How do platforms and marketplaces make money? 11 Platform revenue models

Last year together with my cofounders ?? Filip S. Peri?i? and Aleksandar Orli? we have been presenting and talking about marketplace revenue models at different conferences. Filip presented it first time at Platform Macher Tage in Germany, I then joined a panel discussion where we covered the topic at TheNTWK (The Network) Ecosystem Summit as part of the panel led by Tom M McFadyen and later Aleks ran a panel discussion at Marketplace Risk Global summit in London.?

In each of these events the audience was eager to learn more about the different monetization methods of marketplaces and also shared their own ways of generating revenue. One surprising aspect was the majority still thought of commission as their marketplace business model.?

Filip met researchers from a well known research institute Fraunhofer IESE at an event it was presented. Given the interest in the topic we decided to partner with them and write a structured and well researched whitepaper on the topic. While working on the paper, we combined their research and our practical knowledge and examples which resulted in insightful resource. This comprehensive document, serves as an essential guide for entrepreneurs, platform owners, and businesses looking to navigate the complexities of digital marketplace monetization.

The Evolution of Marketplace Revenue Models

The evolution of marketplace revenue models reflects the broader shifts in digital commerce and technology over the last few decades. Initially, marketplaces were straightforward platforms where buyers and sellers could meet to conduct transactions, with the platforms themselves earning a commission from each sale. This commission model was simple and effective, providing a direct way to monetize the facilitation of transactions. However, as the digital landscape grew more complex and competitive, this model began to show its limitations.

The advent of digital transformation has significantly expanded the scope of what marketplaces can offer and, consequently, how they can generate revenue. Technology has not only increased the efficiency and scope of market transactions but also introduced new behaviors and expectations among users. Marketplaces are no longer just intermediaries; they have become ecosystems that provide a range of services and experiences to both sellers and buyers.

This transformation has led to the emergence of several additional revenue models: from subscription models and listing fees to additional services fees.

In the whitepaper we divide 11 different monetization methods into 4 different platform revenue pillars.

Tech Sidenote: that is also one of the reasons why the current solutions to build marketplaces do not necessarily work for modern marketplaces or vertical marketplaces with specific needs or unique business models. They are mostly set up for building commission based systems. Not the case with randevu.tech

The Four Pillars of Platform Revenue Models

We categorized the monetization? strategies into four distinct groups, each representing a fundamental approach to generating revenue in a marketplace:

Transactional Revenue Models: These models focus on the interactions and exchanges that take place within the marketplace.?They include:

• Commission-Based: Earning a percentage from sales made on the platform.
• Fixed Fee-Based: Charging a fixed amount for transactions.
• Supplementary Services-Based: Offering additional services related to transactions.
• Lead-Generation-Based: Generating revenue by providing leads to sellers or service providers.

Participant Revenue Models: This category revolves around the platform's participants, charging them for access and engagement.?

It includes:

• Onboarding/Setup Fees: Charging new users a fee to join the platform.
• Membership/Subscription Fees: Implementing recurring fees for continuous access to the platform or its premium features.

Listing Revenue Models: These models derive income from the listings on the platform. They encompass:

• Listing Onboarding/Setup Fees: Charging for the creation of new listings.
• Listing Membership/Subscription Fees: Recurring fees for listing items or services.
• Listing Promotion Fees: Fees charged for promoting listings to enhance visibility.

Usage Revenue Models: Focused on the usage levels of the platform, these models include:

• Fees for Unlocking Actions: Charging users to unlock additional features or capabilities.
• Fees for Allowed Sets of Actions (Quotas): Implementing charges based on the volume of actions or transactions a user can perform.

Besides this, the whitepaper gives a classification system specifically tailored for platform revenue models, commonly referred to as a “taxonomy”. Think of this taxonomy as a detailed matrix, categorizing and itemizing every part of revenue models. This classification provides a study framework to capture the essence of platform revenue models. Here is how it looks like for one platform case and the whitepaper includes this type of taxonomy for each practical examples given.

Beyond the Basics: Inspiring Innovation and Adaptation

While many might default to considering only commission-based models, this whitepaper illuminates the breadth and depth of strategies available for marketplace monetization. By offering real-life examples and categorizing revenue models into these four comprehensive groups, we provide a framework for understanding and selecting the most appropriate monetization strategy tailored to a platform's unique context and objectives.

Moreover, the we encourage a dynamic approach to selecting revenue models, advocating for experimentation and adaptation based on market feedback and evolving business needs. We think you should not being confined to a single model but instead consider a hybrid or evolving approach to maximize revenue potential.

Tech Sidenote: Typically you can do this only if you are building the technology from scratch as most of the solutions do not allow you to combine different models due to their technical limitations. With randevu.tech however, you are able to combine them.

Interested to learn more? Download the whitepaper for FREE

For entrepreneurs, platform owners, and businesses planning to build a marketplace or a digital platform this whitepaper can give a comprehensive understanding of different ways to monetize.

You can download the whitepaper for FREE from:

https://randevu.tech/how-do-platforms-make-money-11-platform-revenue-models/

If you have any questions for feedback feel free to reach out.

Thank you