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I am in the early stages of planning an online business which will bring together those who want X, and those who can provide X.

Looking at Apple's App store model and Amazon's Publisher model, they each charge a hefty percentage of a sale, no doubt to cover the cost of running the system, and also to cover payment processing fees.

Would it be sensible to follow this model?

I don't know what makes more sense, to charge for example 20% plus processing fee, or something like 30% flat fee.

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Turn the question around: If you were buying the service what type of fee structure would you like? – Karlson Mar 31 '12 at 18:58
Totally free :). But then there would be no incentive to build it... So the question remains. – Ted Mar 31 '12 at 19:14
And my suggestion still stands. The difference you face in the choice you have to make is: Free is not an option – Karlson Mar 31 '12 at 19:15

2 Answers

up vote 2 down vote

The question was "is 20-30% a standard, accepted practice". The answer, frankly, is no. There is no standard pricing practice for service providers. What you charge should be determined by several factors, such as:

  • your overhead/cost structure
  • the perceived value that you provide
  • demand for your service in the markets that you serve
  • your growth strategy
  • your "go to market" strategy
  • etc.

Apple and Amazon can charge what they do because of who they are and the market reach that they have. It is unlikely that a startup can expect to apply the same pricing without having comparable reach.

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Thanks Mike, for an answer to the question. – Ted Mar 31 '12 at 22:12
up vote 1 down vote

The primary determinant of what you charge should be "What is your customer willing to pay?"

If you don't get this right, you have no customers.

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