enthusiasm among entrepreneurs to start such platforms. To help you in starting a service marketplace successfully, we have thrown light on how does service platforms like Thumbtack and TaskRabbit work.
How do service marketplaces work?
- Customer register and post their job on the website.
- Service professionals, on the other hand, register themselves in a particular service category. They view all the jobs and send customers a proposal.
- These service professionals pay to the admin of the website for applying for a job.
- The customers make an analysis of all the proposals received and chooses the best professional as per their needs.
- The customers pay for the job charges to the admin.
- Once the job is finished, the customer pays the amount to the service provider.
- The earning of service providers is the job charges after the admin cuts a certain amount of fees, which is transferred to the provider after the job is completed.
The business model explained:
In a commission-based model, the marketplace takes a cut of every transaction generated through the platform as commission. TaskRabbit works on this model. The model is beneficial to customers as well as service providers because they have to pay fees only when a job is finalized. This model encourages more service providers to join the platform as there is no upfront cost, and there is no risk of not making a sale.
In a subscription-based model, customers are billed on a recurring basis, and they get services at the same time every month or as per their convenience. This model is beneficial for service providers because once a customer signs up, there are high chances that he/she will stick to the services. It is advantageous to the customers, too, because instead of getting services, again and again, they can pay a low upfront cost than paying for every purchase. Moreover, there’s a discount on these monthly payments, increasing overall customer satisfaction.
Thumbtack earns money through this model. It makes the professionals pay to contact customers through Thumbtack credits. These credits are used by professionals to send quotes to customers. The service providers only have to pay for the quote, and Thumbtack doesn’t charge extra fees on jobs they complete or future jobs that they book. A single credit costs them around $1.50, but that can go down to $1.42 if the provider buys a bulk pack of credits. The number of credits required to send a quote depends on the type of service requested.
Featured listings allow the service providers to get more visibility for their offerings by paying a specific amount of fees to the admin. This will enable them to have their listing featured on the homepage of the website or at the top of a particular category.
Google AdSense model is useful for admin to earn revenues. It gets you paid for displaying ads from third party advertisers who want to promote their products or services. You have a number of ad placement and charge advertisers to give their ads.
Depending on your requirement, you can decide on the advertising model like cost per impression or pay-per-click. You can even consider display advertising. Monetization through ads can be an effective means as long as you can reach the relevant advertisers in your industry.
The fact is that service marketplaces are growing at a fast pace. Players like Thumbtack, TaskRabbit, Flippa, etc. have already made a name for themselves. There is still a huge untapped market for startups, and the above post can come handy. After you understand how these marketplaces work, you can easily incorporate the required features in your website.
To know about how you can start a service marketplace, you can refer to the beginner’s guide for startups to kick-start an online marketplace.