There are many possible ways to start an online business. The rental marketplace is one such option, that the booming entrepreneurs can indulge in. The scenario is changing fast with a shift from owning to renting and it also creates more value for more money when compared to owning.

Many entrepreneurs and startups are very enthusiastic about the rental marketplace idea since millions of users are using the marketplace as a daily part of their life. Also, billions of dollars are being transacted across the world and a huge sum of money is earned as commission fees by the marketplace owners. It triggered budding entrepreneurs to jump into this sharing economy stream.

But choosing the right marketplace model is a difficult task for entrepreneurs. It is necessary to know about the suitable business model that they are planning to execute and the different revenue streams that could be generated.

In this blog, let me guide you to know about the different business models available in the marketplace and how it works.

  • Commission-based
  • Subscription – fee
  • Listing fee
  • Lead generation fee
  • Freemium services

 

Different types of the business model in Marketplace

Commission-based

Commission-Based is probably one of the most popular methods. This method brings real benefit to all the marketplace participants and it also attracts both the users and value providers. This approach lets marketplace owners to capture money and start gaining profit even at a very low level of activity.

There are two types of commission-based fees: fixed fees and variable fees. The fixed fee is a set of percentages charged by the marketplace owners from each seller and buyer. The variable fees are adjusting according to the total amount of bill.

This is one of the best ways to earn revenue from each and every transaction occurring on the marketplace platform. Besides that, the commission-based method scales very well.

Subscription fee

It is one of the best strategies used by enterprises for customer retention and advance payment from the customer. Usually, marketplaces offer several membership tiers, the fee for which is varying according to the in-built features.

A subscription business model is the one in which customers pay a fixed amount of money on fixed time intervals. This method allows consumers to subscribe to the services for a monthly or yearly basis and earn a periodic subscription fee.

One of the main advantages of the subscription model is steady monthly revenue and gives a recurring revenue and budget-friendly offers to the customers

Listing fee

This model is very common in the marketplace industry. It is quite common like classified ads. In this, the revenue can be extracted from the listing of rentals. The vendors have to pay the fees to list their offerings in the rental marketplace. These fees can be charged on a regular or premium basis. Another method is to charge listing fees for promoted ads and other such features.

The listed fee strategy offers more chances for marketplace providers to earn high profits and guarantee for lots of visibility.

Lead generation fee

This method gives a better value proposition than the listing method because the provider has to pay only when they get in touch with the potential customer. This is the way the marketplace gets revenue by charging the seller to get in contact with the customer.

Freemium services

Freemium is the word derived from free and premium. The free products users have limited access to the few features that unlocked when the person buys the paid services.

In any freemium services, the marketplace offers for free and charges the user for upgrades. There are two ways to implement the freemium services, either giving free charge and charge extra for upgrades or giving free as well as paid services.

To make a freemium model work better, the model should look perfect for generating revenue with a high conversion rate.

Wrapping up

We hope that you had a clear-cut understanding of the business models available in the marketplace economy. Still, you are struggling to find out the right business model for your business? Get in touch with experts at support@radicalstart.com We can give you the best solution for your rental sharing business.

In our previous article, we also discussed innovative ways to improve the rental sharing business. You can check that too.