Tell me more ×
Answers OnStartups is a question and answer site for entrepreneurs looking to start or run a new business. It's 100% free, no registration required.
up vote 0 down vote favorite

My partner and I are developing a marketplace website that connects retailers with product makers, allows them to communicate with each-other and hosts wholesale transactions-we are looking for advice on how much to charge for our website.

What we know: the standard fee for retail brokers, has a range of 5-15% off of wholesale transactions. For the website to make money as an active whole-selling community, we decided a transaction fee on each purchase would be the most realistic and fair method (as we can't justify charging a subscription fee at this point). The number we came to was a 7% fee- 5% to the person selling the goods-and 2% to the buyer of the goods.

We feel somewhat comfortable with this number as our rough calculations indicate it will help with operations costs. However, we were hoping to gain some insight from the OnStartups community:

  • Does 7% (fee to sellers & buyers) seem like a reasonable transaction fee for an online marketplace of this nature?
  • Does it make sense to charge the buyers as well?
  • Are there typical ways startups decide on transaction fees or is it more or less trivial at the beginning?

Any help and advice would be greatly appreciated.

Thanks!

share|improve this question

1 Answer

up vote 1 down vote

The best thing I can suggest is to tell/ask your (potential) customers how much they are willing to pay. You know what your monthly infrastructure costs are, what bank transaction fees will be, and what marketing can cost, so make sure to factor that in so you can accommodate for profit. From there you can get a good baseline for what you'll be able to charge.

From personal experience (a hard/rookie lesson learned), I built an SaaS app that we had quite a few people interested in, but we didn't ask them if they'd pay and how much. We spent a bunch of time try to guesstimate what pricing should be, only once we launched, we found out that hard way that everyone wanted it but no one wanted to pay for it.

Any don't short change yourself. While we all have a tendency to want to offer the lowest price so the barrier of entry is lower for customers, there is something to be said for offering a fair/solid price.

Here are some links that may be of help.

http://blog.spark59.com/2012/dont-ask-customers-what-theyll-pay-tell-them/ http://visualstudiomagazine.com/articles/2012/04/02/the-business-of-pricing-your-product.aspx http://venturehacks.com/articles/pricing-experiments

Best of luck.

share|improve this answer

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.